Most Uber/Lyft drivers would be happy as independent contractors if the companies didn't keep reducing rates/incentives.
The mileage/time rates of pay have been slashed drastically and Lyft recently removed Primetime rate increases altogether, so drivers now get essentially no additional money for driving during the busiest times.
When you've been so completely re-intermediated by the platforms you operate on, the assumption that you are an independent contractor no longer holds.
Then the platform will fail due to lack of supply of labor. It’s not ideal, but these freedoms of both parties are part and parcel of independent contracting.
Bullshit. If they can't set their own rates and have customers (riders) accept/reject them they're not really independent contractors. Having Uber/Lyft set the price is like having a centrally planned economy instead of a free market.
No it won't. Uber and Lyft offer significant incentives to boost driver recruitment at the start, and then start peeling them back once those drivers have invested time and rides on the platform. The whole demand/supply equilibrium thing is Econ 101; it belongs in textbooks, because it's oversimplified and doesn't match how business operates in real world conditions.
- predatory pricing, where a product is sold below its true cost, to undercut competitors. Similar to 'dumping' in international trade. Example would be Walmart's undercutting of Target and other pharmacies for Birth Control pills in Wisconsin [0].
You could argue Uber does this as well, as it built market share on the backs of billions in investor capital, as opposed to setting its prices based on demand and supply. In the Econ 101 world, it wouldn't be possible to scale to the size of Uber while losing billions every year, with profitability nowhere in sight.
in terms of other examples:
- minimum wages (pretty much every country has this)
- letting banks borrow from the Fed at an effective 0% rate, and letting them profit by arbitraging that capital by charging "market rates" to consumers
- minimum price guarantees for farmers (again, almost every country has this)
All of these distort the demand-supply relationship as described in economic theory, where all actors have equal bargaining power, equal access to information and where every concept must be prefaced with "all other things remaining equal". That's why it is ultimately "theory". It provides the basic conceptual grounding, but beyond that, everybody has to do their own estimations about what price to charge, because of the various distortions specific to their business environment.
Back to Uber, no, they don't need an infinite number of drivers in the US. They just need enough drivers to replace those that leave their network. They can do that by offering attractive sign-up bonuses, and then start cutting fares once the drivers are settled and it's harder for them to leave because of the potential loss of income.
The mileage/time rates of pay have been slashed drastically and Lyft recently removed Primetime rate increases altogether, so drivers now get essentially no additional money for driving during the busiest times.