Uber, Lyft driver incentives create more traffic, while not delivering more rides A firsthand perspective

By Uber using guaranteed Earnings Boosts to encourage drivers to saturate communities like the Richmond, Marina, and Noe Valley, riders there often pay no surge pricing because drivers often outnumber ride requests, while communities without active Earnings Boosts, like the Outer Mission and Ingleside, can suffer by having a deficit of drivers -- the result of which is increased surge pricing. less By Uber using guaranteed Earnings Boosts to encourage drivers to saturate communities like the Richmond, Marina, and Noe Valley, riders there often pay no surge pricing because drivers often outnumber ride ... more Photo: (Various) Photo: (Various) Image 1 of / 4 Caption Close Uber, Lyft driver incentives create more traffic, while not delivering more rides 1 / 4 Back to Gallery

Are you a frequent rideshare rider who has noticed an increase or decrease in the intensity and frequency of demand pricing in the locations you travel from most? If so, it may be related to surge and prime pricing's insider counterpart: so-called "driver incentives." Lyft and Uber use driver incentives to influence where, when, and how much platform drivers drive. But such incentives may be causing an increase in demand pricing in some areas and the exact opposite in others, and these driver incentives may create more traffic, while not delivering more rides.

The most traditional driver incentive is the referral bonus in which an existing driver (referrer) and new driver (referee) are given a bonus if the referee completes a minimum number of trips within a set time frame. But over the past two years, both companies have become increasingly aggressive with the driver incentives they offer. Both offer drivers weekly bonuses if they complete a certain number of weekly trips and meet certain conditions, such as accepting a minimum share of the trips offered to them. Lyft has introduced hourly guarantees as long as similar conditions are met. And since October 2016, Uber has offered drivers an Earnings Boost incentive in which drivers are guaranteed a minimum multiplier to their earnings on a trip, even if surging is less than the multiplier, as long as the trip originates within a defined boosting zone, each of which has unique earnings multipliers during unique hours.

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Uber and Lyft use these programs to ensure that enough drivers are on the roads when and where they are demanded the most. In a statement Thursday, an Uber spokesperson stated that the programs are designed to "offer drivers more opportunities to earn with clarity and context while helping ensure riders can reliably request a ride wherever they are in a city at any time of day." But now, there may be too many drivers at any location at any time – literally.

With a finite number of trips to go around, using boosts to lure drivers to flood targeted areas, enticing drivers to keep driving until they can't, rewarding drivers for driving specific hours, and appealing to drivers to get all their friends join in and pursue the same incentives alongside them, diminishes the number of trips any one driver can get. Instead, drivers are increasingly competing against each other for the same trip(s) and go "rider-less" for extended periods of time, electing to either drive around in search for a fare or find a spot to park while they wait for a fare to come to them. This means lower earnings per hour, fewer trips per hour, and – ironically – a longer road to many bonuses. As someone who drives some for Uber, I can say that I've definitely noticed the difference.

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But these programs also present a host of public impacts. The most obvious is the safety implication of alluring drivers to keep driving until they can't anymore. As well, localities and their residents have to suffer with extra cars either taking up parking spaces or road space – that means added road repair costs, pollution, and more – while offering no utility since they aren't transporting anybody. Specific to Uber's Earnings Boost program, riders outside of boosted zones suffer with drivers who might normally serve them passing them up in pursuit of boosted zones instead – the ripple effect of which is fewer drivers in non-boosted areas and an increased likelihood of those areas becoming subject to surge pricing.

So, while some riders may benefit from the companies subsidizing their would-be surge or prime pricing, it comes at the expense of other riders, the local neighborhood, and drivers.

Neither Lyft nor Uber responded to questions about whether their data shows a change in supply-demand dynamics overall or in specific areas as a result of their driver incentive programs.

Zakhary Mallett is a transportation planner, writer, and former BART board director who also drives for Uber and Lyft.