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A study conducted by the MIT Center for Energy and Environmental Policy Research analysed revenue and costs for over 1100 Lyft and Uber drivers, with the conclusion that most earn below minimum wage for their state and about 30% actually lose money when all the costs of owning and operating their vehicles are taken into account.
"A Median driver generates $0.59 per mile of driving, and incurs costs of $0.30 per mile", "On an hourly basis, the median profit was $3.37 per hour".
Because actual vehicle operating costs are significantly lower than the IRS allowance of $0.54/mile, many drivers report incomes that are substantially lower that their actual incomes, leading to a large pool of untaxed income (although it is small for each driver).
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MIT Study Shows How Much Driving for Uber or Lyft Sucks
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(Score: 5, Interesting) by istartedi on Saturday March 03 2018, @07:04PM
It works for a while because they're trashing their vehicle. Think of it as equity extraction. It's a smaller scale version of taking out an equity line on your house and living high off the hog; but then when it runs out you're homeless.
If you just got laid off, you can drive people around in your late model car and get very high ratings; but you can't afford to buy a comparable vehicle when the existing one starts to have mechanical issues.
I had this conversation with my sister a while ago, and pointed that out. She insisted that her friend was making good money. Out-of-pocket, he probably was but I'm sure his ride was racking up the miles.
I learned all of this a long time ago when I did package delivery as a contractor in the late 80s. I was able to do it with a used car that was $5000 when I first possessed it. The delivery company didn't car too much about looks, as long as the car ran. A big part of my life was aggressive oil changes and maintenance. I kept it running right and was able to take it back to school; but shortly after I graduated that puppy was whipped.
Even starting with a used car and not factoring in depreciation, I realized I was making minimum. The smartest thing I did was to actually pay my self-employment tax. That got me quarters for Social Security. I've run into people who don't have enough quarters yet, and they're in their 40s or even 50s sweating about what will happen. Even minimum wage quarters are better than zeros or really low numbers from some "biz". As an aside, I'm given to understand that the IRS and even Social Security may not even care if you dealt drugs to make the money. Just pay your taxes, pay into the system, and you'll do better in the long run; but I digress.
The MIT analysis makes sense to me at a gut level, although I haven't actually checked their numbers.
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