The video examines the plight of Uber and Lyft drivers in New York City during the summer of 2024, where they face unexpected lockouts preventing them from working. These lockouts, lasting up to 8 hours, challenge the belief of drivers' flexibility and independence. Drivers, seeing themselves as independent contractors, feel deprived of the control they once had over their schedules. This struggle is complicated further by discrepancies in how minimum wage rules are applied and utilized by Uber and Lyft, impacting drivers' earnings and leading to protests demanding fair compensation.

The video's investigation reveals a complex pattern, with lockouts being part of Uber and Lyft's responses to New York City's minimum wage requirements. These occurrences exposed gaps in how rideshare companies manage driver pay, leading a grassroots movement to unfold as a bot gathers evidence from drivers. The study shows how lockouts manipulate metrics essential for drivers' pay under city regulations, thus permitting companies to minimize expenses by avoiding higher wage obligations.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. lockout [ˈlɒk.aʊt] - (noun) - An event where individuals are prevented from working, used here to describe Uber and Lyft drivers' exclusion from their apps. - Synonyms: (shutdown, exclusion, stoppage)

You can't even go online because there's lockouts.

2. minimum wage [ˈmɪnɪməm weɪdʒ] - (noun) - The lowest legal salary that can be paid to workers, critical in the context of driver earnings discussions. - Synonyms: (base pay, living wage, basic wage)

While Uber and Lyft take a cut from each fare, New York's rules ensure them a minimum wage, at least in theory.

3. independent contractor [ˌɪn.dɪˈpɛn.dənt ˈkɒn.træktər] - (noun) - A person tasked with performing work for another entity, without formal employment status, usually having more autonomy but fewer benefits. - Synonyms: (freelancer, self-employed, consultant)

Drivers are classified as independent contractors because they set their own, own hours.

4. rideshare [ˈraɪdˌʃɛə] - (noun) - A service in which users share rides in vehicles for a fee, usually facilitated by an app such as Uber or Lyft. - Synonyms: (carpool, shared mobility, transport service)

The business model of the rideshare industry

5. utilization rate [ˌjuː.tɪˈlaɪˈzeɪʃən reɪt] - (noun) - A percentage that measures how often workers are actively engaged in their tasks, in this context, how often drivers have passengers. - Synonyms: (activity level, occupancy rate, usage rate)

The current utilization rate is set as 58%, so we can think of it as out of 100 minutes that drivers are on the road, 58 minutes of that is spent with a passenger in their car.

6. surge zone [sɜːʤ zəʊn] - (noun) - Area where demand for rides is high and prices increase, often leading to higher earnings for drivers. - Synonyms: (peak area, high-demand zone, premium area)

We found that there were more than 400 instances of lockouts happening in search zones.

7. denominator [dɪˈnɒm.ɪ.neɪ.tər] - (noun) - The number below the line in a fraction, here part of the formula for calculating pay based on the utilization rate. - Synonyms: (bottom number, divisor, base number)

...there is a denominator in this formula, which is called the utilization rate, which is a percentage that measures how busy drivers are.

8. app workers [æp ˈwɜrkərz] - (noun) - Persons who work via digital platforms, providing various services like rides, deliveries, etc. - Synonyms: (digital workers, platform workers, gig employees)

In no place in the United States are app workers winning.

9. negative externalities [ˈnɛɡətɪv ˌɛkstərˈnælətiz] - (noun) - Unintended adverse effects of a business activity on third parties or society. - Synonyms: (adverse effects, negative impacts, spillover effects)

...ensure that workers are fairly paid, that the companies are not allowed to create negative externalities.

10. grassroots movement [ˈɡræs.ruːts muːvmənt] - (noun) - An organized effort by the general public to promote change, often on a community level. - Synonyms: (bottom-up movement, community action, popular campaign)

These occurrences exposed gaps in how rideshare companies manage driver pay, leading a grassroots movement to unfold.

How Uber and Lyft Lockouts Cost Drivers Millions

The summer of 2024 was a stressful time to be an Uber or Lyft driver in New York City. You can't even go online because there's lockouts. Currently, it has been three months. In May, Uber began preventing drivers from working seemingly at random for hours at a time. Lyft soon followed suit. They opened their app, and normally you would be able to click the go button and go online. But when you're locked out, when you press go, nothing happens. An individual lockout could happen from anywhere from five minutes up to 8 hours, and there was no telling if you would get online or not. It was always a myth that drivers had unlimited flexibility. We understood that this stemmed from a six year old payroll, and this really intrigued us and got us down the rabbit hole.

I started driving for Uber to be able to work at my own schedule because I went. I went through a lot of trauma with a divorce. I was a mess emotionally. My typical workday starts at 06:00 a.m. i usually am busy until 11:00 a.m. i'll take a break. So I go to the gym, and then from 02:00 p.m. till 10:00 p.m. i continue working. I come home, take my 8 hours sleep, and start my day again. So basically, a lockout is when you cannot go online to work. So essentially you're micro fired every day. I would get locked out of Uber. It was very frustrating. It was also affecting my self respect. What am I? Just, I'm a robot. Like, getting locked out. Like, I'm a person. I have to feed my family. Like, come on, child support.

In June, we heard that this group that is representing thousands of drivers in New York City is organizing a protest in front of Uber's offices in downtown Manhattan. Drivers are classified as independent contractors because they set their own, own hours. While Uber and Lyft take a cut from each fare, New York's rules ensure them a minimum wage, at least in theory. We definitely know, based on Uber's messaging to the drivers, that they're trying to respond to this minimum wage requirement in the city. That really set us on the path of answering why? What is driving their decisions behind this? And we came up with this idea of creating a WhatsApp bot that has an automated chat conversation and allowed drivers to send us screenshots and answer a few simple questions. We got more than 7300 screenshots from more than 800 drivers. We interviewed close to 120 drivers, and by the end of it, we had a pretty good idea of how these lockouts work.

Lockouts happen every hour of the day, every day. And that's despite Uber saying their particular schedule of open access times where people shouldn't be locked out. We found that there were more than 400 instances of lockouts happening in search zones. So there's definitely potential impact there on consumer pricing. A lot of people, through our interviews, we learned that they are working way beyond their usual hours to try to make what they made before. The New York Taxi Workers alliance says the lockouts manipulate a key metric in the law allowing Uber and Lyft to avoid paying a minimum wage.

The business model of the rideshare industry. Their approach is to flood the streets with as many drivers as they can get to sign onto their platform. That leads them to be incredibly inefficient in the use of the driver's time. Hey, no work today. No dead. Come on, where's the secret spot? So, drivers, they're paid per mile and per minute, but for New York City, the unique part of the formula is that there is a denominator in this formula, which is called the utilization rate, which is a percentage that measures how busy drivers are. In 2017, I was contacted by the Taxi and Limousine Commission to consider undertaking a study that would support a minimum pay regulation for Uber and Lyft drivers. We spent a year very intensively researching the industry. We found in the course of our study, for 75% of the trips, drivers were being paid less than the equivalent of the minimum wage after factoring in their expenses. So it was necessary for them to have a special regulation to establish a minimum compensation standard for Uber and Lyft drivers.

The formula that determines driver pay takes into account how often drivers actually have passengers in their cars. With a number called the utilization rate, companies keep drivers busy. Nearly all the drivers wages come directly from fares, but if drivers have too much downtime, the companies have to make up the difference. Before we had the utilization rate, if you wanted to be an Uber driver, you just had to agree to the Uber driving terms. I don't know how people hacked it. Maybe they didn't need any money and they lived with their parents or something, but anybody like me really wouldn't have done it full time.

Drivers for Uber and Lyft in New York City can expect a raise soon. The rule went into effect in February 2019, but during COVID rideshare, demand plummeted, and that sort of delayed the showdown that we're seeing today. In the initial pay standard formula, utilization was supposed to be reset every six months. The TLC opted to not do that. In the first year Covid came along, the years after that, the economy, everyone's recovering from COVID So it was only in the spring of 2023 that the TLC got back to this utilization notion. The current utilization rate is set as 58%, so we can think of it as out of 100 minutes that drivers are on the road, 58 minutes of that is spent with a passenger in their car, and 42 minutes of that is spent I driving to the passenger and just waiting for a ride to be sent to them. And with recovery of rideshare volumes, the regulator is revisiting how the formula is calculated and trying to understand how it is going to work.

By its original design, you are forcing companies to make a decision to lock out. Through July of this year, industry wide utilization clocked in at 53%, according to a Bloomberg analysis. This means Lyft would have paid around $53 million more in minimum payments to drivers in the first half of 2024, and Uber would have paid at least 154 million.

So after two months of lockouts and at least two protests by the drivers, the city and the two companies came to an agreement in late July saying they would reduce lockouts. Uber has stopped lockouts as of early September, but Lyft is still doing it. The fight over lockouts shows how challenging it is to protect workers in the growing gig economy. If we're to have a society and an economy that works for people in a sustainable way, there has to be the authority on the part of government to effectively regulate businesses to ensure that workers are fairly paid, that the companies are not allowed to create negative externalities.

In no place in the United States are app workers winning. New York City was closest to a situation where the workers themselves would be assured that they could earn a minimum compensation level and be paid for their expenses. The lockout situation now is putting that at risk.

I think Uber is a fantastic thing. I actually bought shares of Uber right when they came out and unfortunately I had to sell them, but I would have loved to hold onto them. I really do appreciate being an independent contractor and making my own way in life. If there was an opportunity out there, I would definitely take it. But currently being an independent contractor works for my schedule and for my passions in life.

Economics, Technology, Global, Gig Economy, Labor Rights, Ride-Share Industry, Bloomberg Originals