A day before Uber’s hotly anticipated IPO on Thursday, slated to be one of the biggest in history, drivers for the ride-hailing company and for rival Lyft plan to strike over their working conditions and wages.
Drivers in eight U.S. cities plan a work stoppage Wednesday, Uber’s last day as a privately held company, according to the New York City Taxi Workers Alliance. Drivers also plan to rally in New York and Los Angeles.
The protests come as ride-hailing firms face increasing scrutiny over the sustainability of their businesses, which suffer massive losses while relying on the work of millions of drivers who are not employees.
“Wall Street investors are telling Uber and Lyft to cut down on driver income, stop incentives, and go faster to Driverless Cars,” said NYTWA Executive Director Bhairavi Desai in a news release. “With the IPO, Uber’s corporate owners are set to make billions, all while drivers are left in poverty and go bankrupt.”
The drivers union is calling for better job security, a livable income and a cap on the ride-hailing companies’ commission, to guarantee drivers receive 80% to 85% of a fare.
Drivers in San Francisco, Boston, Chicago, Minneapolis, Philadelphia and the District of Columbia are among those participating in the work stoppage.
Uber is expected to raise roughly $9 billion in its IPO Thursday, the latest in highly valued tech companies hitting the public market. Lyft, which IPOed in late March, surged during its first day of trading, but plummeted soon after. It is trading at $62 or about 13 percent below its initial $72 price.
In the aftermath of Lyft’s disappointing debut, analysts said several tech companies had recalibrated their IPO strategy, opting for a more conservative price to build momentum and sustain investor demand. Uber, which was once estimated to debut at well over $100 billion, is expected to set an IPO range of $44 to $50, capping its highest valuation at $91.5 billion.
Uber helped pioneer the ride-hailing economy, but the company loses a staggering amount of money (an estimated $1 billion in the first quarter of 2019), even as it relies on a vast network of drivers who are paid as little as 60 cents a mile. Investors are banking on those drivers eventually being replaced with autonomous vehicles, but experts have questioned the viability of the business model since such technology is possibly a decade away.
Uber and Lyft say that if they convert their fleets to self-driving, they could cut the cost of their rides by three-quarters, allowing them to turn a profit. But in the meantime, the driver protests highlight the industry’s existing challenge in fairly compensating its workforce.
“We do see added risk from Uber aiming to take greater share of the fare from drivers and expect that the more Uber pushes here, the more drivers will fight back and protest, increasing the likelihood of regulations (particularly at the state level in the U.S. and in Europe) of minimum wage guarantees,” said Daniel Ives, an analyst at Wedbush Securities.
Uber and Lyft did not immediately respond to a request for comment.