Algorithm charges riders more, pays drivers less

A.I.-driven pricing and pay is bad for drivers and customers

With the release of its December 2024 report on “algorithmic pay,” the Rideshare Drivers Association of Ontario makes three recommendations:

• An end to black-box pricing
• A return to “rate-card” pay with Toronto rates increased to match other Ontario cities
• A city-led right-sizing of the ride-hail fleet

Introduction to the Rideshare Drivers’ Association of Ontario December, 2024 report on algorithmic pay methods, referred to by Uber as “up front pay”

“A legal hourly minimum wage was established in Ontario in 1920 and “establishes a wage floor to prevent employers from taking unfair advantage of employees with little or no bargaining power.

Even employees performing piecework or commission-based work are entitled to receive a minimum wage for their labour; workers receive the higher performance pay earned or minimum wage per time spent.

With the rise of gig work, companies have begun avoiding these longstanding and hard-won labour standards, and ride-hailing services are at the forefront of the erosion of this right.

Companies like Uber have begun to erode these rights, going so far as to say that pay “varies according to the task, and that contractors are not guaranteed they will be paid the statutory hourly minimum wage for their region,” according to recent reporting by CIO.

In Ontario, Uber has successfully lobbied the Ford government to exclude gig workers from the Employment Standards Act, ensuring that this fast-growing segment of our labour force – many of whom are racialized, women and newcomers – are excluded from rights that most of us enjoy and paid only for “engaged time.”

In an earlier report, we illustrated – using company-provided figures and City of Toronto data – that the average Uber driver in Toronto earned $6.37 per hour, well below Ontario’s minimum wage. This wage, while way too low, was still based on “rate cards,” or pay on time and kilometres travelled. In other words, there was a wage floor, which, even though it was too low, was somewhat transparent, measurable and reproducible.

Since the introduction of AI pay and AI fares by Uber in October 2024, this wage floor has disappeared; it has become virtual, ever-moving, non-transparent, immeasurable and irreproducible. Introducing this proprietary black box into Canadian wage relations sets a dangerous precedent as it evades government accountability.

Since Uber introduced AI pay and fares in the US, research has shown that drivers’ wages declined even further, by nearly 20 percent, while fares increased above the inflation rate. In other words, Uber uses AI to squeeze workers and customers alike. In addition to that, research has shown that AI pay introduces a whole new level of algorithmic wage discrimination.

This report is the first in Canada to examine sample of drivers’ trip offers and compare these to what drivers would have been paid under the previously standard “rate card system” based on time and distance. As we will show, even in this preliminary sample we find evidence that drivers’ wages are declining under this new arrangement.  

Lastly, Uber’s changes are also an attempt to avoid accountability.

In Toronto, one of Uber’s largest markets in North America, the City has asked the company to provide trip data at regular intervals. Mayor Chow’s administration further directed staff to investigate drivers’ pay since poverty wages are not what builds an equitable city.

With the introduction of AI pay and fares, Uber effectively decouples what it pays drivers and charges customers from time and distance, making it impossible for regulators to establish oversight or device policies that could influence pay.  And because the City allows platforms to set fares and onboard new drivers at their discretion – a role the City previously played – established platforms can also easily undercut competitors trying to do better by drivers, as has been argued elsewhere.

This report details a very harmful and invasive change Uber has instituted as of October 8, 2024, makes a call to disband this form of wage discrimination and highlights the need for a dependable wage floor based on transparent, measurable and reproducible metrics.”