The market will decide

Stuff reports:

Ben Wilson, chairman of the New Zealand Drivers’ Association, said his organisation was building a legal case against Uber that would prove drivers suffered a drop in income and an increase in workload from the pricing changes.

“Lots of the drivers were former taxi drivers who came to Uber because they thought it was a better service, but with these price cuts they are having to go back to traditional taxi driving.”

Auckland driver Leon Leang Khan had also stopped working for Uber and, saying drivers “cannot make a living” from the company.

“They are very upset and they are leaving the company. Uber is running out of drivers.”

The good thing is that the market will test if these claims are true.

If Uber does run out of drivers, then fewer people will use Uber, and Uber will make less money. If I have to wait too long for an Uber driver, I’ll grab a taxi instead.

No one has to work for Uber. They will only do so if it is worthwhile to do so. The entry costs to become an Uber driver are very low, which means so are the exit costs. That is different to taxis where you may have to pay tens of thousands of dollars to buy into a firm.

I’m not saying Uber got it right with their price drop. As a consumer obviously I like cheaper prices. But at the end of the day if drivers can’t earn enough, they won’t drive for Uber.

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