Wharton Business Daily's Gad Allon talks to Wharton Business Daily, SiriusXM, about the challenges that ride-hailing companies face following the pandemic.Customers of Lyft and Uber are frustrated by the long wait times and high prices. This is because Lyft and Uber are trying to meet a growing demand.Whartons Gad Allen wants to tell those customers a little secret. The fact that prices have risen is not a problem, but a feature of gig economy.At this point, I don't think anyone is happy. He said that customers are unhappy, drivers are unhappy, and Uber isn't happy. Their employment model is the subject of much debate.Allon is a professor at the department of operations information and decisions. He wrote a blog post about Uber's disposition and talked about it in an interview with Wharton Business Daily, Sirius XM. Listen to the podcast. He stated that the COVID-19 pandemic caused a long-term break in ride-hailing. This has brought attention to the gig platform as well as the importance of consumers in ensuring fair competition.Where are the drivers?Lyft and Uber, like many service-based businesses, have stated that they struggle to find enough workers in a recovering economy. Uber announced that it had 22% less drivers in the first quarter 2021 than the previous year and made a $250 million investment in incentives and bonuses to hire them.Fares have risen to the stratosphere due to a decrease in supply (drivers), and an increase in demand (riders). Rakuten Intelligence, a research firm, found that Uber and Lyft rides cost about 40% more in April than they did a year ago.Allon listed several reasons drivers aren't getting back behind their cars in large numbers, including continuing worries about health and the limited financial cushion provided by federal stimulus. The biggest factor is realizing that gig work is not all that lucrative.Uber cut back on spending in the lead-up to its IPO, he said, causing a decline in the drivers' pay and conditions. Drivers are now questioning the value of the job as Uber tries to lure them back with increased profits through surge pricing and other incentives.They say, "Well, we've been to that movie before." We've seen you try to get us in. Once you are in, you're going to take these benefits away, and then we'll be forced to do many, many short rides at very low wages, Allon stated. Let us know how you think this time is different.Professor John has been studying the gig economy since years. He noted in a 2018 paper the impact of inertia behaviour on the decision-making process of drivers. The bottom line is that drivers are more likely to work if they have more drivers. This inertia was disrupted by the pandemics that forced people to become ill.Allon stated that in the day-today you are always looking for the next ride. Many of these drivers were able to look back at their lives and realize that there wasn't enough money left after factoring everything in. Maybe they need to try something else.At this point, I don't think anyone is happy. Uber isn't happy. Customers are unhappy. Drivers are not happy.Is there a better way?Allon stated that drivers will be returning to work because of the lower fares and flexibility offered by gig work. Uber and other similar companies will need to reconsider the declining returns to their employment model, as drivers with long histories and don't want to forget how they were treated in the past.Customers can complain about long wait times and high prices, but they also have the option to do more than just grumble. Allon urged consumers to be fair citizens and encourage competition through multiple services. Push the government to offer more gig options to avoid a monopoly. Appeal to elected officials to regulate these platforms to protect customers and workers.He said that he expects to see some recalling on all sides, from the drivers who are already doing it, the companies that are realizing that, as well as the consumers who are deciding which side of the economy and where they want to go. We can't be just consumers. This market is a partnership. We have to ensure that all parties are healthy.
