Czarina Grace Del Valle Culture 04.07.2021 23:Apr PM EDT

Stimulus Check for Uber Drivers: Ride-Hailing Company Pledges $250 Million for Incentives Amid Driver Shortage

Uber is planning to spend $250 million as "stimulus" payment to help bring back drivers to the ride-sharing platform.

The payment should accommodate existing drivers and provide support to first-timers. Uber is hoping that drivers could go back on the road now that the state is pulling back some of the restrictions as the vaccines are rolling out.

The ride-hailing service is one of the many companies that took a heavy hit from the pandemic's effects. With daily travels and activities being heavily restricted, their customer volumes plummeted. Passengers and drivers share fears of close-quarters contact and risk of infection with each other

Uber Driver Shortage and Rider Demand

The Verge reported that Uber's vice president for mobility in the US and Canada, Dennis Cinelli, has been dealing with this same problem since 2020. Drivers could not get enough trips to make it worth their time. However, things are looking up for 2020, where they are getting more rider request trips than drivers are available.

With the restrictions lifting in the city, major industries are reopening. This includes business travels, offices, leisure activities, restaurants, and other enterprises. Proper health protocols continue to be implemented, but people are finally returning to their daily routines. This could include a lot of commute and travel.

People are coming back to their city lives and an exclusive ride from Uber services provides them with a safe alternative. In the situation where both drivers and passengers observe health standards, a private ride reduces the risk of exposure from the general public. The demand for on-call ride-sharing services is coming back, and Uber needs more divers for their reopening.

$250 Million "Stimulus" for Drivers

Witht that said, Uber announced that they would be providing monetary support in the form of incentives to welcome back their drivers. Not only is the market demand going high, but with new cash incentives, it is indeed a great support to their drivers.

Cnbc reported that the company plans to roll these incentive payments over the course of the next few months. There are multiple opportunities to win these incentives. For example, drivers in Austin are guaranteed $1100 incentives if they complete 115 trips while drivers in Phoenix are guaranteed $1775 if they complete 200 trips.

The company foresees this as a temporary situation due to circumstances. They predict that as the recovery continues and more drivers hit the road, then the company could deliver earnings back to pre-COVID-19 levels.

This strategy is not exclusive to Uber. Financial Times reported that Lyft is also covering the cost of rental cars, offering up to $800 bonuses for the driver's return to service and adding extra cash incentives to trips lasting longer than 9 minutes.

Both Uber and Lyft hope that the incentives can persuade drivers to return to the rideshare platform. Uber in particular lost about $3.17 billion when the pandemic dropped 37.5% of their logging activities.

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