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The Hidden Costs of Being an Uber Driver

32 points by jsc123 12y ago

GuiA 12y ago
I don't particularly care for Uber as a company, but reading this it seems to me that the "bad guy" is the US government. Making things like paying taxes more straightforward and automated, and providing a better health insurance structure to its citizens are 2 things that would allow people to partake in things like driving for Uber without most of the drawbacks exposed in this post. That's the kind of stuff really needed to enable a country built on entrepreneurship (things like a national "day of code" or White House hackathons are cute, but rank lower on the list of priorities)
- vacri 12y ago
  US taxes are ridiculously complicated, but trying to change any of it is basically impossible - at the slightest hint of any one sector having to increase taxes, it's game over, as the US public gets very loud when that happens. About 20 years ago here in Australia, the sales tax was simplified. It used to be that you'd pay 0, 11, 22, or 33% tax on goods if they were classed as staples, luxuries, or something in-between. They scrapped this and replaced it with a flat 10% tax nationally, except for staple foods. My mother was a bookseller, which was previously tax-free (so it wasn't good for her business), but she said that other vendors were over the moon at the much greater ease of compliance. If you ran a mixed business, it was a pain to track which items were 11% versus one of the others. Then I look at the US system and... shudder. Sales taxes can come from several different levels, and then be chargeable depending on where the seller is and also where the buyer is. It's ridiculously complex. But fixing it means that some people will have to pay a little more (never going to happen) and some entities will lose political power to someone further up the chain (also never going to happen). On the other hand, the US economy is ridiculously powerful, so perhaps they can afford to waste money on process, keeping armies of accountants employed :)
droopyEyelids 12y ago
This article should be another argument in favor of calling this "The 1099 economy" instead of "The Sharing Economy". In the end, that 1099 will be much more salient to your everyday life than the notion of 'sharing'
- sukilot 12y ago
  Uber isn't sharing at all. It's CSR service. ZipCar, Car2Go are sharing.
zobzu 12y ago
The Uber claim is about the bay area/sf only. Then the counter study is about the USA average for Uber. Based on that, I can't say who tells the truth - but I can certainly say that I don't believe anything from this article either.
Animats 12y ago
Uber's driver income numbers have been wildly deceptive. They don't include the cost of the car, or of operating it.
- glenra 12y ago
  Uber is a pretty good option for people who already have a suitable car, especially people who already have one they've previously been using to run a limo service. To call ignoring the cost of the car "deceptive" seems a bit like calling it "deceptive" to say software engineers can earn 6 figures because you haven't factored in the cost of getting a computer science degree.
swatow 12y ago
This article struck me as illogical and out of touch. ...a more recent study commissioned by Uber reported that the typical Uber X and Uber Black drivers make about $19 an hour after paying Uber’s 20 percent commission ... yet that hasn’t diminished the appeal of driving for Uber. Does the author really not realize that $19 an hour would be appealing to a very large proportion of the population? The author also doesn't show how the federal income tax is fundamentally different to what an employee would pay, and yet the tone of the article suggests that the amount of income tax paid is a special burden for Uber drivers, e.g. ...there can be a big difference between the fares from driving for Uber, say $62,000, and what’s left over after paying Uber’s commission, your gas, car maintenance, health and car insurance expenses, and your federal income and self-employment taxes, or about $27,600. And you may still have to pay state and local income taxes, which might add up to another thousand dollars or so. I thought only the crazy libertarian right talked about "what's left over after federal (and state and local!) taxes". Finally the author makes a ridiculous comparison with actual employees of Uber: Things would be different if you worked for Uber Technologies. You would receive a 401(k) plan, gym reimbursement, nine paid company holidays, full medical/dental/visions package and an unlimited vacation policy. You might even get snacks in Uber’s lunchroom. How is this relevant? Is the author going to get the Uber drivers jobs as professors at GWU, since the mean tech nerds won't pay them software engineer salaries?
- jcdavis 12y ago
  According to Uber's underlying research (http://www.scribd.com/doc/253410228/An-Analysis-of-the-Labor-Market-for-Uber-Drivers http://www.scribd.com/doc/253410228/An-Analysis-of-the-Labor... , page 23), $19 an hour is just the revenue they get after Uber's cut, and does not include gasoline, depreciation/lease fees, insurance etc, which makes it a useless number.
  - swatow 12y ago
    I agree that the article was poorly written, and using the $19 an hour figure to make a point, then debunking the $19 an hour figure later to make a different point, was a poor way to structure the argument. The final take home pay after federal tax was quoted as 27,600, which strikes me as still an attractive wage for many people. Of course if you had the option to become a software engineer at Uber (or a Professor at GMU) then you should probably take that option. But that's precisely why the article is out of touch. People who drive for Uber don't have these options.
peteretep 12y ago
> unlimited vacation policy I could not work for a company like that, as I would feel guilty taking each and every day. Much better to just give a generous allowance - how about the 4-5 weeks you'd get in Europe?
- comrh 12y ago
  I have and that was the exact feeling most of the non-management employees got. It didn't feel like a "perk" at all.
  - abawany 12y ago
    Agree as well - IME 'unlimited vacation policy' means 'policy: no vacation'.
    - comrh 12y ago
      or policy: "sure, just hold off until this next launch and we'll make it worth it!"
- hughes 12y ago
  How about a "minimum vacation" policy? http://www.paperplanes.de/2014/12/10/from-open-to-minimum-vacation-policy.html http://www.paperplanes.de/2014/12/10/from-open-to-minimum-va...
  - peteretep 12y ago
    I think you start to get in to trouble the moment that holiday stops being seen as remuneration. When it's clear that some people have negotiated different holiday allowances, and have different holiday needs, and that's been factored in to their take home, then everyone knows that everyone has earned their holiday. As for minimums, at any European company with a vaguely competent HR function, unused holiday will get flagged as a risk in terms both of resource planning, but also from a staff wellbeing perspective.
torgoguys 12y ago
Clickbait-y article. Hidden costs? How are these hidden? You live in the US and expect to NOT pay taxes or something? I expected to read about some surprising cost, but insurance, gas, taxes, car maintenance, uber's cut, etc., are all straightforward.
- torgoguys 12y ago
  ...and downvoted why? ;-) marincounty's comment here represents a potential hidden cost. The article's contents don't.
bdcravens 12y ago
Other hidden costs: * Driving around when you'd normally be at home, to be in a position for fares * Driving only to have ride cancelled * Bottled water/mints/etc (I've seen these in a few Ubers) * Toll tags (though I've had an Uber detour when the most direct route directed them through a toll road) * Most drivers seem to prefer dedicated GPS to one built into Uber app, so there's that cost if they choose to take it on. * Uber drivers tend to keep car cleaner than usual driver, so time/money for that.
marincounty 12y ago
My only problem with Uber is this clause; "Vehicle requirements are subject to change" The list of approved cars didn't make much sense when I looked into it. I have a feeling there's a bunch of people who went into debt buying a four door Uber approved car--and are now saving up for bankruptcy?
justcommenting 12y ago
this article points out several important aspects of uber's 'unfair advantage,' which in the labor market almost completely boils down to structural forms of tax avoidance that regulated incumbents are unable to match, but neglects to mention some of the longer-term benefits that 'real' employment brings. for example, having a W-2 job in the united states typically means contributing to social security, which helps people build up to qualifying for certain benefits in retirement. not so with uber. especially over a typical worker's lifetime, comments about $x/hour dramatically oversimplify and abstract away the NPV of these endeavors for employee-like participants. NPV for employee-like participants is considerably lower than many reasonable-sounding discussions would have you believe because a lot of the discounts that uber captures as profits are not as cleanly captured in $x/hr numbers....social security is one of many.
- djrogers 12y ago
  Wrong, as a self employed person you are absolutely required to pay in to social security. Heck, the article even spells that out...
joosters 12y ago
I truly despise the term 'sharing economy', as used in the article. This is not sharing, none of these companies are sharing. It is renting, or selling, just like any company in the boring old normal economy. When you share something with others, you don't charge people for it.
eloisant 12y ago
The article should be called "the (not so hidden) cost of being an independent worker". Yes, you're making a big mistake if you compare the amount you would make as an independent worker vs being employed.
ddw 12y ago
Could someone explain why Uber doesn't have an Android app for their drivers? It looks to me like they are trying to skim a little extra from those without iPhones. Surely they can afford the engineering costs associated with an Android version?
- jimmywanger 12y ago
  You underestimate how much engineering would cost for an Android port. From my friends who have maintained both iPhone and Android versions of the same product, the Android dev costs were roughly 4x that of the iPhone, and that continues with QA for every single new feature released, assuming you want feature parity.

32 points by jsc123 12y ago

GuiA 12y ago

I don't particularly care for Uber as a company, but reading this it seems to me that the "bad guy" is the US government. Making things like paying taxes more straightforward and automated, and providing a better health insurance structure to its citizens are 2 things that would allow people to partake in things like driving for Uber without most of the drawbacks exposed in this post. That's the kind of stuff really needed to enable a country built on entrepreneurship (things like a national "day of code" or White House hackathons are cute, but rank lower on the list of priorities)

vacri 12y ago
US taxes are ridiculously complicated, but trying to change any of it is basically impossible - at the slightest hint of any one sector having to increase taxes, it's game over, as the US public gets very loud when that happens. About 20 years ago here in Australia, the sales tax was simplified. It used to be that you'd pay 0, 11, 22, or 33% tax on goods if they were classed as staples, luxuries, or something in-between. They scrapped this and replaced it with a flat 10% tax nationally, except for staple foods. My mother was a bookseller, which was previously tax-free (so it wasn't good for her business), but she said that other vendors were over the moon at the much greater ease of compliance. If you ran a mixed business, it was a pain to track which items were 11% versus one of the others. Then I look at the US system and... shudder. Sales taxes can come from several different levels, and then be chargeable depending on where the seller is and also where the buyer is. It's ridiculously complex. But fixing it means that some people will have to pay a little more (never going to happen) and some entities will lose political power to someone further up the chain (also never going to happen). On the other hand, the US economy is ridiculously powerful, so perhaps they can afford to waste money on process, keeping armies of accountants employed :)

droopyEyelids 12y ago

This article should be another argument in favor of calling this "The 1099 economy" instead of "The Sharing Economy". In the end, that 1099 will be much more salient to your everyday life than the notion of 'sharing'

sukilot 12y ago
Uber isn't sharing at all. It's CSR service. ZipCar, Car2Go are sharing.

zobzu 12y ago

The Uber claim is about the bay area/sf only. Then the counter study is about the USA average for Uber. Based on that, I can't say who tells the truth - but I can certainly say that I don't believe anything from this article either.

Animats 12y ago

Uber's driver income numbers have been wildly deceptive. They don't include the cost of the car, or of operating it.

glenra 12y ago
Uber is a pretty good option for people who already have a suitable car, especially people who already have one they've previously been using to run a limo service. To call ignoring the cost of the car "deceptive" seems a bit like calling it "deceptive" to say software engineers can earn 6 figures because you haven't factored in the cost of getting a computer science degree.

swatow 12y ago

This article struck me as illogical and out of touch. ...a more recent study commissioned by Uber reported that the typical Uber X and Uber Black drivers make about $19 an hour after paying Uber’s 20 percent commission ... yet that hasn’t diminished the appeal of driving for Uber. Does the author really not realize that $19 an hour would be appealing to a very large proportion of the population? The author also doesn't show how the federal income tax is fundamentally different to what an employee would pay, and yet the tone of the article suggests that the amount of income tax paid is a special burden for Uber drivers, e.g. ...there can be a big difference between the fares from driving for Uber, say $62,000, and what’s left over after paying Uber’s commission, your gas, car maintenance, health and car insurance expenses, and your federal income and self-employment taxes, or about $27,600. And you may still have to pay state and local income taxes, which might add up to another thousand dollars or so. I thought only the crazy libertarian right talked about "what's left over after federal (and state and local!) taxes". Finally the author makes a ridiculous comparison with actual employees of Uber: Things would be different if you worked for Uber Technologies. You would receive a 401(k) plan, gym reimbursement, nine paid company holidays, full medical/dental/visions package and an unlimited vacation policy. You might even get snacks in Uber’s lunchroom. How is this relevant? Is the author going to get the Uber drivers jobs as professors at GWU, since the mean tech nerds won't pay them software engineer salaries?

jcdavis 12y ago
According to Uber's underlying research (http://www.scribd.com/doc/253410228/An-Analysis-of-the-Labor-Market-for-Uber-Drivers http://www.scribd.com/doc/253410228/An-Analysis-of-the-Labor... , page 23), $19 an hour is just the revenue they get after Uber's cut, and does not include gasoline, depreciation/lease fees, insurance etc, which makes it a useless number.
- swatow 12y ago
  I agree that the article was poorly written, and using the $19 an hour figure to make a point, then debunking the $19 an hour figure later to make a different point, was a poor way to structure the argument. The final take home pay after federal tax was quoted as 27,600, which strikes me as still an attractive wage for many people. Of course if you had the option to become a software engineer at Uber (or a Professor at GMU) then you should probably take that option. But that's precisely why the article is out of touch. People who drive for Uber don't have these options.

peteretep 12y ago

> unlimited vacation policy I could not work for a company like that, as I would feel guilty taking each and every day. Much better to just give a generous allowance - how about the 4-5 weeks you'd get in Europe?

comrh 12y ago
I have and that was the exact feeling most of the non-management employees got. It didn't feel like a "perk" at all.
- abawany 12y ago
  Agree as well - IME 'unlimited vacation policy' means 'policy: no vacation'.
  - comrh 12y ago
    or policy: "sure, just hold off until this next launch and we'll make it worth it!"
hughes 12y ago
How about a "minimum vacation" policy? http://www.paperplanes.de/2014/12/10/from-open-to-minimum-vacation-policy.html http://www.paperplanes.de/2014/12/10/from-open-to-minimum-va...
- peteretep 12y ago
  I think you start to get in to trouble the moment that holiday stops being seen as remuneration. When it's clear that some people have negotiated different holiday allowances, and have different holiday needs, and that's been factored in to their take home, then everyone knows that everyone has earned their holiday. As for minimums, at any European company with a vaguely competent HR function, unused holiday will get flagged as a risk in terms both of resource planning, but also from a staff wellbeing perspective.

torgoguys 12y ago

Clickbait-y article. Hidden costs? How are these hidden? You live in the US and expect to NOT pay taxes or something? I expected to read about some surprising cost, but insurance, gas, taxes, car maintenance, uber's cut, etc., are all straightforward.

torgoguys 12y ago
...and downvoted why? ;-) marincounty's comment here represents a potential hidden cost. The article's contents don't.

bdcravens 12y ago

Other hidden costs: * Driving around when you'd normally be at home, to be in a position for fares * Driving only to have ride cancelled * Bottled water/mints/etc (I've seen these in a few Ubers) * Toll tags (though I've had an Uber detour when the most direct route directed them through a toll road) * Most drivers seem to prefer dedicated GPS to one built into Uber app, so there's that cost if they choose to take it on. * Uber drivers tend to keep car cleaner than usual driver, so time/money for that.

marincounty 12y ago

My only problem with Uber is this clause; "Vehicle requirements are subject to change" The list of approved cars didn't make much sense when I looked into it. I have a feeling there's a bunch of people who went into debt buying a four door Uber approved car--and are now saving up for bankruptcy?

justcommenting 12y ago

this article points out several important aspects of uber's 'unfair advantage,' which in the labor market almost completely boils down to structural forms of tax avoidance that regulated incumbents are unable to match, but neglects to mention some of the longer-term benefits that 'real' employment brings. for example, having a W-2 job in the united states typically means contributing to social security, which helps people build up to qualifying for certain benefits in retirement. not so with uber. especially over a typical worker's lifetime, comments about $x/hour dramatically oversimplify and abstract away the NPV of these endeavors for employee-like participants. NPV for employee-like participants is considerably lower than many reasonable-sounding discussions would have you believe because a lot of the discounts that uber captures as profits are not as cleanly captured in $x/hr numbers....social security is one of many.

djrogers 12y ago
Wrong, as a self employed person you are absolutely required to pay in to social security. Heck, the article even spells that out...

joosters 12y ago

I truly despise the term 'sharing economy', as used in the article. This is not sharing, none of these companies are sharing. It is renting, or selling, just like any company in the boring old normal economy. When you share something with others, you don't charge people for it.

eloisant 12y ago

The article should be called "the (not so hidden) cost of being an independent worker". Yes, you're making a big mistake if you compare the amount you would make as an independent worker vs being employed.

ddw 12y ago

Could someone explain why Uber doesn't have an Android app for their drivers? It looks to me like they are trying to skim a little extra from those without iPhones. Surely they can afford the engineering costs associated with an Android version?

jimmywanger 12y ago
You underestimate how much engineering would cost for an Android port. From my friends who have maintained both iPhone and Android versions of the same product, the Android dev costs were roughly 4x that of the iPhone, and that continues with QA for every single new feature released, assuming you want feature parity.