According to a report in The Wall Street Journal, both Uber and Lyft, which saw their stocks fall after their initial public offerings, are placing recruiting and retaining drivers on top of their priorities list. Cutting costs is another area the two ride-hailing companies are focused on, former employees told the paper. What’s adding to the pressure is the fact that the unemployment rate in the U.S. is at a low not seen in decades. Uber, which priced its stock late last week, ended Friday (May 10) down 7.6 percent, losing $6 billion in value while shares of Lyft are 29 percent lower since it when public in March. Investors want to see profitability or fast growth out of the companies they invest in.
Recruiting and retaining drivers is seen by industry watchers as a tough battle for Uber and Lyft. Churn among drivers is high and it’s very easy for drivers to stop working for the service on the fly or jump between both depending on the rates. The Wall Street Journal noted that in 2015 and 2016 many drivers gave up on the gig six months in. The paper cited research from Stanford University and Uber. They aren’t alone. The researchers found that other low wage jobs had high turnover.
As the companies get bigger, the high churn could become a bigger problem. While both companies listed recruiting drivers as a risk factor in their IPO prospectus, they didn’t lay out the churn rate. To find new drivers both ride-hailing companies are casting a wide net, including people who don’t have cars for jobs. The company has also increased financial incentives for drivers and offers discounts on car maintenance. When Uber announced its IPO it said it would award drivers $300 million, giving them as much as $40,00 each. Uber said in a Securities and Exchange Commission filing that it planned to pay roughly $300 million to around 1.1 million drivers located across the globe ahead of its IPO.