In my opinion, Uber and Lyft’s problem is not that they have a computer that sets prices. Every company does that nowadays. That’s normal, and enables more flexible prices.
The problem with Uber and Lyft is that they pay their drivers less than minimum wage. There are two ways this can work:
- Drivers for the platform are classified as employees and they get all of the rights afforded to them by law, including being paid at least minimum wage with mandatory benefits if they work sufficient hours.
- Drivers for the platform are independent contractors and they can set their own prices automatically.
When I did some driving for Uber Eats and Postmates, I would often not be told the amount I would make or how far I would have to drive in order to pick up a delivery before I would end up being driven for free to the other side of the city and then only be paid a few dollars when I finally made the delivery. It’s impossible to make enough to live with such a system. They will then stop paying you enough to survive and push you into poverty if you turn down too many jobs.
In this way, they have found a way to maximize profits while taking advantage of everyone illegally.
Another illegal action by these companies is predatory pricing. They enter the market and offer extremely good deals. People who used to be taxi drivers lose business and are forced to become employees of these companies instead of running their taxi businesses. The wages start by being high enough for everyone to get a good deal. Once their competition is gone, they jack up prices and reduce wages for their drivers. This is illegal.
Part of their anti-competitive nature is also fighting against public transit. When Uber enters an area, bus ridership drops, starving routes of funds. Read more in this newspaper.
Ultimately, there is no substitute for fast, frequent, high-quality mass transit for getting around cities.