Uber and Lyft fares surge by up to 40% as the ride-hailing apps struggle to find enough drivers
- Uber and Lyft are hiking up fares amid a driver shortage.
- Uber prices were up 40% in April compared to the same time last year, data showed.
- But the labor shortage and surging demand means that earnings for drivers are soaring.
Uber and Lyft are hiking up fares on their apps as demand for rides outstrips the number of available drivers.
Ride-hailing apps are struggling to find enough drivers amid the current labor shortage - but demand for travel is rebounding.
Lyft cofounder John Zimmer said in an earnings call in May that rising rideshare prices hadn't deterred customers from using Lyft because it was an industry-wide trend - but a report by The New York Times shows that some people are now shunning ride-hailing apps in favor of public transit, or even flights.
Uber fares in April cost 40% more than they did the same time a year ago, per data from research firm Rakuten Intelligence, first reported by The Times.
This has risen to 50% and higher during recent periods of surge pricing, when Uber hikes up pay to attract more drivers to areas with high demand, Wedbush analyst Dan Ives said, per The Times.
Uber and Lyft are struggling to find enough drivers
Demand for ride-sharing services is rebounding after plummeting in 2020. Wedbush analyst Dan Ives said he expected Lyft to see a "roaring 20s-like" rebound in the second half of 2021 as both business and leisure travel rise, while Uber reported its highest-ever bookings in its history in March.
But the number of available drivers is down. More than half of Uber and Lyft drivers stopped driving during the pandemic, and some drivers say that they were holding out for higher pay and better working conditions.
The labor shortage and surging demand means that earnings for drivers are soaring.
Lyft's Zimmer said during the May earnings call that in some markets, average hourly driver earnings had reached "all-time highs," and were up 85% compared with pre-pandemic.
Uber CEO Dara Khosrowshahi said on May 5 that drivers in some US cities were making more than $40 per hour.
Lyft expects its driver supply to rebound
Both Uber and Lyft are bumping up incentives to get drivers back on the road, and Uber told The Times that more than 100,000 drivers had returned to the platform over the past month.
Lyft said it expected to see driver supply recover as COVID-19 cases declined across the US and federal unemployment benefits end. Zimmer said Lyft expected people in other app-based driving work to move to rideshare driving.
Hiring in the US private sector accelerated through April, aided by the vaccine rollout, but some industries have been hit by huge labor shortages. Insider's Ayelet Sheffey reported that this could be down to a mix of unemployment benefits, COVID-19 health concerns, caring responsibilities, and low wages.
Bank of America expects this worker shortage to fade by early 2022, though Insider's Juliana Kaplan and Ben Winck said that companies and lawmakers needed to rethink the way people work to lure back staff.