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Lower rates after UBER Ipo. Read part of the document.

One of the biggest pressures is Uber’s relationships with its drivers, who went on strike worldwide Wednesday to protest the company’s business model ahead of its IPO. The drivers argue that Uber’s business model enriches company executives at the expense of its low-paid drivers, who are contractors, and not full-time employees with benefits (this issue is at the heart of several lawsuits that seek to get drivers classified as employees). Uber offers incentives to drivers to join, hurting its bottom line even further, and rider discounts. In the company’s S1, it said it increased driver incentives and promotions in the first quarter to maintain its competitive market position, and noted that it expects its driver relations to get worse.
“As we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase,” the company said. It also noted that as it continues to invest in self-driving cars, “it may add to driver dissatisfaction over time, as it may reduce the need for drivers.”
“Getting profitable by squeezing down costs is going to create even further problems, with the high turnover rate with drivers and challenge the new drivers so they can expand,” said Larry Mishel, distinguished fellow at the Economic Policy Institute in Washington. “There are huge contradictions at the heart of their business model.” Last year, Mishel worked on a study of Uber drivers and concluded that their W-2 equivalent hourly wage is less than what 90% of U.S. workers earn. “Our results indicate that Uber drivers earn low wages and compensation and the total hours and compensation in the gig economy represent a very small share of total hours and compensation in the overall economy,” Mishel’s study said.
 
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