{"id":42785,"date":"2026-07-10T07:15:00","date_gmt":"2026-07-10T14:15:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=42785"},"modified":"2026-07-10T08:36:30","modified_gmt":"2026-07-10T15:36:30","slug":"surge-pricing-is-broken-but-theres-a-smarter-way-to-match-gig-workers-with-consumers","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/surge-pricing-is-broken-but-theres-a-smarter-way-to-match-gig-workers-with-consumers\/","title":{"rendered":"Surge pricing is broken \u2013 but there\u2019s a smarter way to match gig workers with consumers"},"content":{"rendered":"\n

Christopher S. Tang<\/a>, University of California, Los Angeles<\/a><\/em>; David Dobrzykowski<\/a>, Auburn University<\/a><\/em>, and Nicolo Masorgo<\/a>, Miami University<\/a><\/em><\/p>\n\n\n\n

Millions of Americans tap their smartphone screens daily to order rides<\/a>, groceries or dinner<\/a>, hooked on the seamless convenience of the gig economy.<\/p>\n\n\n\n

Yet beneath this frictionless interface lies a brewing war.<\/p>\n\n\n\n

On one side, consumers are squeezed<\/a> by volatile and erratic surge pricing, which adjusts to reflect spiking demand or dropping supply. On the other, gig workers face manipulative algorithmic payouts, erratic schedules and the skyrocketing costs<\/a> of keeping their cars on the road.<\/p>\n\n\n\n

For years, gig-economy executives have wielded the blunt instrument of surge pricing<\/a> to manage their workforce. It treats human labor as a frictionless commodity. The logic is simple: If the number of drivers drops, throw more cash into the pool<\/a>, and supply will correct itself.<\/p>\n\n\n\n

But there\u2019s a huge catch. This strategy has created severe market friction, leaving consumers frustrated by high prices and platforms struggling with widespread driver shortages<\/a>. Compounding the issue, fresh research<\/a> shows that drivers don\u2019t actually benefit from surge pricing and are increasingly demanding compensation reforms.<\/p>\n\n\n\n

A case in point is Massachusetts, where that frustration led to the launch of the first U.S. gig-worker union<\/a> in May 2026. It followed a 2024 settlement<\/a> between the state and rideshare platforms that guaranteed a minimum wage of $34.48 an hour for Lyft and Uber drivers.<\/p>\n\n\n\n

As business professors<\/a> who study consumer psychology<\/a> and supply chains<\/a>, we analyzed<\/a> 2 million delivery tasks, completed by over 70,000 drivers for a Fortune 500 retailer from February through April 2022, to unpack this problem. We discovered that gig workers aren\u2019t just driven by money. They\u2019re sophisticated micro-entrepreneurs who perform a strict \u201cmental audit\u201d of every single task to see if it\u2019s worth their time \u2013 before hitting the \u201caccept\u201d button.<\/p>\n\n\n\n

By understanding these hidden frictions among drivers, platforms can stop overcharging consumers and start designing work that aligns with the drivers\u2019 preferences and makes their jobs more satisfying<\/a>.<\/p>\n\n\n\n

The three dimensions of friction<\/h2>\n\n\n\n

Domingo, an Uber driver who declined to give his last name, captured these systemic frictions<\/a> in a 2023 CBS interview.<\/p>\n\n\n\n

\u201cIt feels like the algorithm is turned against you,\u201d he said. He recalled a night when he had completed 95 of the 96 trips required for a $100 bonus, only to be left waiting 45 minutes in a busy area for his final ride. That led him to believe the platform was intentionally baiting him to stay online.<\/p>\n\n\n\n

This example underscores why it\u2019s so important to consider the driver\u2019s perspective to understand why traditional cash incentives in surge pricing fail.<\/p>\n\n\n\n

With inflation squeezing their margins<\/a> and rideshare platforms demanding a large share<\/a> of their earnings, a driver\u2019s split-second decision to accept a fare is a high-stakes calculation of business survival.<\/p>\n\n\n\n

It\u2019s not just the money<\/h2>\n\n\n\n

In effect, drivers consider more than the top-line dollar figure, we discovered. Instead, they evaluate three distinct factors<\/a>.<\/p>\n\n\n\n

First is what we call the \u201cefficiency paradox.\u201d Drivers are acutely aware of their pay-per-mile ratio, so they treat their personal vehicles like small corporate fleets where every mile is a capital expenditure. By that logic, if a route is long and inefficient, platforms should simply raise drivers\u2019 pay and pass on the fare hike to the passenger.<\/p>\n\n\n\n

But it turns out that higher pay alone doesn\u2019t guarantee that a long, isolated route is worth it for the driver. We found that when compensation rises from $7 to $45 per ride, drivers were only 50% more inclined to accept \u201cinefficient\u201d tasks, such as long distances with few drop-offs. By contrast, their acceptance rate of \u201cefficient\u201d tasks, covering short distances with dense clusters, shot up by 70%.<\/p>\n\n\n\n

Why did drivers prefer high-density volume over raw mileage premiums? Because they clear more customers and gain higher earnings, which feels like a win for their microbusiness. To acknowledge this calculation, platforms should group rides and deliveries into tight, localized clusters instead of heavily subsidizing long, isolated routes, in recognition that drivers prioritize route efficiency.<\/p>\n\n\n\n

The second factor is what we call the \u201cuncertainty tax.\u201d Beyond the odometer, rideshare drivers price in behavioral and operational uncertainty. This friction is most visible during complex pickups, such as chaotic airport terminals or massive sports stadiums, where they often have to circle around and around before finding their customer.<\/p>\n\n\n\n

To drivers, this kind of pickup is a volatile risk that drains time and burns fuel, another hidden tax.<\/p>\n\n\n\n

Surge pricing tries to incentivize drivers to accept a high-friction pickup. But there\u2019s a better way: Platforms could let passengers opt into \u201clow-friction hubs,\u201d like walking one block away to an easy pull-off zone, in exchange for a lower price. This reduces the cost of uncertainty for rider and driver alike.<\/p>\n\n\n\n

And last, there\u2019s the \u201csunset threshold.\u201d The final and most rigid factor is the personal and physical cost of being on the road after dark. Despite the pressure to make money, gig drivers heavily value their safety and personal life above the extra dollar earned.<\/p>\n\n\n\n

Our research confirms that the desirability of a delivery task drops off sharply at sunset, regardless of the base pay. Fatigue and safety concerns create an operational drag that money alone has a notoriously hard time overcoming. To address the reluctance, platforms could shift nonurgent evening orders \u2013 say, for groceries \u2013 to the following morning. This approach mitigates the need to offer costly incentives to exhausted drivers working past sunset.<\/p>\n\n\n\n

\"Rideshare
Rideshare drivers successfully organized their first-ever union in Massachusetts in 2026, establishing a minimum wage of $34.48 an hour. AP Photo\/Leah Willingham<\/a><\/figcaption><\/figure>\n\n\n\n

What about consumers?<\/h2>\n\n\n\n

Because algorithmic platforms pass the cost of driver friction directly to the user, consumers hate surge pricing<\/a>. When you encounter a massive upcharge, the algorithm isn\u2019t just telling you that there are too few drivers. It\u2019s telling you that your specific order represents high friction for the available fleet.<\/p>\n\n\n\n

But consumers can take steps on their own to restructure their orders and minimize the driver\u2019s \u201cmental audit\u201d penalty.<\/p>\n\n\n\n

One way is to avoid the uncertainty caused by unattended delivery. With measures like selecting the \u201cleave at my door\u201d option or providing clear gate codes, the consumer can reduce the \u201cuncertainty tax\u201d imposed on drivers. When algorithms see these frictions falling away, the need for a driver premium plummets, deflating the surge price.<\/p>\n\n\n\n

Another way is to rethink timing and scheduling, essentially what platforms could do on their side. In particular, consumers should avoid peak sunset and dinner rushes for nonperishable goods.<\/p>\n\n\n\n

Ordering items for a flexible morning delivery window, for example, makes the most of \u201csmart postponement.\u201d Algorithms can hold nonurgent items for the next morning, when more drivers are available and ready to take orders, for a lower price. The evening \u201cinconvenience premium\u201d disappears.<\/p>\n\n\n\n

Finally, consumers should be smart about order bundling. Instead of placing three separate orders throughout the week from different local spots, for example, they can consolidate purchases into a single drop. This directly aligns with the driver\u2019s desire for high-density, low-mileage clusters, effectively neutralizing the \u201cefficiency paradox.\u201d<\/p>\n\n\n\n

A win-win outcome<\/h2>\n\n\n\n

Ultimately, our research shows that gig workers and consumers alike can create a win-win outcome by shifting their approaches.<\/p>\n\n\n\n

Consumers can save money by reducing uncertainty, bundling and pooling orders strategically and timing them to avoid the sunset penalty. And drivers can gain more control over the algorithm and their earnings \u2013 prioritizing density over distance, holding out for higher baseline premiums on complex deliveries and aligning their schedules with daylight hours when safety risks and physical fatigue are lowest.<\/p>\n\n\n\n

Just as important, drivers are taking matters into their own hands at the political level. Along with the successful unionizing push in Massachusetts, rideshare drivers secured the right to organize in California<\/a> in 2025, and Illinois is considering<\/a> similar legislation.<\/p>\n\n\n\n

Christopher S. Tang<\/a>, Professor of Supply Chain Management, University of California, Los Angeles<\/a><\/em>; David Dobrzykowski<\/a>, Bickerstaff Chair, Professor of Supply Chain Management, Auburn University<\/a><\/em>, and Nicolo Masorgo<\/a>, Assistant Professor of Management, Miami University<\/a><\/em><\/p>\n\n\n\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Christopher S. Tang, University of California, Los Angeles; David Dobrzykowski, Auburn University, and Nicolo Masorgo, Miami University Millions of Americans tap their smartphone screens daily to order rides, groceries or dinner, hooked on the seamless convenience of the gig economy. Yet beneath this frictionless interface lies a brewing war. On one side, consumers are squeezed […]<\/p>\n","protected":false},"author":56,"featured_media":42786,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5,277,291,10,25,36,27,15533,8,9],"tags":[361,356,2993,1651,885,891,886,860,579,510,17917,15369,4744,506,646],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/42785"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/56"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=42785"}],"version-history":[{"count":1,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/42785\/revisions"}],"predecessor-version":[{"id":42787,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/42785\/revisions\/42787"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/42786"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=42785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=42785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=42785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}