Uber and Lyft are reportedly now struggling to recruit enough drivers to keep up with the growing demand for their ride-hailing services.
The surge in demand comes as more people get vaccinated and some states in the U.S. being to relax their pandemic-induced movement restrictions.
Last year, the two ride-hailing companies had to reduce the size of their businesses as demand for their services plummeted due to the pandemic. In May, demand for their services dropped by more than 80%.
Analysts said that most drivers who worked for the company before the pandemic are reluctant to return as the risk of getting infected has not yet completely gone away. A lot of people that worked as Uber and Lyft drivers before 2020 have likely also moved on to other jobs, analysts said.
On Thursday, Uber announced plans to provide additional incentives to drivers. The company said it plans to invest up to $250 million in new driver's incentive programs.
Rebuilding their pool of drivers will be difficult as it takes a lot of time and effort, analysts said. Uber said it is planning to pay drivers more to entice people to come back. In some cities, drivers can make an average of around $31 per hour. Some of the best-paying cities in the country include Philadelphia, Chicago, Phoenix, and Miami.
The shortage has caused some inconvenience to customers, who now have to wait longer to get a ride. One customer in Boston said it now "takes forever to get an Uber." Another customer said he has had to wait an average of 15 to 16 minutes to get a ride.
Apart from driver shortages, ride-hailing companies are also facing specific challenges in some states. In Boston, the government has prohibited the companies from using its so-called price surge system. Uber said the system helps to balance supply and demand, which incentives drivers by allowing them to earn more during peak hours.
In California, Uber is facing legal issues as it continues to convince the courts that its drivers are independent contractors rather than employees.
The company even implemented a new feature that allows drivers to set their own prices. Uber is reportedly considering removing that features after some drivers were found to be cherry-picking bookings.