Lyft said that ride demand outstripped driver supply in the first quarter, as travel rebounds.
The company said that the number of drivers was down, which pushed both fares and wages up.
But Lyft's president said the company expects driver supply to recover "in the coming months."
Lyft cofounder John Zimmer said earnings for its drivers are soaring as the ride-hailing app struggles to find enough drivers to meet the high demand for rides.
But while drivers are making more money than before, the supply shortage has led to higher fares for customers, Lyft's executives said during at its first-quarter earnings call Tuesday.
Demand for ride-hailing apps, including Lyft and Uber, plummeted during 2020 as people stayed at home during the pandemic. But demand is now "improving rapidly" as the US economy reopens, Zimmer, who serves as Lyft's president, said.
Wedbush analyst Dan Ives said that he expects Lyft to see a "roaring 20s-like" rebound into the second half of 2021 as both business and leisure travel rise.
But the number of available drivers is down. Insider's Tom Dotan reported that more than half of Uber and Lyft drivers stopped driving during the pandemic, and that number has far from recovered.
During the earnings call, Lyft's executives didn't expand on the driver shortage, but some drivers told Insider's Tyler Sonnemaker that they were holding out for higher pay and better working conditions.
And because demand outstripped supply, Lyft said it hiked up prices for its ridesharing. Zimmer said that this was an industry-wide trend, meaning that it didn't deter many customers from using Lyft. He added that this trend would likely continue in the second quarter.
Lyft's executives said that these higher fares, in turn, led to higher wages for its drivers.
Zimmer said that in many markets, average hourly driver earnings have been up "meaningfully" compared to pre-pandemic levels, and in some markets have reached "all-time highs."
He said that drivers in Lyft's top 25 markets were earning more than $30 per hour on average in April, which he said is up more than 85% compared to pre-pandemic levels.
Lyft expects its driver supply to rebound
Zimmer said that the company expected to see driver supply recover "in the coming months."
"As pandemic conditions continue to improve and health safety concern abate, we see more drivers feeling more comfortable getting back behind the wheel," he said. "As the vaccine rollout continues, driver availability should naturally improve."
He said the company is also bumping up driver incentives, such as enhancing its app so that drivers can find more opportunities to maximize their earnings.
Zimmer also said the company expected people in other forms of app-based driving work to transition to rideshare driving.
He said that rideshare work generally brings in higher earnings than food delivery, and has better opportunities for social interaction, which he said drivers are "craving" after a year of social distancing. He added that demand for food delivery might slow down as the economy reopens, leading to some drivers moving back to ridesharing.
Logan Green, Lyft's CEO, also said that the end of federal unemployment benefits in the third quarter could lead to more drivers for the app.
Other industries have also been hit by huge labor shortages in early 2021. Restaurant chains like Subway and Dunkin' are cutting hours, closing dining rooms, and pushing employees to work harder than ever to cope with the lack of available workers.
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