Discussing a rideshare worker's take-home pay as "profit" really accepts the framing of the company. Yes it's technically true that each driver is an independent contractor ("Small Business Owner"), but this designation is a farce without the ability to set pricing. The take-home pay isn't profit in practice, it's wages less unreimbursed expenses.
It's important to not use the IRS Mileage Rate to calculate real cost. (The linked study does not.) The IRS rate is designed for the worst case scenario for the purpose of tax filing (coz you don't want to penalize someone who has to drive a F-150 in a high-gas-price state in a year where gas price spikes to $5/gallon). Even if we don't consider the fact that the cost of vehicle depreciation, maintenance and insurance is an "almost-fixed" or marginal cost because you are going to own the vehicle and pay for the insurance any way, and let's be generous about estimating the cost here:<p>At IRS rate of $0.54 a mile, let's say we buy a Prius (which is the most popular car used for ridesharing), for $23,000, and drive it for 100,000 miles and throw it away.<p>At IRS rate, that's a cost of $54,000.<p>Gas cost is about $8,000 (50MPG [1], $4/gallon). Insurance $1500 x 5 years ($1200 base insurance + $300 extra for rideshare add-on [2]). That still leaves us $15,500 (28.7% of estimated cost) to cover repair deductible etc. That's almost enough to buy another Prius.<p>Edits: I mistakenly said the study used IRS Mileage Rate. It does not.<p>[1] <a href="http://mikes-review.com/does-a-toyota-prius-really-get-50-miles-per-gallon.htm" rel="nofollow">http://mikes-review.com/does-a-toyota-prius-really-get-50-mi...</a><p>[2] <a href="https://www.nerdwallet.com/blog/insurance/best-ridesharing-insurance/" rel="nofollow">https://www.nerdwallet.com/blog/insurance/best-ridesharing-i...</a>
The problem isn't the profit, but that there are a number of people using this as one of their primary income sources. I'm not sure how Uber et. al was originally promoted to drivers, but I've originally seen it as something like "I'm heading home from work, let me turn on my uber app and see if anyone around me needs a ride going in that direction".<p>Or, "I feel like riding around tonight, no particular place to go, may as well see if I can make a couple bucks by giving others a lift". I know that back when I was around 18 - 22 or so, I would often spend a saturday night just cruising with the radio playing, windows down, and enjoying the ride.
Two things:<p>1. The cost is absorbed by another entity, usually the parents. It is the parents' car, or your parents bought you a car. You need some quick cash, so you basically "eat out" of that car to generate that "cash".<p>2. You are trapped in a situation where you need quick cash. So you "eat out" of your vehicle to generate that cash. This also happens when you have a low "realization" consciousness. (ie: You are bad at math and economics and you think you are making money while you are losing money).<p>By driving Uber you are exposing yourself to greater risks: Accidents, Lawsuits and Lost opportunities have you been doing something else. But most people either have low realizations or are trapped. Usually both of them.<p>I have seen countless of people getting into this kind of business. One of them and probably the biggest is real-estate renting when the economics says NO! The argument is usually: well, it is sitting there anyway so any cash is a profit. It is not and it usually led to worse financial situations and then worse decisions.
This paper has actual data on earnings from all Uber drivers in all cities in the US. They find that the average earnings are $20 per hour with a standard deviation of $5 (there is substantial variation across cities and especially across time, with late nights on weekends being especially high earning). <a href="http://www.nber.org/papers/w23296" rel="nofollow">http://www.nber.org/papers/w23296</a>
The authors are very well respected economists from UCLA and Yale, though it should be noted that one author was a former Uber employee.<p>This is substantially higher than the estimates in this newer study unless you think that the per hour operating costs of a car are $16 per hour. The new study bases it's numbers on self reported values from a relatively small sample, which is much less accurate than calculating an average using Uber's actual full database.<p>Another interesting finding from the study I linked is that a majority of Uber drivers work 20 or fewer hours per week and place a substantial value on the flexibility that they get from being able to choose their own hours.
What is the incentive to drive for one of these services at that price point? Couldn't these people make more money (and not have to replace their car in five years) flipping burgers or the like?<p>Are drivers misled into believing they will make more? Is the cost per mile intentionally hidden from them?
The flaw in these studies are the assumption that the person would not have a car unless they were an Uber/Lyft driver. This has a huge impact on the final per hour calculations.<p>If the vehicle is a fixed cost for the person regardless of whether or not they are a driver, then factoring in the cost and depreciation of the vehicle isn't really a fair measure.
3 problems.<p>1. This is at subsidised Uber pricing, where Uber is loosing money at an alarming rate.<p>2. This means driving for Uber is terrible economicly.<p>3. This also implies that even getting to driverless cars, Uber will only save 3.37 per hour, not making the business model viable, I would think.
Uber, Lyft, and Juno only exist because the Taxi apps are bad or non-existent. If there was a Taxi app that worked exactly like these 3 apps, and not just for hailing taxis, then there would be no need for this.
In speaking with various drivers I've had I either hear that driving for [Lyft|Uber] is great, or terrible. There's rarely any in between.<p>I've had drivers who had worked with them for years, and seemed to be really happy, also new ones who were happy. Perhaps they have lower living expenses, or this is more pay than they made at other ventures, or uniquely fits their lives.<p>And I've had others who are really frustrated with the app, the GPS, traffic, the company, their compensation, the Pooling services, riders, etc.<p>Of note these are generally in the same geographic areas roughly (Boston and SF is where I ride most and flip between services as needed), so in theory it's sampling from a similar population.<p>One thing in particular I've asked drivers is if pool-services work ok for them. About half say yes and seem to love it, and the other half grumble that it never makes them any money.<p>I really wish I knew the other factors that go into this to understand the root causes better.
I wonder how much airbnb hosts are making. In Lisbon most airbnb hosts are amateurs who spend a few hours every week cleaning and greeting, and get the bejeezus taxed out of their parallel activity. I wonder if they’re doing any better than “transportation entrepreneurs” working for ridesharing companies.
I analyzed the math here: <a href="https://news.ycombinator.com/item?id=16503218" rel="nofollow">https://news.ycombinator.com/item?id=16503218</a><p>TLDR: It's probably correct but also highly misleading in how it's characterized.
“Of the five sources of cost estimated per mile (Insurance, Maintenance, Repairs, Fuel and Depreciation), approximately 40% of costs are attributable to Insurance, Maintenance and Repairs, 40% to fuel expenses, and 20% to depreciation.”<p>I don’t understand how insurance is a relevant cost. Insurance is required to legally operate a vehicle - this is something that they must have for their personal vehicle regardless of whether or not they are driving for Uber or Lyft. The only way this is a relevant cost is if they own their vehicle for the sole purpose of Uber or Lyft driving. I have to imagine that this is usually not the case.
This is a duplicate. Previously: <a href="https://news.ycombinator.com/item?id=16498551" rel="nofollow">https://news.ycombinator.com/item?id=16498551</a>
Ways in which this headline is potentially misleading:<p>1) Driving for Uber/Lyft/etc is not a full time job, and was not intended to be a full time job. It's a piecemeal work side job. The flexibility of working when you want, and not working when you don't want, is valuable and you don't get it for free.<p>2) "Profit" is not income. This is profit net of expenses. Expenses that, among other things, you can write off against your income. And to pre-empt the "Uber drivers can't afford tax accountants" criticism, Turbotax costs $50<p>3) The profitability of Uber driving can vary dramatically place to place. I often ask Uber drivers in SF how they like their jobs, what they make, etc. They consistently report to me that they make between $40k and $55k/yr. This is significantly higher than "below minimum wage". OTOH, I imagine that driving Ubers in a low density place, where cabs are less financially viable (say, Fargo) is a shitty job. Averaging across the San Franciscos and the Fargos of the country to say "Uber is a terrible job" is not an accurate representation of the facts.
In my city (Montreal) there are some Uber drivers who seem very content and have driven for 3+ years.<p>They often have very nice cars. What is going on: are these drivers just doing it as a hobby? Are they somehow earning more than others?<p>One would assume that you can be fooled and stay in the game for 3-9 months at $3.37 an hour, but not 3+ years.
At $0.59 per mile these guys are stiffed really really hard. The IRS recommendation is over $0.50 per mile:<p><a href="https://www.irs.gov/newsroom/standard-mileage-rates-for-2018-up-from-rates-for-2017" rel="nofollow">https://www.irs.gov/newsroom/standard-mileage-rates-for-2018...</a><p>Perhaps these companies should charge at least that rate, not to mention the drivers should be setting their own rates on top of that.<p>With an average speed of about 20mph (EPA urban drive cycle) you would need to "profit" about $0.50 per mile to make $10 per hour. I'm not gonna look up minimum wage and it varies per state, but anyone charging less than $1 per mile to give you a ride would seem to be screwing themselves over and would be better off flipping burgers.
Questionable statistics.
I know several people who driver rideshares for a secondary income and do quite well. They're not irrationally wasting their time. They're using vehicles that they're _already_ paying insurance on, et cetera. From their POV, they either drive rideshares and make money (couple hundred bucks maybe), or stay at home and relax. They've explained to me that they do it because their bored or have free time.
To support any discussion on this post, here is an earlier HN post of the same content but from a different source:<p>> <a href="https://news.ycombinator.com/item?id=16498551" rel="nofollow">https://news.ycombinator.com/item?id=16498551</a><p>> The MIT CEEPR Research: <a href="http://ceepr.mit.edu/files/papers/2018-005-Brief.pdf" rel="nofollow">http://ceepr.mit.edu/files/papers/2018-005-Brief.pdf</a>
The maintenance, insurance and depreciation cost of driving Uber an unlimited miles a week is $214 a week, minus a profit margin for a company like Hertz: <a href="https://www.hertz.com/rentacar/misc/index.jsp?targetPage=UberFAQs.jsp" rel="nofollow">https://www.hertz.com/rentacar/misc/index.jsp?targetPage=Ube...</a><p>So any study that says it is more expensive than that to drive for Uber is wrong.
Good thing no one is being forced to drive for Uber. If your main source of income is from being a ride-share driver, the problem isn't with Uber.
I'd be interested to see what the median profit would look like after adjusting for COL.
My guess would be that most high earning drivers are in areas with high population density (thus also likely to be more expensive) so I'm not sure if the increased hourly rate necessarily implies that they are doing better.
Anecdata: I talked with an Uber driver the other day in London who said his weekly target was to make £1000 gross per week and would adjust hours (ie less or more) accordingly. On the side he was trying to bootstrap a business.
it's almost like i detailed this phenomenon two years ago.<p><a href="https://cryoshon.co/2016/01/11/why-the-sharing-economy-is-awful/" rel="nofollow">https://cryoshon.co/2016/01/11/why-the-sharing-economy-is-aw...</a>
'If drivers are fully able to capitalize on these losses for tax purposes, 73.5% of an estimated U.S. market $4.8B in annual ride-hailing driver profit is untaxed," they add.'<p>So they might be making money, but only by avoiding taxes. Great. /s
It does seem that there are glaring flaws in the methodology:<p>1) They use average numbers for vehicle expenses which are going to be much higher than what professional drivers with strong profit incentives are going to pay<p>2) They report on a sampled average of all Uber drivers while acknowledging that the vast majority of these are part time and temporary employees who are not really optimizing their profits. If they looked only that those who do Uber full time or for more than temporary work they would get a completely different story.