It would seem that every week brings new revelations about how Uber manipulates the market. A special report in The New York Times reveals how it entices drivers to work longer and harder.
It is innocuous enough. Drivers are technically self-employed business owners. That frees Uber from providing health coverage and other benefits employers are mandated to give to employees. At the same time, it deprives the firm from leverage on forcing on its drivers shifts and schedules.
Uber found a way around it in behavioral psychology. Drawing from research into addictive gaming, like Tetris, it set seemingly arbitrary goals every time a driver tried to log off for the day. For example, it would send them messages saying they were only $10 short of making $330 for the week.
That would prompt many to keep on driving, late into the night and into far away areas. In another example, male employees would impersonate female associates, sending messages under names like “Jane”, reminding drivers about concerts or other events where lots of people would need a ride home. The psychological mechanics at work here are quite simple and summed up in the phrase: “You are almost there.”
And that’s why Uber drivers are always a nickel short of a dime. Uber only cares about driving prices down for itself, first and foremost, and for clients who —genuinely, like the drivers themselves of its own fleet— cannot afford the full fare of a regular taxi cab. This is all explained by another famous principle of popular economics: “There’s no such thing as a free lunch.”
Someone is indeed paying for the difference between the regular fares of a taxi cab and those cheap Uber rates. In fact, it’s Uber drivers who are really picking up the tab.