5 ms·

Uber and Lyft push back on Seattle mayor’s plan to pay drivers more money

31 points by donsupreme 6y ago

shay_ker 6y ago
> Uber and Lyft commissioned their own study from Cornell University showing that the typical driver earned $23 per hour in Seattle after expenses. > Kevin Schofield of SCC Insight analyzed both studies last month and found that they “skew their analysis and recommendations in the direction that favors the one who commissioned their study.” This is such a blatantly bad framing of the article they cite: https://sccinsight.com/2020/07/21/the-war-heats-up-over-seattles-attempts-to-regulate-uber-and-lyft-drivers-pay/ https://sccinsight.com/2020/07/21/the-war-heats-up-over-seat... The skew in question is around Parrot & Reich's study, which prioritizes full-time drivers (and doesn't include tips, if I read correctly), vs. the Cornell study with Uber/Lyft which includes all drivers and includes tips.
908B64B197 6y ago
If drivers are losing money on rideshares then why are so many signing-up? I'm legitimately curious to understand. Shouldn't we, at some point, reach an equilibrium in these markets?
- klyrs 6y ago
  My cousin is in this situation. It's a lot like payday loans. She knows she's losing money on driving Uber, but it pays the bills today. When her car breaks down, she won't be able to afford it without taking a payday loan. When she needs a new car, she's just gonna be fucked out of the industry. Ultimately, she's probably gonna fall back on my mom and a friend or two; she's already reliant on government assistance and church handouts but that can only go so far as cost of living keeps ratcheting and income doesn't follow it.
- seibelj 6y ago
  I'm happy there is some way that someone a little short on cash can earn some extra money by providing a useful service to people without a lot of strings attached. Better than a payday loan. But it seems that many on the left disagree.
  - bdcravens 6y ago
    There are very real costs associated with ridesharing. Many states require specific insurance coverage; for example, in Texas that's an increased cost of 15-30%. Your car will depreciate faster with miles; I ballparked it at around $2000/year. I also ballpark an additional $500 or so year for increased standard maintenance costs. Someone may still come out ahead of course, and this will vary based on how much someone does it, but these costs are very real, regardless of whether you are on the left or the right.
    - 908B64B197 6y ago
      At least there's no payments (at an outrageous interest rate typically) for a loan to get a medallion on top of these expenses!
      - bdcravens 6y ago
        It's definitely a better business model if you approach it with both eyes open about what you're getting into.
- sumtechguy 6y ago
  It is a very 'low margin' thing to get into. Basically bar to entry is low. So there are lots of participants. So any company that runs something like this can skim most of the profit and offer whatever is left over. I know a few people who do this sort of thing. Usually for a very short time then they give up realizing there is no real money in it. It is kind of like MLM you are shown how much you might make. But that rarely happens. One guy I know showed me how he breaks even basically on it. He said "I do not do this for the money I have that from my real job I do it to meet people as I find that fun". What is kind of amusing is the 'real' taxi industry that they disrupted have their own set of scams they play on people. Usually with leasing/rental/payback agreements. People sometimes forget that labor is a market too even if you price it at free. One that has price points and different quality at those points. They also quietly forget that changing the rules in that market affects dozens of other markets. Take for example what Cali did. They basically ran Uber out of the market. That means there is now a pool of labor that someone else can use. That will lower wages in that spectrum of talent. That is the supply and demand working, or the 'invisible hand'. Take for example the mona lisa. There is one of them so its 'price' is basically huge. But lets say he had spent years cranking out thousands of copies. What would it be worth? Not nearly as much. Scarcity drives prices up. Plenty drives prices down. The same is almost always true in almost all markets. What creates 'scarcity' and 'plenty' can be manipulated too, and is.
dfilppi 6y ago
Uber and Lyft drivers don't get paid wages, so the premise is silly.
- zmarty 6y ago
  don't get paid wages ...yet
AlexTWithBeard 6y ago
So... Please help me to understand the math here. My latest Uber trip was 10 minutes, 3 miles long and 10 bucks. Assuming it's a typical trip and also assuming the driver spends half of the time getting to the customer, we have, $30 and 18 miles per hour. 18 miles is one gallon of fuel at $2.00 and, say, another $3.00 in car amortization. Subtract fees, add tips and incentives and we end up with, give or take, $25. That seems like a reasonable salary?
- hansvm 6y ago
  Assuming a single data point is representative could add a lot of bias, the cost per trip estimate is probably low given that newer nicer cleaner cars are required, that assumes drivers are able to drive 100% of the time, it assumes all times of day are equally viable so that there are enough total hours to turn that into a liveable wage, and it's probably a generous representation of tips and a naive view of fees and incentives outside of when a driver first starts. Your numbers might work out, but studies indicate less income in practice, and there are plenty of potential sources of error in your methodology, so I'd be inclined to believe there's something wrong with that ballpark estimate.
  - AlexTWithBeard 6y ago
    > a single data point is representative Please feel free to add your data. I don't think it will change the estimate dramatically. An airport trip takes about an hour and costs $80, which sums up to similar numbers. > that assumes drivers are able to drive 100% of the time No, it doesn't. Reread my message. > it assumes all times of day are equally viable True. I've ignored surge pricing.
    - hansvm 6y ago
      > Please feel free to add your data. I don't think it will change the estimate dramatically. An airport trip for me is usually around $15 and 20min. That's in the same ballpark, but even if we get several people from HN to weigh in that doesn't paint a comprehensive picture or account for local variation. > that assumes drivers are able to drive 100% of the time > No, it doesn't. Reread my message. That was my mistake. In my mind I was assuming it would take a car as long to get to me as it would for them to take me where I'm going -- exactly equaling your $30 estimate assuming 0 downtime. Regardless, both the 5min to get to you and 5min of waiting between rides are potential sources of error. Throwing an anecdote into the mix, I've never waited less than 6min for an uber, and I live in a major city. Answering that conclusively needs more data than just the two of us. > it assumes all times of day are equally viable > True. I've ignored surge pricing. And slow periods where drivers wait an hour, late nights where a driver has a higher chance of getting stiffed and needing to clean vomit from their seats, periods just following surge pricing where many drivers have swarmed to an area but the actual available riders have plummeted, and so on. Again, your ballpark numbers might actually be close, but extrapolating a single experience into an entire industry's unit economics is error-prone and IMO irresponsible.
DINKDINK 6y ago
"The first thing that happens, for example, when a law is passed that no one shall be paid less than $106 for a forty-hour week is that no one who is not worth $106 a week to an employer will be employed at all. You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation. The only exception to this occurs when a group of workers is receiving a wage actually below its market worth. This is likely to happen only in rare and special circumstances or localities where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization. It may be thought that if the law forces the payment of a higher wage in a given industry, that industry can then charge higher prices for its product, so that the burden of paying the higher wage is merely shifted to consumers. Such shifts, however, are not easily made, nor are the consequences of artificial wage-raising so easily escaped. A higher price for the product may not be possible: it may merely drive consumers to the equivalent imported products or to some substitute. Or, if consumers continue to buy the product of the industry in which wages have been raised, the higher price will cause them to buy less of it. While some workers in the industry may be benefited from the higher wage, therefore, others will be thrown out of employment altogether. On the other hand, if the price of the product is not raised, marginal producers in the industry will be driven out of business; so that reduced production and consequent unemployment will merely be brought about in another way. When such consequences are pointed out, there are those who reply: “Very well; if it is true that the X industry cannot exist except by paying starvation wages, then it will be just as well if the minimum wage puts it out of existence altogether.” But this brave pronouncement overlooks the realities. It overlooks, first of all, that consumers will suffer the loss of that product. It forgets, in the second place, that it is merely condemning the people who worked in that industry to unemployment. And it ignores, finally, that bad as were the wages paid in the X industry, they were the best among all the alternatives that seemed open to the workers in that industry; otherwise the workers would have gone into another. If, therefore, the X industry is driven out of existence by a minimum wage law, then the workers previously employed in that industry will be forced to turn to alternative courses that seemed less attractive to them in the first place. Their competition for jobs will drive down the pay offered even in these alternative occupations. There is no escape from the conclusion that the minimum wage will increase unemployment." [...] "As to the prices, wages and profits that should determine the distribution of that product, the best prices are not the highest prices, but the prices that encourage the largest volume of production and the largest volume of sales. The best wage rates for labor are not the highest wage rates, but the wage rates that permit full production, full employment and the largest sustained payrolls. The best profits, from the standpoint not only of industry but of labor, are not the lowest profits, but the profits that encourage most people to become employers or to provide more employment than before." Henry Hazlitt “Economics in One Lesson.”

31 points by donsupreme 6y ago

> Uber and Lyft commissioned their own study from Cornell University showing that the typical driver earned $23 per hour in Seattle after expenses. > Kevin Schofield of SCC Insight analyzed both studies last month and found that they “skew their analysis and recommendations in the direction that favors the one who commissioned their study.” This is such a blatantly bad framing of the article they cite: https://sccinsight.com/2020/07/21/the-war-heats-up-over-seattles-attempts-to-regulate-uber-and-lyft-drivers-pay/ https://sccinsight.com/2020/07/21/the-war-heats-up-over-seat... The skew in question is around Parrot & Reich's study, which prioritizes full-time drivers (and doesn't include tips, if I read correctly), vs. the Cornell study with Uber/Lyft which includes all drivers and includes tips.

908B64B197 6y ago

If drivers are losing money on rideshares then why are so many signing-up? I'm legitimately curious to understand. Shouldn't we, at some point, reach an equilibrium in these markets?

klyrs 6y ago
My cousin is in this situation. It's a lot like payday loans. She knows she's losing money on driving Uber, but it pays the bills today. When her car breaks down, she won't be able to afford it without taking a payday loan. When she needs a new car, she's just gonna be fucked out of the industry. Ultimately, she's probably gonna fall back on my mom and a friend or two; she's already reliant on government assistance and church handouts but that can only go so far as cost of living keeps ratcheting and income doesn't follow it.
seibelj 6y ago
I'm happy there is some way that someone a little short on cash can earn some extra money by providing a useful service to people without a lot of strings attached. Better than a payday loan. But it seems that many on the left disagree.
- bdcravens 6y ago
  There are very real costs associated with ridesharing. Many states require specific insurance coverage; for example, in Texas that's an increased cost of 15-30%. Your car will depreciate faster with miles; I ballparked it at around $2000/year. I also ballpark an additional $500 or so year for increased standard maintenance costs. Someone may still come out ahead of course, and this will vary based on how much someone does it, but these costs are very real, regardless of whether you are on the left or the right.
  - 908B64B197 6y ago
    At least there's no payments (at an outrageous interest rate typically) for a loan to get a medallion on top of these expenses!
    - bdcravens 6y ago
      It's definitely a better business model if you approach it with both eyes open about what you're getting into.
sumtechguy 6y ago
It is a very 'low margin' thing to get into. Basically bar to entry is low. So there are lots of participants. So any company that runs something like this can skim most of the profit and offer whatever is left over. I know a few people who do this sort of thing. Usually for a very short time then they give up realizing there is no real money in it. It is kind of like MLM you are shown how much you might make. But that rarely happens. One guy I know showed me how he breaks even basically on it. He said "I do not do this for the money I have that from my real job I do it to meet people as I find that fun". What is kind of amusing is the 'real' taxi industry that they disrupted have their own set of scams they play on people. Usually with leasing/rental/payback agreements. People sometimes forget that labor is a market too even if you price it at free. One that has price points and different quality at those points. They also quietly forget that changing the rules in that market affects dozens of other markets. Take for example what Cali did. They basically ran Uber out of the market. That means there is now a pool of labor that someone else can use. That will lower wages in that spectrum of talent. That is the supply and demand working, or the 'invisible hand'. Take for example the mona lisa. There is one of them so its 'price' is basically huge. But lets say he had spent years cranking out thousands of copies. What would it be worth? Not nearly as much. Scarcity drives prices up. Plenty drives prices down. The same is almost always true in almost all markets. What creates 'scarcity' and 'plenty' can be manipulated too, and is.

dfilppi 6y ago

Uber and Lyft drivers don't get paid wages, so the premise is silly.

zmarty 6y ago
don't get paid wages ...yet

AlexTWithBeard 6y ago

So... Please help me to understand the math here. My latest Uber trip was 10 minutes, 3 miles long and 10 bucks. Assuming it's a typical trip and also assuming the driver spends half of the time getting to the customer, we have, $30 and 18 miles per hour. 18 miles is one gallon of fuel at $2.00 and, say, another $3.00 in car amortization. Subtract fees, add tips and incentives and we end up with, give or take, $25. That seems like a reasonable salary?

hansvm 6y ago
Assuming a single data point is representative could add a lot of bias, the cost per trip estimate is probably low given that newer nicer cleaner cars are required, that assumes drivers are able to drive 100% of the time, it assumes all times of day are equally viable so that there are enough total hours to turn that into a liveable wage, and it's probably a generous representation of tips and a naive view of fees and incentives outside of when a driver first starts. Your numbers might work out, but studies indicate less income in practice, and there are plenty of potential sources of error in your methodology, so I'd be inclined to believe there's something wrong with that ballpark estimate.
- AlexTWithBeard 6y ago
  > a single data point is representative Please feel free to add your data. I don't think it will change the estimate dramatically. An airport trip takes about an hour and costs $80, which sums up to similar numbers. > that assumes drivers are able to drive 100% of the time No, it doesn't. Reread my message. > it assumes all times of day are equally viable True. I've ignored surge pricing.
  - hansvm 6y ago
    > Please feel free to add your data. I don't think it will change the estimate dramatically. An airport trip for me is usually around $15 and 20min. That's in the same ballpark, but even if we get several people from HN to weigh in that doesn't paint a comprehensive picture or account for local variation. > that assumes drivers are able to drive 100% of the time > No, it doesn't. Reread my message. That was my mistake. In my mind I was assuming it would take a car as long to get to me as it would for them to take me where I'm going -- exactly equaling your $30 estimate assuming 0 downtime. Regardless, both the 5min to get to you and 5min of waiting between rides are potential sources of error. Throwing an anecdote into the mix, I've never waited less than 6min for an uber, and I live in a major city. Answering that conclusively needs more data than just the two of us. > it assumes all times of day are equally viable > True. I've ignored surge pricing. And slow periods where drivers wait an hour, late nights where a driver has a higher chance of getting stiffed and needing to clean vomit from their seats, periods just following surge pricing where many drivers have swarmed to an area but the actual available riders have plummeted, and so on. Again, your ballpark numbers might actually be close, but extrapolating a single experience into an entire industry's unit economics is error-prone and IMO irresponsible.

DINKDINK 6y ago

"The first thing that happens, for example, when a law is passed that no one shall be paid less than $106 for a forty-hour week is that no one who is not worth $106 a week to an employer will be employed at all. You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation. The only exception to this occurs when a group of workers is receiving a wage actually below its market worth. This is likely to happen only in rare and special circumstances or localities where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization. It may be thought that if the law forces the payment of a higher wage in a given industry, that industry can then charge higher prices for its product, so that the burden of paying the higher wage is merely shifted to consumers. Such shifts, however, are not easily made, nor are the consequences of artificial wage-raising so easily escaped. A higher price for the product may not be possible: it may merely drive consumers to the equivalent imported products or to some substitute. Or, if consumers continue to buy the product of the industry in which wages have been raised, the higher price will cause them to buy less of it. While some workers in the industry may be benefited from the higher wage, therefore, others will be thrown out of employment altogether. On the other hand, if the price of the product is not raised, marginal producers in the industry will be driven out of business; so that reduced production and consequent unemployment will merely be brought about in another way. When such consequences are pointed out, there are those who reply: “Very well; if it is true that the X industry cannot exist except by paying starvation wages, then it will be just as well if the minimum wage puts it out of existence altogether.” But this brave pronouncement overlooks the realities. It overlooks, first of all, that consumers will suffer the loss of that product. It forgets, in the second place, that it is merely condemning the people who worked in that industry to unemployment. And it ignores, finally, that bad as were the wages paid in the X industry, they were the best among all the alternatives that seemed open to the workers in that industry; otherwise the workers would have gone into another. If, therefore, the X industry is driven out of existence by a minimum wage law, then the workers previously employed in that industry will be forced to turn to alternative courses that seemed less attractive to them in the first place. Their competition for jobs will drive down the pay offered even in these alternative occupations. There is no escape from the conclusion that the minimum wage will increase unemployment." [...] "As to the prices, wages and profits that should determine the distribution of that product, the best prices are not the highest prices, but the prices that encourage the largest volume of production and the largest volume of sales. The best wage rates for labor are not the highest wage rates, but the wage rates that permit full production, full employment and the largest sustained payrolls. The best profits, from the standpoint not only of industry but of labor, are not the lowest profits, but the profits that encourage most people to become employers or to provide more employment than before." Henry Hazlitt “Economics in One Lesson.”