[UK] Uber drivers’ earnings cut after changes to ‘dynamic pricing’ algorithm

New research has revealed that many of the UK’s Uber drivers are earning “substantially less” per hour since the introduction of a “dynamic pricing” algorithm in 2023, which coincided with Uber taking a significantly higher share of fares, The Guardian reports.

The findings are part of a study released on June 19 by academics at the University of Oxford, which analysed data provided by 258 UK Uber drivers responsible for 1.5 million trips.

Uber reportedly began by taking a fixed 20 per cent cut of the UK fares charged, which subsequently rose to 25 per cent. Uber introduced ‘dynamic pricing’ in 2023, an algorithm that variably sets pay for drivers and fares for passengers. 

Dynamic pricing is a later iteration of Uber’s “surge pricing” that increased fares during periods of peak demand.

The researchers found that the gig economy giant is now claiming a cut, or “take rate”, of 29 per cent of a fare, rising to more than 50 per cent in some cases.

Unions reportedly criticised the move when it was made in 2023, stating that there was no transparency and that the technology “could push down working conditions by targeting drivers based on their willingness and ability to accept lower fares”.

The Oxford research paper said, “Post-dynamic pricing, Uber’s passengers now pay higher prices, but the drivers are not better off.”

The study was published in partnership with the non-profit gig worker organisation Worker Info Exchange (WIE). Its conclusion reads, “Our findings suggest that post-dynamic pricing, many aspects of Uber drivers’ jobs have gotten worse. Average pay per hour on the app is stagnant and is lower in real terms in the year following the introduction of dynamic pricing.

“Uber’s median take rate per driver has increased from 25% to 29%, and on some trips, the take rate is over 50%. Furthermore, the higher take rates are concentrated among higher-fare trips, which explains how Uber can extract an additional 38% [income] from its drivers’ labour on average … Many drivers are earning substantially less per hour.”

The Oxford research added that drivers’ average hourly pay was £29.46, by Uber’s definition, or £15.98 if counting waiting time when drivers made themselves available to pick up passengers. Neither average takes into account costs to drivers such as vehicle maintenance, insurance or fuel.

Uber reportedly said it did “not recognise the figures in this report”. It added, “Every driver is guaranteed to earn at least the national living wage.”

Speaking to The Guardian, an Uber spokesperson said, “Uber drivers in the UK took home over £1bn in earnings between January and March of this year, which is up on the year before. Drivers choose to drive with Uber because we offer total flexibility on when they work and provide full transparency over the trips they accept.

“All drivers receive a weekly summary of their earnings, which includes a clear breakdown of what Uber and the driver received from trips. We are proud that thousands of drivers continue to make the positive choice to work on Uber as passenger demand and trips continue to grow.”

Source: The Guardian

(Links and quotes via original reporting)

New research has revealed that many of the UK’s Uber drivers are earning “substantially less” per hour since the introduction of a “dynamic pricing” algorithm in 2023, which coincided with Uber taking a significantly higher share of fares, The Guardian reports.

The findings are part of a study released on June 19 by academics at the University of Oxford, which analysed data provided by 258 UK Uber drivers responsible for 1.5 million trips.

Uber reportedly began by taking a fixed 20 per cent cut of the UK fares charged, which subsequently rose to 25 per cent. Uber introduced ‘dynamic pricing’ in 2023, an algorithm that variably sets pay for drivers and fares for passengers. 

Dynamic pricing is a later iteration of Uber’s “surge pricing” that increased fares during periods of peak demand.

The researchers found that the gig economy giant is now claiming a cut, or “take rate”, of 29 per cent of a fare, rising to more than 50 per cent in some cases.

Unions reportedly criticised the move when it was made in 2023, stating that there was no transparency and that the technology “could push down working conditions by targeting drivers based on their willingness and ability to accept lower fares”.

The Oxford research paper said, “Post-dynamic pricing, Uber’s passengers now pay higher prices, but the drivers are not better off.”

The study was published in partnership with the non-profit gig worker organisation Worker Info Exchange (WIE). Its conclusion reads, “Our findings suggest that post-dynamic pricing, many aspects of Uber drivers’ jobs have gotten worse. Average pay per hour on the app is stagnant and is lower in real terms in the year following the introduction of dynamic pricing.

“Uber’s median take rate per driver has increased from 25% to 29%, and on some trips, the take rate is over 50%. Furthermore, the higher take rates are concentrated among higher-fare trips, which explains how Uber can extract an additional 38% [income] from its drivers’ labour on average … Many drivers are earning substantially less per hour.”

The Oxford research added that drivers’ average hourly pay was £29.46, by Uber’s definition, or £15.98 if counting waiting time when drivers made themselves available to pick up passengers. Neither average takes into account costs to drivers such as vehicle maintenance, insurance or fuel.

Uber reportedly said it did “not recognise the figures in this report”. It added, “Every driver is guaranteed to earn at least the national living wage.”

Speaking to The Guardian, an Uber spokesperson said, “Uber drivers in the UK took home over £1bn in earnings between January and March of this year, which is up on the year before. Drivers choose to drive with Uber because we offer total flexibility on when they work and provide full transparency over the trips they accept.

“All drivers receive a weekly summary of their earnings, which includes a clear breakdown of what Uber and the driver received from trips. We are proud that thousands of drivers continue to make the positive choice to work on Uber as passenger demand and trips continue to grow.”

Source: The Guardian

(Links and quotes via original reporting)