Uber: Advantages and Disadvantages

Uber: An Overview

E-hail services like Uber allow you to hire a driver using a smartphone from almost any location at any time. Proprietary software locates drivers circling nearby and generally offers a selection of options, from the cheapest carpooling choice to luxury wheels. The price is set and paid in advance.

Uber’s famous “surge pricing” revises the cost of its rides from hour to hour based on local demand. As more calls are made, prices tick up, drawing more drivers out to score customers. As demand subsides, prices tick down.

Uber Advantages

Convenient and Cashless

Instead of chasing down a taxi on a street or calling and waiting for a car service, e-hail app users can hail a car from any location and have it arrive in minutes. Uber doesn’t even need to ask you for an address. It knows where you are.

Because the passenger’s credit card is linked to the e-hail account, no cash changes hands. At the destination, the driver stops the car, and the passenger gets out and walks away. A receipt is sent via email, with links to options for rating and tipping the driver.

Professional Service

Uber drivers use their own cars, and they seem incentivized to keep them clean and well-maintained. The cheapest options are late-model compacts, not older cars.

The riders input their destinations into the app, and the drivers use navigational software to get there. Wrong turns are unlikely.

The drivers are generally polite and well-spoken. They never refuse to take you to any particular destination. They don’t even know your destination before they accept your call.

Unprofessional drivers are weeded out because passengers get to rate the driver’s performance. A consistently low rating will force a driver out of Uber.

Competitive Pricing

It is impossible to come up with a definitive or average price for an Uber. Its pricing scheme varies with every city, and that surge pricing model changes the prices constantly based on demand.

That said, Uber is usually cheaper for longer trips where you’re moving at a quicker speed, while taxis are likely cheaper in congested cities like New York. That’s because taxis charge per mile when moving, but per minute when they’re idling. Uber charges per mile and minute, regardless of whether the car is moving or idling, with a few exceptions.

Keep in mind that the surge pricing model can mean much higher prices at busy times of the day.

But if you are heading to an airport, Uber is almost always a less expensive choice than a cab, especially for airports that are located farther outside a city.

Uber can be less expensive than a taxi or car service, but not consistently. One point in its favor, though, is that Uber tells you exactly what the prices will be for the options available at that time before you confirm the trip.

Safety and Flexibility for Drivers

Safety is an important advantage for drivers working with Uber and other e-hail services. The riders using the service have registered their identities and their credit card numbers on the app. They are not random strangers on the street.

Because the transaction is cashless, a driver doesn’t risk unpaid fares or need to carry cash for change.

Rude, aggressive, and disruptive passengers are weeded out because drivers rate their customers. Consistently low ratings or reports of unsafe behavior toward drivers can cause an account to be deactivated.

Unlike yellow cab taxi drivers who work 12-hour shifts or car drivers who are scheduled by dispatchers, Uber drivers enjoy considerable freedom and flexibility. Drivers log in and out of the system anytime they choose and pick their own hours.

Drivers avoid expensive taxi rental leases by using their own vehicles. They also pay their own fuel and maintenance costs. All else being equal, this may mean more profit for drivers.

Drivers are also spared any office politics because the app renders dispatchers irrelevant.

Uber Disadvantages

Controversial Labor Practices for Drivers

Uber has become a prime example of the gig economy at work. In most states, drivers are not guaranteed a minimum wage; they have to supply and maintain their own vehicles and have few, if any, benefits. Some Uber drivers say they struggle to earn even a minimum wage once Uber takes its cut. However, that has changed in many other cities and states where Uber operates.

In 2022, Washington passed the first statewide legislation that mandated minimum rideshare driver pay and benefits that include unemployment insurance and paid family and medical leave. And in November 2023, New York State Attorney General Letitia James announced settlements with Lyft and Uber for $328 million in back pay for drivers as well as new benefits, including sick pay, a minimum wage of $26 per hour, earnings statements, and more.

In 2024, Massachusetts set the minimum wage for ride-hailing drivers at $33.48, which is effective only when drivers are transporting someone or traveling to pick them up, not when they are idle. The wage is designed to compensate drivers for any downtime between rides. Minnesota also began requiring a minimum wage(per mile and per minute) for drivers in 2024.

Surge Pricing

“Surge pricing” for Uber is controversial among customers. It’s a classic use of the free market principle of raising or lowering prices according to supply and demand. For Uber customers, this means how many cars are available (supply) and how many passengers want to ride in them (demand).

Compared to a straightforward surcharge, this automated system can lead to quite dramatic differences in pricing between any two points. At super peak times, the price could double or triple. That can mean a hefty expense during rush hour or during a snowstorm.

Safety concerns have emerged in some cities and states where the transportation industry regulations are lax, and it’s easy to enter the e-hail network as a service provider. Although this has a positive effect by increasing the supply of drivers, these drivers might not be as motivated to reach high standards of professionalism and safety.

Negative Impact of Price Competition

Price competition can be destructive for any industry. Increasingly, Uber, Lyft, and other e-hail services are engaged in an intense battle to provide the cheapest service. They are directly competing with each other and traditional taxi and car services for both customers and drivers.

With competition from other ride-sharing services and the continuous hiring of new drivers, average earnings are being pushed downward. This means that drivers have to work longer hours to earn an income comparable to what they would have previously earned.

Increasing competition and lower wages have led to a precipitous drop in earnings for taxi drivers, too.

The Bottom Line

Operating in 15,000 cities worldwide, in more than 70 countries, and with 171 million monthly active users as of 2025, Uber is one of the most popular rideshare platforms in the world.

Uber offers riders the convenience of an easy-to-use app, safety, and reliable quality. For drivers, it provides flexibility and a range of perks, like immediate payouts, the right to keep 100% of tips, and simple driver requirements.

However, stiff competition in the sector, effects of replacing steady jobs with gig work, and the unpredictable prices and regulatory environment pose challenges that Uber continues to face.