Uber Boss Makes Shocking Admission Over ‘Algorithmic Wage Discrimination’

He said the quiet part loud.

by Ben Wray

13 February 2024

Uber CEO Dara Khosrowshahi. REUTERS/Anushree Fadnavis
Uber CEO Dara Khosrowshahi. REUTERS/Anushree Fadnavis

Uber’s CEO admitted that the company changes its drivers’ pay based on their “behavioural patterns”, after years of denials of the controversial policy which has been called “algorithmic wage discrimination”.

The Silicon Valley gig economy giant has been accused for years of gathering data from drivers and using it to decide what it pays them. Academics and trade unions claim that the policy is used to reduce pay by stealth while undermining laws on equality at work.

The claim is key to rising dissatisfaction among Uber’s drivers and riders internationally over declining and unpredictable pay rates, with strikes set for the UK, Canada and the US this week.

Uber has always denied the claim.

However, in a conference call with top investors on 7 February, CEO Dara Khosrowshahi was asked specifically about Uber’s “upfront fares” policy, and responded: “I think what we can do better is targeting different trips to different drivers based on their preferences, or based on behavioural patterns that they are showing us.

“That is really the focus going forward: Offering the right trip, at the right price to the right driver.”

The admission came hours after the company announced its first-ever annual profit of $1.1 billion, after racking up over $30 billion in losses since 2014. Some analysts have linked the company’s financial turn-around to the introduction of the dynamic pricing policy, which has masked a sharp fall in average driver pay behind “personalised” pay rates.

News of the company’s profits came as it is locked in dispute with its workers. Food couriers including Uber Eats riders walked out in one of the largest strikes in the history of the UK food delivery sector on 2 February over what organisers described as “appalling working conditions”. A new strike date has been called for Valentine’s Day, with Uber drivers in Bristol announcing they would be joining the couriers in taking industrial action.

Dynamic pricing was first introduced by American Airlines to set prices for customers. Uber and other gig economy platforms’ have adapted it to their workers, who are paid upfront per task completed rather than per hour or per mile travelled.

Prices vary based on a set of algorithmically-determined data inputs which are unknown to the worker, including real-time supply and demand conditions, market competition and historical driver data, such as acceptance rates.

This lack of transparency gives Uber even more power over how much money it makes from drivers. Whereas drivers used to get a fixed rate of what the customer paid for a ride, typically 80%, now the upfront fare Uber offers has no relation to the customer price, giving Uber the power to decide the commission it takes on a trip-by-trip basis.

The result is that Uber’s drivers and Uber Eats food delivery couriers can never be sure of what pay they are going to be offered or why they have been offered it. Drivers on “The Rideshare Guy” Youtube channel have demonstrated that two drivers sitting side-by-side can be offered significantly different pay rates for the exact same trip.

Veena Dubal, law professor at the University of California and expert on the gig economy, was one of the first academics to study Uber’s dynamic pricing policy, describing it as “algorithmic wage discrimination”.

She found that it breached equality laws requiring equal pay for equal work, which was established in the UK in the 1970 Equal Pay Act. Uber rubbished Dubal’s research, arguing that her “central premise” is “simply wrong”.

In light of Khosrowshahi’s admission, Dubal told Novara Media that it was time for regulators to wake-up to the dangers of the company’s pay policy.

“The personalisation of fares – using data extracted from workers’ own labour – is a real life nightmare,” Dubal said.

“It is not just that the company offers too low wages, it is also that these wages are unpredictable, variable, and distributed in a way that is analogous to gambling.

“Perhaps even worse, these practices are spreading to other companies and sectors. I hope Uber’s admission to these practices will wake up regulators. This needs to be stopped now.”

James Farrar, a former Uber driver who took the company to the UK Supreme Court in 2021 and won, said dynamic pricing was the “inevitable, grim” endgame of “a decade-long evolution of the gig economy.”

Farrar, who is co-founder and director of Worker Info Exchange, a UK advocacy organisation for workers’ data rights, added that dynamic pricing was “the reduction of the dignity of the individual to an isolated market of one alone to be exploited.”

“The scary thing is that this will not stop with the gig economy platforms. It could destroy employment as we know it.”

Despite Uber launching in the UK 12 years ago, and reports that more than half of gig workers in the country earn below the minimum wage, neither the Tories or Labour have committed to reforms to improve job and pay security in the gig economy. Research by the TUC in 2021 found 14.7% of workers in England and Wales laboured on digital labour platforms at least once a week, a figure that had almost tripled in five years.

In 2021, Labour announced a single worker status pledge, a policy which would have ended the “limb (b)” third status between employees and self-employed which Uber currently uses for its drivers. The FT reported in August 2023 that Labour had scrapped the policy as part of a bid to “woo corporate leaders”.

Uber was revealed to be one of Labour’s “commercial partners” at a business conference in January. Previously, Novara Media reported how Deliveroo’s UK director used a sponsored Labour party conference event to claim that France gave ​​“the most progressive example” of gig economy regulation, even as the company was fined for abusing workers rights there.

Alex Marshall, President of the IWGB union, said Khosrowshahi’s comments should raise questions about why “this regressive use of technology to further exploit workers is often lauded as ‘innovative’ by both members of our government and our opposition.”

“Companies such as Uber and Deliveroo use technology to systematically drive down wages for riders, creating divisions amongst the workforce and trampling on the hard fought for minimum standards of work the trade union movement has won over the years,” Marshall, a former food delivery courier in London, added.

Uber did not respond to Novara Media’s request for a comment.

Ben Wray is a journalist and coordinator of the Gig Economy Project.

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