Lyft has drivers, Uber has earners
"Increasingly we want earners to earn, however they want to on a particular day"
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The post-pandemic challenge for both Uber and Lyft has been getting drivers back online. Drivers ditched ride-hail platforms en masse during covid, some opting for jobs that came with benefits like sick pay and health care, and others preferring to transport food or groceries rather than people. The driver shortage increased ride wait times and drove up prices. Getting a ride in 2021 was “next to impossible” or “almost impossible”; fares were “astronomical.”
Uber set aside $250 million for driver incentives in April 2021 and has been busy partnering with taxi companies to increase its ride supply. Lyft has also spent heavily to get more people driving, to the dismay of analysts on its first-quarter earnings call this week. Chief financial officer Elaine Paul said Lyft spent $350 million in the first quarter on “incentives classified as contra [revenue],” a category that includes driver subsidies, 3% more than in the same period last year. Lyft plans to continue the subsidies for now, Paul added, weighing on Q2 margins. “This is an investment quarter,” she said. “When the marketplace reaches much healthier balance would be hard to predict.” In other words: we don’t know how long we’ll need to keep subsidizing drivers to have enough on our platform.