min read
May 29, 2014

Digital Disruptor Uber Gives Its Drivers a Lift Too

Digital Trends

As it turns out, Uber’s million weekly users are not the only ones getting a lift. The iconic digital disruptor to the transportation services announced this week that the median annual income for an UberX driver in New York City is $90,766, a salary over triple the estimated median income for a typical U.S. cab driver. Uber also reported a median income of $74,191 for UberX drivers in San Francisco.

Digital drives efficiency

Uber is already well regarded for its seamless, highly-personalized consumer experience, but the new income report is especially significant because it proves that Uber’s mission to disrupt traditional taxi services benefits its drivers as well as riders. By converting clumsy analog tools to digital, Uber has created a more efficient marketplace for drivers with greater revenue opportunities and lower operating costs. Connecting drivers directly to riders minimizes idle, unpaid time between jobs that drivers would otherwise spend looking for their next customer, and Uber reduces overhead costs by supplanting costly, fallible dispatch centers and relying on user reviews to vet and monitor its current workforce.

Traditional companies are losing the battle

In an interview yesterday with Recode’s Kara Swisher, outspoken Uber CEO Travis Kalanick labeled traditional taxis as the “asshole incumbent” candidate that Uber is battling in cities across America -- and from a driver's point of view, it’s hard to argue with that perspective. UberX drivers are allowed to use their own car to transport riders, eliminating the need to license a vehicle from a middleman taxi company for an exorbitant rate of around $3,500 a month. According to the San Francisco Cab Driver’s Association, over one third of Bay Area drivers have left a traditional cab service in the last year to join Uber or its competitors Lyft and Sidecar.

Digital disruption fuels revenue growth

Uber is likely hoping that releasing the grand income figures from New York and San Francisco will expedite this migration and attract the additional drivers needed to fuel the company’s rapid growth. Uber currently operates in 60 U.S. cities and impressively claims it can deliver a ride to 43% of Americans within 5 minutes, but will still need to significantly increase its workforce in order to expand further. This rapid expansion is good not only for passengers and drivers, but for the economy as well. An ECOnorthwest study commissioned by Uber claims the company creates 20,000 jobs every month and has a $2.4 billion annual impact on the U.S. economy. And with upcoming support from a rumored $500 million funding round, Uber will be well positioned to broaden its impact and roll out other services to its loyal, engaged user base (the company is currently piloting UberRUSH, a bicycle delivery service, in NYC).

Becoming the Uber of _____

The value Uber delivers to both consumers and employees elevates its digital disruption of a traditional industry from a flashyfad to a sustainable business model, and should be an example for companies in all industries. These companies should examine current tools, systems, and processes and complete a digital business caseidentifying where conversion to digital may introduce new revenue opportunities and reduce operating costs. Not only will creation of seamless digital experiences attract new users and increase retention, but companies will reduce overhead expenses and be able to pass these savings on to their employees.

Centric Digital