Uber has seen its fair share of controversies over the years, and they seem to have intensified recently. Ironically, the most contentious relationship the rideshare company has is with its employees.Well, not really its employees—its contractors. The fact that Uber classifies its drivers as such, allowing them to avoid providing proper benefits, has long been a sticking point. But a recent New York Times report shows that it’s not just what Uber isn’t doing – providing health insurance and other protections – that’s riling up drivers. It’s what they are doing.The Times reveals how Uber uses behavioral psychology techniques to tweak their drivers’ habits through in-app communications. The manipulation benefits the company but could have a detrimental impact on drivers.
Uber’s main point of contact with anyone – driver or rider – is their app. It’s no surprise that a lot of the techniques they use to manipulate drivers manifest through the app; it’s a portal to communicate with drivers, and also a way to track drivers’ usage and habits.Take, for example, the "forward dispatch" feature. It allows drivers to receive rides before they’re finished with their current fare. It’s like when Netflix automatically starts the next episode of a show – it literally takes more effort for you to stop it than to just let it happen, so you might as well go onto the next one, right? In Uber’s case, though, it became such an issue that the company had to implement a pause feature so that drivers could do little things, like take a bathroom break.Then there’s income targeting. How much Uber drivers make depends on how much they drive. Income targeting involves workers who set a specific income goal for themselves. "I’ll only drive until I reach $200." Uber accommodates these drivers by providing notifications. But they’ve also begun notifying drivers when they’re about to log out that they’re only $X away from an arbitrary number – not even a goal that the driver wanted to reach, but a higher-but-still-attainable increment to entice the driver to work that much longer.Besides dollar amounts, Uber also encouraged drivers to hit a certain ride goal. They noticed that drivers were more likely to keep driving once they hit 25 rides, so they gave friendly reminders when they were close to that goal, and provided a signing bonus at that threshold. They might lead drivers to a certain area with more riders, but that won’t necessarily translate to higher earnings.So far, the techniques used by Uber seem manipulative at worst and "helpful but not altruistic in very specific circumstances" at best. Take into account that male managers text drivers from a female persona to get a higher engagement rate, and the mind games just feel a little...dirty.Finally, Uber gamified their entire work platform. Gamification is tech lingo for turning tasks into a form of game or competition. Fitbit does this: you "level up" and get new rewards and bragging rights by walking a certain amount or completing events. Even video games are gamified; you can unlock achievements (that others can see) for doing things within a game beyond just beating a boss or level.Uber gamifies in the form of badges. Drivers, based on rider feedback, might get "excellent service" badges or "great conversationalist" badges. These don’t have any impact on their ability to work – there are no raises or tangible rewards for the number of badges earned – but it’s a way to encourage drivers. They’re always after the next thing: the next income threshold, the next rider, the next badge.That’s great for Uber. It’s not for drivers.
Uber has one goal with all of this: to keep drivers driving.That seems obvious. But a driver’s status as a freelance contractor is a double-edged sword for Uber in this case. The drivers lose out on some benefits, but they’re also harder for Uber to control. Salaried employees are told when to come into the office and where to work. Uber drivers work where and when they want, but Uber needs to make sure there are enough drivers to keep riders happy.Riders are well aware of what happens when there aren’t enough drivers to meet demand: surge pricing. That’s bad for people looking for a cheap trip home, but turns out it’s not great for Uber, either. They make more money on a lot of moderately-priced rides than a few high-priced rides; on the other hand, drivers make out well in terms of hourly wage during surge periods because of the higher fares.But the whole point of surge pricing is to entice more drivers so that supply meets demand and prices eventually normalize. Uber would rather just skip that whole song and dance and have drivers and rates be in equilibrium at all times. Since the drivers aren’t employers, Uber can’t set work hours; the mind games serve to get them to work in other ways.The techniques employed by Uber aim to make the drivers "internalize the company’s goals," video game designer Chelsea Howe tells the New York Times. They exploit two main human instincts: inertia and loss aversion.Inertia is controlled by the Netflix-style forward dispatch. Don’t give drivers a chance to think about the next ride, and they’re more likely to just roll into the next one. Staying "on the clock" is seamless and every way to exit has some friction, so drivers will keep working longer than they intended.The other main trigger is loss aversion. This is the idea that humans hate losing more than they like gaining. Messaging within the app goes a long way toward this: Tell drivers how much money they’re losing by not picking up fares, rather than how much money they’ll make by driving, they’ll be spurred to action. Show them they’re losing out on money by not reaching an arbitrary threshold, and they’ll want to make up that difference.If Uber wants more control over drivers, why not just make them employees rather than contractors? It seems like a lot of work to manipulate drivers when they could just hire them and dictate working conditions. But it all comes down to cost. The New York times notes that "relying on independent contractors rather than employees can lower direct costs by roughly 25 percent." Despite seemingly jumping through hoops to get drivers to do what they want, it’s still a more cost-effective employment method for Uber. And Uber needs all the financial corner-cutting they can get, considering the company lost $1.2 billion in the first half of 2016.
If this whole system feels stacked in favor of Uber, it is. And while Uber is in a spat of bad press, the fact that the manipulative techniques result in shorter wait times and lower fares for riders means that drivers probably won’t find themselves with allies any time soon.But just by being aware of how Uber operates, drivers can take back some measure of control. Seeing the man behind the curtain can be enlightening. If a driver knows that a prompt won’t lead them to higher fares or that the "goals" are arbitrary or that they really don’t need to keep driving, it puts the control back in their hands. They’ll still be somewhat at the whim of Uber’s practices, but they can avoid being duped.They can also look into other driving opportunities. This might not be the most fruitful endeavor, as Uber is the biggest bad apple but hardly the only one, and services like Lyft employ some of the same practices. But with Juno, Gett, and other providers popping up every day, drivers may be able to choose the lesser of all evils and feel comfortable with their working conditions. Many drivers work for multiple services, but it doesn’t mean they have to stick with all of them.The real solution might just be waiting for the gig economy to mature. Companies like Uber are taking advantage of drivers because it’s presented as a "disruptor" and a new way to work, so the old rules don’t apply. But as the industry grows up and more competition is introduced, norms will be put in place and we won’t be so easily fooled by the smokescreens that are employed.
Get essential money news & money moves with the Easy Money newsletter.
Free in your inbox each Friday.