7 ms·

Driving for Uber and Lyft

205 points by sus_007 9y ago

erikb 9y ago
TL;DR: What everybody expects: You basically don't make money if you really calculate the whole cost package. I honestly believe that it must be lower than $5/hour so I'd say even MMM might've forgotten something.
- SilasX 9y ago
  Yeah, there's a quote in the article that I liked, which made the point: "Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like?" (i.e. Uber) With that said, considering how much of the fares they take, and how low their cost of booking is, it seems they could make it work by charging a bit more and taking less of a cut.
- ams6110 9y ago
  Well it's before tax as far as I could tell, unless Uber withholds. Granted you can probably deduct the IRS standard per-mile expense allowance.
  - URSpider94 9y ago
    Uber drivers are contractors, so they’re not going to withhold, but they will issue you a 1099 for the full amount they pay you. It will be up to you to deduct work expenses, either actuals (repairs, depreciation, registration, etc), or per-mile, but not both. You’ll end up paying income tax on something like the $5 per hour net income.
- jaggederest 9y ago
  I think he's actually wrong. It's definitely higher than marginal $5/hour, it's just not $5 net profit per hour. You take into account the fixed costs of owning and maintenance on the vehicle (which don't entirely vary directly with mileage driven) and it becomes a smart economic choice to drive Uber even if you're "losing money" each hour - because your marginal gross profit is higher than if you were sitting on the couch.
  - kunimu 9y ago
    You don't need marginalism to explain that making some money doing Uber given fixed costs for your car is better than making no money at all and incurring same or similar costs.
  - hyper_reality 9y ago
    I think you're right, and the article's claim that the drivers' ignorance is being taken advantage of is an unpleasant thing to say. It assumes that the drivers are financially naive, when in fact there are many legitimate reasons why they choose to drive. Many of them are supplementing their income in between other gigs, or enjoy driving more than other jobs available to them. Others have done well out of the referral, bonus schemes and tips that the author mentions. There are various other factors and incentives which the author does not seem to have taken into account. Much as I dislike the corporate practices of Uber, implying that the drivers are miscalculating the cost of driving and are therefore ignorant is a smug overgeneralisation.
    - astura 9y ago
      That's Mister Money Mustache's writing style. I don't care too much for him myself either but he writes for his audience.
      - prawn 9y ago
        I liked when he talked about being a retiree, but also about being able to work like an executive from the back of a car to the airport.
        astura 9y ago
        http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/ http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-...
  - redler 9y ago
    Not to mention, you can't pay your rent with saved future dollars.
chubot 9y ago
This is interesting. So why are there so many Uber/Lyft drivers? Is it because there is a glut of unused cars in America and they provide a way to monetize it? That is, if you aren't actually paying for the car's costs, then it IS your profit.
- toomuchtodo 9y ago
  Not a glut of unused cars, a huge deficit in good, stable jobs. That’s what enables the gig economy to exist.
- astura 9y ago
  Because 1) People don't understand the true costs of ownership and driving and think they are yielding the entire cost of the fair. Or 2) They enjoy driving, getting paid for it is a bonus. Or 3) They don't/can't have "regular employment" for whatever reason and want to make some money in their spare time, even if it's just a little. Like some in college who only works during breaks or weeks when the courseload is smaller. Or 4) Someone who is employed but only drives when they are bored on the weekends rather than watching Netflix or going to the pub. Of course #3 becomes self perpetuating at scale. For #1 - story time: I had already decided I was going to buy a new car, which car I would buy, and that I was going to finance it. I was trying to squeeze another year out of my current car first tho. My sister was absolutely baffled by this and couldn't understand that this would save me money. No matter how much I tried to explain it she didn't "get" it. From TFA: >"Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like?“ (the answer is of course that it would look like very much like Uber or any other ridesharing company)
  - chubot 9y ago
    But my question is how people live in the Bay Area on $5 an hour. Where is the difference coming from? Debt, parents, unused car etc.?
    - nikanj 9y ago
deleted 9y ago
[deleted]
habosa 9y ago
So in a way driving Uber is like taking a loan from your future self. You have a car and need money. Uber gives you good gross pay. 5 years down the road when you have to sell or repair your car, that's when you have to pay up for all the wear and tear. It's really a shame to see who gets rich off this. As a rider, these services are incredibly convenient. But I wish I wasn't basically relying on unpaid labor.
- corporateguy5 9y ago
  It's their to decision to drive Uber. It's not a shame, it's an economic decision people are making. The drivers are not victimized by Uber
- deleted 9y ago
  [deleted]
- Retric 9y ago
  Something I don't think people really think about in the Uber equation. Driving also has a massively higher risk of dying than sitting on the couch, so it's part loan part Russian roulette. It's not just traffic, Taxi drivers have double the risk of being murdered as cops, without any of the benefits. http://www.syracuse.com/opinion/index.ssf/2015/01/by_the_numbers_job_with_the_number_1_murder_rate_taxi_drivers.html http://www.syracuse.com/opinion/index.ssf/2015/01/by_the_num...
  - irl_zebra 9y ago
    And there's the psychological stress of sitting in traffic. My mental status takes a huge nosedive when I have a job where I have to commute by car.
    - LoSboccacc 9y ago
      I think that feeling can probably be split by the fear of being late, fear of being in a bender fender and the general unpleasantness of navigating traffic - so as a professional driver you don't care about lateness and can take a small insurance to reduce the mental stress of being in a fender bender. won't solve everything, but maybe it can bring the stress down enough to be manageable as a career.
ewjordan 9y ago
$0.50 of vehicle costs per mile does not compute. If you're spending $30 a day on gas and driving 250 miles, you can just rent a car for the week at a daily rate of $30 or less, and come out with $60/day in costs rather than his stated $125, which makes the whole thing quite a bit more profitable. Probably profitable enough that my poor as shit unskilled and unemployed college self would have been better off doing that than tutoring during the summers. Am I missing something?
- tspike 9y ago
  Commercial use is almost certainly prohibited in your rental car contract. Also, Uber requires a vehicle inspection before driving.
- baddox 9y ago
  It’s probably against the terms of the rental agreement to do any commercial driving.
- astura 9y ago
  ~$.50 a mile isn't a made up number, it's what the federal government has calculated as the cost of driving for business purposes. Actual value is 53.5 cents a mile. https://www.irs.gov/newsroom/2017-standard-mileage-rates-for-business-and-medical-and-moving-announced https://www.irs.gov/newsroom/2017-standard-mileage-rates-for... Students are usually under 25 thus largely are unallowed to rent cars. I doubt using a rental car for this type of business is allowed under the terms of a rental contract or under Uber's rules. Insurance isn't free.
  - ewjordan 9y ago
    Ah, fair enough - I was just wondering because I've known Uber drivers that do exactly this, and have given me advice on where to find cheaper rental cars.
    - dsp1234 9y ago
      All consumer rental car contracts in the US include a provision that disallows the usage of the vehicle for commercial purposes. Additionally, most personal vehicle insurance prohibits the use of the insurance for commercial ride sharing activities without a special waiver. So as soon as that first fare is picked up (if not sooner), then the renter is in breach of contract. Any insurance from the rental agency is now void, and without special personal insurance waivers, the driver is now driving uninsured. That is both illegal, and all liability will now be 100% on the driver. So if someone is going to do that, then they need to calculate in the risk of an accident/arrest and all of the full liability that goes with that.
rm999 9y ago
This article rests on the premise that operating a car costs a fixed 50 cents a mile. But several uber drivers have told me the economics work out pretty well for them because they already need their cars, so IMO using 50 cents a mile is an unfair assumption. Looking at the operating cost of a car is complicated with many variables, but the standard 50 cent estimate is NOT a marginal cost, i.e. you don't actually spend an extra 50 cents to drive a mile. The annual AAA driving costs brochure puts the per mile cost (gas + maintenance) at 14 cents a mile for a small sedan, and 17 cents for a big sedan, plus ~3 cents a mile for depreciation (see "decreased depreciation"). Moving from 50 cents to 20 cents a mile brings his estimate pay from 7 dollars an hour to 12.40. Brochure link: http://exchange.aaa.com/wp-content/uploads/2017/08/17-0013_Your-Driving-Costs-Brochure-2017-FNL-CX-1.pdf http://exchange.aaa.com/wp-content/uploads/2017/08/17-0013_Y... edit: to be clear this math is if you already own a car and are driving on off-times for additional income, which (in my experience) is what a large % of uber/lyft drivers do. It's also what Mr. Mustache was doing in his test.
- jfoutz 9y ago
  in that brochure, average total cost per mile is $0.5646 @15k miles per year. I think you're looking at the operating cost per mile, that doesn't include stuff like insurance, registration, and financing. page 9, look in the middle of the green section for the cost per mile - page 8 has the row name you're looking for.
  - rm999 9y ago
    My point is the fixed costs (the ones you list) don't significantly change if you already have a car and decide to become an Uber driver. Mr Mustache didn't pay 18 dollars to drive those 36 miles, he was already going to pay for his insurance and registration.
    - alexasmyths 9y ago
      Most of the costs are not fixed, i.e. wear and tear, gas etc..
jimmywanger 9y ago
I think one of the reasons that he writes this is that cash in the hand is extremely appealing if you are not in a good economic situation. For instance, I have some savings, so I can keep the wolf from the door, and I have friends and family so I always have a place to stay and at least something to eat. I won't freeze or I won't starve. Cash on the barrel every night is extraordinarily appealing to those who have to buy antibiotics for their kids right away, or who have to make the rent that day. I've never driven Uber, but I am given to believe that they settle up debts every day. Just like why waiters/bartenders like doing what they do. They get a fistfull of cash every day.
- ec109685 9y ago
  Yeah, they offer instant cash out: https://www.uber.com/info/instant-pay/ https://www.uber.com/info/instant-pay/ Your post was a good one, highlighting the problems the “unbanked” / “uncredited” face that something like Uber is an antitode for.
enraged_camel 9y ago
There are two major problems with the sharing economy that most people don't mention when they write articles about it. First, the overwhelming majority of gigs don't teach you any marketable skills whatsoever. So over the course of your contracting, you may as well be unemployed. This hurts most people's chances of finding gainful employment, and ends up being a massive hidden cost above and beyond car maintenance and similar expenses directly related to running the gigs. Second, because you make so little, you also save very little, if any, for retirement. Since saving for retirement is all about compound interest, people who run gigs while young instead of looking for full-time employment are in for lots of pain and discomfort later in life. In fact I suspect we're witnessing the creation of yet another underclass, consisting of people who will probably have to work until they die. Lots of Baby Boomers (who were unfortunate and/or made poor choices earlier in life) are already in this situation and it will only get worse. As an aside, one thing I don't get about the gig economy is how the workers can afford health insurance. I assume most don't have any, or they are on their parents or spouses' plans because even the cheapest plans are really expensive and I doubt your average Uber driver can afford them.
- antisthenes 9y ago
  1. They're young so they go without or buy the cheapest possible one. 2. On their parents' plan 3. Don't make enough and get huge subsidies from the marketplace. Retirement and lack of any marketable skills is the bigger issue, however.
jimmywanger 9y ago
One more thing. Uber is pouring huge amounts of money into this business. And it's not profitable. I shudder to think what will happen when all the subsidies are removed. If you don't have any assets besides a clean driver's license and a recent car, you got nothing coming.
- ghaff 9y ago
  I'm not sure they can realistically cut what the drivers are earning by much. What seems more likely is that fares rise to $2-3 per mile (or whatever number), which puts them more in line with traditional cabs, and let ridership fall where it may.
  - jimmywanger 9y ago
    Maybe that matters psychologically, but not in bottom lines. Drivers might be fooled for a bit, but once the fares rise, I'll be willing to bet the driver network collapses. They're not that stupid. If slinging burgers is more lucrative than driving Uber, they'll be slinging burgers.
    - ghaff 9y ago
      That's fair. Less work for no more money on a per-ride basis. The driver network will certainly decrease. Not clear what the overall dynamics look like. I do think that prices need to get to breakeven in the fairly near future and self-driving isn't going to make a difference in an interesting time horizon.
alexasmyths 9y ago
“Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like? “ This has always been my #1 complaint about Uber. Their business model is like payday loans. It's not that 'it . can only work' like this - but given human nature and competitiveness - 'it will effectively work' like this. Too many drivers will forgo the 'wear and tear' calculation and drive the price down. It has an effect much like migrant labour (nothing to do with the 'migrant' aspect per sey - just that they are paid under minimum wage) - once a few farms start doing it - the rest of the farms are forced to follow suit or go out of business. It's just bad for everyone. I wish there were a way to make sure that drivers were comped a min gas + wear and tear + servicing and THEN wages - and if that was not above min. wage then Uber would have to up the comp.
- ec109685 9y ago
  Driving full time for Uber costs $214 a week in maintenance and depreciation costs (minus Hertz’ profit): https://www.hertz.com/rentacar/misc/index.jsp?targetPage=UberFAQs.jsp https://www.hertz.com/rentacar/misc/index.jsp?targetPage=Ube... That is way less than the 50 cents a mile that the author cited. Agree Uber could calculate that and provide that info to drivers, which would be useful.
  - alexasmyths 9y ago
    Surely it's below 50 cents a mile ... but it's 'something' an whatever it is, I suggest that drivers will delay the costs.
chx 9y ago
Interesting. So they are not only hurting the entire society by weakening the rule of law (google "greyball") but their drivers as well. Wonderful company.
paulpauper 9y ago
the author makes the implicit assumption that someone can find a better way to make money and that driving for uber comes with a large opportunity cost, but that is not always the case. $5/hour driving pays more than an hour watching TV ding nothing.
- deleted 9y ago
  [deleted]
beisner 9y ago
I've used Uber and Lyft a lot in the last ~4 years, and I've realized that there are essentially two different types of drivers: professional, full-time drivers who hyperoptimize, and part-time/after-hours drivers that do it to pull in a little bit of extra cash. The hypothetical driver best represented by this article is of the second type, and no doubt that working this way doesn't really make you a good hourly wage, especially after the hidden costs mentioned. I'd like to see an analysis of profitability for drivers in the first category. I have met drivers who specifically bought Priuses to drive for Uber/Lyft because of the 50+ mpg and low-ish maintenance costs - just look at the ride-sharing section of the SEA-TAC parking garage and you'll know what I mean. Speaking with this sort of driver, they seem to have done the math on maximizing return based on surge pricing (i.e. driving in the city Friday/Saturday 7pm-2am), practice driving that maintain vehicle quality and fuel efficiency, and are extremely time-efficient in parts of the ride that are within their control. If even this sort of driver can't make a good wage, then the system is certainly unsustainable. But if it's possible to make a good wage in this fashion, I hesitate to pass judgment before seeing a breakdown of the distribution of hourly earnings across all drivers.
- dunham 9y ago
  I had a lyft driver tell me that there was a MPG requirement to pick up passengers at SEA-TAC, which is confirmed by the Lyft web site: "the Port of Seattle will only allow Lyft vehicles with a blended MPG rating of 40 or higher to pick up passengers at Sea-Tac." https://help.lyft.com/hc/en-us/articles/217879848-Washington-airport-information-for-drivers https://help.lyft.com/hc/en-us/articles/217879848-Washington...
mcguire 9y ago
"...but I have seen bonuses pop up on my app offering between $100-$500 to refer other drivers." Whoo hoo! Multilevel marketing! "Provide drivers with the details of where the person is going, or at least how long of a ride it is. Right now, Uber has all this incredibly useful information at the time of booking, but deliberately withholds it from the driver." And have all drivers ignore assignments for short rides?
- trowawee 9y ago
  And fall into the exact same issue that people have brought up with cabs forever - they just won’t go to some neighborhoods/pick up some groups of people. That’s a very real selling point for ride share companies to people who live places or are members of groups that get discriminated against in that way.
- the_gastropod 9y ago
  Uber touts itself as a marketplace right? Maybe short trips should pay more than they do if drivers are skipping them. Or as MMM suggested, drivers should be paid for driving to pick up the passenger.
dbuder 9y ago
Driving for Uber is a hand to mouth existence.
bluedino 9y ago
A friend of mine is about to start delivering/shopping for Shipt, I'd like to see a similar breakdown. Heck, I'd like to see what pizza delivery drivers costs are as well.

205 points by sus_007 9y ago

TL;DR: What everybody expects: You basically don't make money if you really calculate the whole cost package. I honestly believe that it must be lower than $5/hour so I'd say even MMM might've forgotten something.

SilasX 9y ago
Yeah, there's a quote in the article that I liked, which made the point: "Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like?" (i.e. Uber) With that said, considering how much of the fares they take, and how low their cost of booking is, it seems they could make it work by charging a bit more and taking less of a cut.
ams6110 9y ago
Well it's before tax as far as I could tell, unless Uber withholds. Granted you can probably deduct the IRS standard per-mile expense allowance.
- URSpider94 9y ago
  Uber drivers are contractors, so they’re not going to withhold, but they will issue you a 1099 for the full amount they pay you. It will be up to you to deduct work expenses, either actuals (repairs, depreciation, registration, etc), or per-mile, but not both. You’ll end up paying income tax on something like the $5 per hour net income.
jaggederest 9y ago
I think he's actually wrong. It's definitely higher than marginal $5/hour, it's just not $5 net profit per hour. You take into account the fixed costs of owning and maintenance on the vehicle (which don't entirely vary directly with mileage driven) and it becomes a smart economic choice to drive Uber even if you're "losing money" each hour - because your marginal gross profit is higher than if you were sitting on the couch.
- kunimu 9y ago
  You don't need marginalism to explain that making some money doing Uber given fixed costs for your car is better than making no money at all and incurring same or similar costs.
- hyper_reality 9y ago
  I think you're right, and the article's claim that the drivers' ignorance is being taken advantage of is an unpleasant thing to say. It assumes that the drivers are financially naive, when in fact there are many legitimate reasons why they choose to drive. Many of them are supplementing their income in between other gigs, or enjoy driving more than other jobs available to them. Others have done well out of the referral, bonus schemes and tips that the author mentions. There are various other factors and incentives which the author does not seem to have taken into account. Much as I dislike the corporate practices of Uber, implying that the drivers are miscalculating the cost of driving and are therefore ignorant is a smug overgeneralisation.
  - astura 9y ago
    That's Mister Money Mustache's writing style. I don't care too much for him myself either but he writes for his audience.
    - prawn 9y ago
      I liked when he talked about being a retiree, but also about being able to work like an executive from the back of a car to the airport.
      - astura 9y ago
        http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/ http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-...
- redler 9y ago
  Not to mention, you can't pay your rent with saved future dollars.

chubot 9y ago

This is interesting. So why are there so many Uber/Lyft drivers? Is it because there is a glut of unused cars in America and they provide a way to monetize it? That is, if you aren't actually paying for the car's costs, then it IS your profit.

toomuchtodo 9y ago
Not a glut of unused cars, a huge deficit in good, stable jobs. That’s what enables the gig economy to exist.
astura 9y ago
Because 1) People don't understand the true costs of ownership and driving and think they are yielding the entire cost of the fair. Or 2) They enjoy driving, getting paid for it is a bonus. Or 3) They don't/can't have "regular employment" for whatever reason and want to make some money in their spare time, even if it's just a little. Like some in college who only works during breaks or weeks when the courseload is smaller. Or 4) Someone who is employed but only drives when they are bored on the weekends rather than watching Netflix or going to the pub. Of course #3 becomes self perpetuating at scale. For #1 - story time: I had already decided I was going to buy a new car, which car I would buy, and that I was going to finance it. I was trying to squeeze another year out of my current car first tho. My sister was absolutely baffled by this and couldn't understand that this would save me money. No matter how much I tried to explain it she didn't "get" it. From TFA: >"Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like?“ (the answer is of course that it would look like very much like Uber or any other ridesharing company)
- chubot 9y ago
  But my question is how people live in the Bay Area on $5 an hour. Where is the difference coming from? Debt, parents, unused car etc.?
  - nikanj 9y ago

deleted 9y ago

[deleted]

habosa 9y ago

So in a way driving Uber is like taking a loan from your future self. You have a car and need money. Uber gives you good gross pay. 5 years down the road when you have to sell or repair your car, that's when you have to pay up for all the wear and tear. It's really a shame to see who gets rich off this. As a rider, these services are incredibly convenient. But I wish I wasn't basically relying on unpaid labor.

corporateguy5 9y ago
It's their to decision to drive Uber. It's not a shame, it's an economic decision people are making. The drivers are not victimized by Uber
deleted 9y ago
[deleted]
Retric 9y ago
Something I don't think people really think about in the Uber equation. Driving also has a massively higher risk of dying than sitting on the couch, so it's part loan part Russian roulette. It's not just traffic, Taxi drivers have double the risk of being murdered as cops, without any of the benefits. http://www.syracuse.com/opinion/index.ssf/2015/01/by_the_numbers_job_with_the_number_1_murder_rate_taxi_drivers.html http://www.syracuse.com/opinion/index.ssf/2015/01/by_the_num...
- irl_zebra 9y ago
  And there's the psychological stress of sitting in traffic. My mental status takes a huge nosedive when I have a job where I have to commute by car.
  - LoSboccacc 9y ago
    I think that feeling can probably be split by the fear of being late, fear of being in a bender fender and the general unpleasantness of navigating traffic - so as a professional driver you don't care about lateness and can take a small insurance to reduce the mental stress of being in a fender bender. won't solve everything, but maybe it can bring the stress down enough to be manageable as a career.

ewjordan 9y ago

$0.50 of vehicle costs per mile does not compute. If you're spending $30 a day on gas and driving 250 miles, you can just rent a car for the week at a daily rate of $30 or less, and come out with $60/day in costs rather than his stated $125, which makes the whole thing quite a bit more profitable. Probably profitable enough that my poor as shit unskilled and unemployed college self would have been better off doing that than tutoring during the summers. Am I missing something?

tspike 9y ago
Commercial use is almost certainly prohibited in your rental car contract. Also, Uber requires a vehicle inspection before driving.
baddox 9y ago
It’s probably against the terms of the rental agreement to do any commercial driving.
astura 9y ago
~$.50 a mile isn't a made up number, it's what the federal government has calculated as the cost of driving for business purposes. Actual value is 53.5 cents a mile. https://www.irs.gov/newsroom/2017-standard-mileage-rates-for-business-and-medical-and-moving-announced https://www.irs.gov/newsroom/2017-standard-mileage-rates-for... Students are usually under 25 thus largely are unallowed to rent cars. I doubt using a rental car for this type of business is allowed under the terms of a rental contract or under Uber's rules. Insurance isn't free.
- ewjordan 9y ago
  Ah, fair enough - I was just wondering because I've known Uber drivers that do exactly this, and have given me advice on where to find cheaper rental cars.
  - dsp1234 9y ago
    All consumer rental car contracts in the US include a provision that disallows the usage of the vehicle for commercial purposes. Additionally, most personal vehicle insurance prohibits the use of the insurance for commercial ride sharing activities without a special waiver. So as soon as that first fare is picked up (if not sooner), then the renter is in breach of contract. Any insurance from the rental agency is now void, and without special personal insurance waivers, the driver is now driving uninsured. That is both illegal, and all liability will now be 100% on the driver. So if someone is going to do that, then they need to calculate in the risk of an accident/arrest and all of the full liability that goes with that.

rm999 9y ago

This article rests on the premise that operating a car costs a fixed 50 cents a mile. But several uber drivers have told me the economics work out pretty well for them because they already need their cars, so IMO using 50 cents a mile is an unfair assumption. Looking at the operating cost of a car is complicated with many variables, but the standard 50 cent estimate is NOT a marginal cost, i.e. you don't actually spend an extra 50 cents to drive a mile. The annual AAA driving costs brochure puts the per mile cost (gas + maintenance) at 14 cents a mile for a small sedan, and 17 cents for a big sedan, plus ~3 cents a mile for depreciation (see "decreased depreciation"). Moving from 50 cents to 20 cents a mile brings his estimate pay from 7 dollars an hour to 12.40. Brochure link: http://exchange.aaa.com/wp-content/uploads/2017/08/17-0013_Your-Driving-Costs-Brochure-2017-FNL-CX-1.pdf http://exchange.aaa.com/wp-content/uploads/2017/08/17-0013_Y... edit: to be clear this math is if you already own a car and are driving on off-times for additional income, which (in my experience) is what a large % of uber/lyft drivers do. It's also what Mr. Mustache was doing in his test.

jfoutz 9y ago
in that brochure, average total cost per mile is $0.5646 @15k miles per year. I think you're looking at the operating cost per mile, that doesn't include stuff like insurance, registration, and financing. page 9, look in the middle of the green section for the cost per mile - page 8 has the row name you're looking for.
- rm999 9y ago
  My point is the fixed costs (the ones you list) don't significantly change if you already have a car and decide to become an Uber driver. Mr Mustache didn't pay 18 dollars to drive those 36 miles, he was already going to pay for his insurance and registration.
  - alexasmyths 9y ago
    Most of the costs are not fixed, i.e. wear and tear, gas etc..

jimmywanger 9y ago

I think one of the reasons that he writes this is that cash in the hand is extremely appealing if you are not in a good economic situation. For instance, I have some savings, so I can keep the wolf from the door, and I have friends and family so I always have a place to stay and at least something to eat. I won't freeze or I won't starve. Cash on the barrel every night is extraordinarily appealing to those who have to buy antibiotics for their kids right away, or who have to make the rent that day. I've never driven Uber, but I am given to believe that they settle up debts every day. Just like why waiters/bartenders like doing what they do. They get a fistfull of cash every day.

ec109685 9y ago
Yeah, they offer instant cash out: https://www.uber.com/info/instant-pay/ https://www.uber.com/info/instant-pay/ Your post was a good one, highlighting the problems the “unbanked” / “uncredited” face that something like Uber is an antitode for.

enraged_camel 9y ago

There are two major problems with the sharing economy that most people don't mention when they write articles about it. First, the overwhelming majority of gigs don't teach you any marketable skills whatsoever. So over the course of your contracting, you may as well be unemployed. This hurts most people's chances of finding gainful employment, and ends up being a massive hidden cost above and beyond car maintenance and similar expenses directly related to running the gigs. Second, because you make so little, you also save very little, if any, for retirement. Since saving for retirement is all about compound interest, people who run gigs while young instead of looking for full-time employment are in for lots of pain and discomfort later in life. In fact I suspect we're witnessing the creation of yet another underclass, consisting of people who will probably have to work until they die. Lots of Baby Boomers (who were unfortunate and/or made poor choices earlier in life) are already in this situation and it will only get worse. As an aside, one thing I don't get about the gig economy is how the workers can afford health insurance. I assume most don't have any, or they are on their parents or spouses' plans because even the cheapest plans are really expensive and I doubt your average Uber driver can afford them.

antisthenes 9y ago
1. They're young so they go without or buy the cheapest possible one. 2. On their parents' plan 3. Don't make enough and get huge subsidies from the marketplace. Retirement and lack of any marketable skills is the bigger issue, however.

jimmywanger 9y ago

One more thing. Uber is pouring huge amounts of money into this business. And it's not profitable. I shudder to think what will happen when all the subsidies are removed. If you don't have any assets besides a clean driver's license and a recent car, you got nothing coming.

ghaff 9y ago
I'm not sure they can realistically cut what the drivers are earning by much. What seems more likely is that fares rise to $2-3 per mile (or whatever number), which puts them more in line with traditional cabs, and let ridership fall where it may.
- jimmywanger 9y ago
  Maybe that matters psychologically, but not in bottom lines. Drivers might be fooled for a bit, but once the fares rise, I'll be willing to bet the driver network collapses. They're not that stupid. If slinging burgers is more lucrative than driving Uber, they'll be slinging burgers.
  - ghaff 9y ago
    That's fair. Less work for no more money on a per-ride basis. The driver network will certainly decrease. Not clear what the overall dynamics look like. I do think that prices need to get to breakeven in the fairly near future and self-driving isn't going to make a difference in an interesting time horizon.

alexasmyths 9y ago

“Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like? “ This has always been my #1 complaint about Uber. Their business model is like payday loans. It's not that 'it . can only work' like this - but given human nature and competitiveness - 'it will effectively work' like this. Too many drivers will forgo the 'wear and tear' calculation and drive the price down. It has an effect much like migrant labour (nothing to do with the 'migrant' aspect per sey - just that they are paid under minimum wage) - once a few farms start doing it - the rest of the farms are forced to follow suit or go out of business. It's just bad for everyone. I wish there were a way to make sure that drivers were comped a min gas + wear and tear + servicing and THEN wages - and if that was not above min. wage then Uber would have to up the comp.

ec109685 9y ago
Driving full time for Uber costs $214 a week in maintenance and depreciation costs (minus Hertz’ profit): https://www.hertz.com/rentacar/misc/index.jsp?targetPage=UberFAQs.jsp https://www.hertz.com/rentacar/misc/index.jsp?targetPage=Ube... That is way less than the 50 cents a mile that the author cited. Agree Uber could calculate that and provide that info to drivers, which would be useful.
- alexasmyths 9y ago
  Surely it's below 50 cents a mile ... but it's 'something' an whatever it is, I suggest that drivers will delay the costs.

chx 9y ago

Interesting. So they are not only hurting the entire society by weakening the rule of law (google "greyball") but their drivers as well. Wonderful company.

paulpauper 9y ago

the author makes the implicit assumption that someone can find a better way to make money and that driving for uber comes with a large opportunity cost, but that is not always the case. $5/hour driving pays more than an hour watching TV ding nothing.

deleted 9y ago
[deleted]

beisner 9y ago

I've used Uber and Lyft a lot in the last ~4 years, and I've realized that there are essentially two different types of drivers: professional, full-time drivers who hyperoptimize, and part-time/after-hours drivers that do it to pull in a little bit of extra cash. The hypothetical driver best represented by this article is of the second type, and no doubt that working this way doesn't really make you a good hourly wage, especially after the hidden costs mentioned. I'd like to see an analysis of profitability for drivers in the first category. I have met drivers who specifically bought Priuses to drive for Uber/Lyft because of the 50+ mpg and low-ish maintenance costs - just look at the ride-sharing section of the SEA-TAC parking garage and you'll know what I mean. Speaking with this sort of driver, they seem to have done the math on maximizing return based on surge pricing (i.e. driving in the city Friday/Saturday 7pm-2am), practice driving that maintain vehicle quality and fuel efficiency, and are extremely time-efficient in parts of the ride that are within their control. If even this sort of driver can't make a good wage, then the system is certainly unsustainable. But if it's possible to make a good wage in this fashion, I hesitate to pass judgment before seeing a breakdown of the distribution of hourly earnings across all drivers.

dunham 9y ago
I had a lyft driver tell me that there was a MPG requirement to pick up passengers at SEA-TAC, which is confirmed by the Lyft web site: "the Port of Seattle will only allow Lyft vehicles with a blended MPG rating of 40 or higher to pick up passengers at Sea-Tac." https://help.lyft.com/hc/en-us/articles/217879848-Washington-airport-information-for-drivers https://help.lyft.com/hc/en-us/articles/217879848-Washington...

mcguire 9y ago

"...but I have seen bonuses pop up on my app offering between $100-$500 to refer other drivers." Whoo hoo! Multilevel marketing! "Provide drivers with the details of where the person is going, or at least how long of a ride it is. Right now, Uber has all this incredibly useful information at the time of booking, but deliberately withholds it from the driver." And have all drivers ignore assignments for short rides?

trowawee 9y ago
And fall into the exact same issue that people have brought up with cabs forever - they just won’t go to some neighborhoods/pick up some groups of people. That’s a very real selling point for ride share companies to people who live places or are members of groups that get discriminated against in that way.
the_gastropod 9y ago
Uber touts itself as a marketplace right? Maybe short trips should pay more than they do if drivers are skipping them. Or as MMM suggested, drivers should be paid for driving to pick up the passenger.

dbuder 9y ago

Driving for Uber is a hand to mouth existence.

bluedino 9y ago

A friend of mine is about to start delivering/shopping for Shipt, I'd like to see a similar breakdown. Heck, I'd like to see what pizza delivery drivers costs are as well.