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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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... I want to perform cranial activities with Tuesday Weld!!
(Score: 2) by Grishnakh on Saturday March 03 2018, @02:35PM (31 children)
If it were really *that* unprofitable to drive for Uber/Lyft, why would anyone still be doing it? Workers can't work almost for free and still pay their rent; eventually the house of cards collapses. This seems pretty suspicious. Also, Uber/Lyft aren't *that* much cheaper than regular cabs (perhaps half as much at times, certainly not by an order of magnitude), and with cabs the driver doesn't normally own and maintain the car, and still makes an apparently decent paycheck. If Uber/Lyft were really such a bad deal, it wouldn't be as popular for drivers as it is.
(Score: 2, Informative) by Anonymous Coward on Saturday March 03 2018, @02:38PM (1 child)
second reference in the pdf linked in tfa:
McGee C (2017) Only 4 percent of Uber drivers remain after a year says report. URL:
https://www.cnbc.com/2017/04/20/only-4-percent-of-uber-drivers-remain-after-a-year-says-report.html [cnbc.com]
(Score: 1, Informative) by Anonymous Coward on Saturday March 03 2018, @03:11PM
This goes to another link which is partly hidden behind a website subscription,
https://www.theinformation.com/articles/how-uber-will-combat-rising-driver-churn [theinformation.com] (I didn't give them my email address).
Visible at the bottom of "theinformation" page is this line:
Correction: A prior version of this article said about 4% of people who sign up for an Uber driver account still drive for Uber one year later. It’s roughly 3%.
(Score: 1, Insightful) by Anonymous Coward on Saturday March 03 2018, @03:00PM (2 children)
Because the real minimum wage is $0, always has been, always will be. In light of that, $3.50 is greater than $0, and if you already have the vehicle it's gonna cost you in upkeep anyways.
(Score: 0) by Anonymous Coward on Saturday March 03 2018, @03:07PM (1 child)
I don't think anyone would get out of bed for a penny per hour.
(Score: 2) by realDonaldTrump on Saturday March 03 2018, @04:32PM
Interesting thought! I never thought of it that way. It's like you're paying them to get out of your bed.......
(Score: 5, Interesting) by canopic jug on Saturday March 03 2018, @05:11PM (11 children)
If it were really *that* unprofitable to drive for Uber/Lyft, why would anyone still be doing it? Workers can't work almost for free and still pay their rent;
No. They can't pay their rent doing that. However, many of them can't (or won't) do math either.
They used to do something similar to pizza drivers in the US and people still fell for it even back then when the education was much better. Back in the day, one friend bragged about getting a fairly high paying pizza delivery job because he had is own car. I talked him into doing a cost-benefit analysis, taking into account the cost of fuel, and we saw quickly that he'd be losing a lot of money on the deal and depending on heavy tips to break even. Amortizing maintenance costs per hour driven cut into the tips noticeably as well. Needless to say there were better, far more fun ways to go broke so he quit that day.
Money is not free speech. Elections should not be auctions.
(Score: 3, Insightful) by Anonymous Coward on Saturday March 03 2018, @05:52PM (5 children)
If you need any evidence of people doing things because they can't do the math and get dazzled by the exceptions, just look at how many MLM schemes there are.
(Score: 3, Informative) by bzipitidoo on Saturday March 03 2018, @06:52PM (3 children)
Or look at farming. Farmers have been squeezed for decades, forced to get bigger and bigger. You can't justify a million dollars worth of state of the art farm equipment without a lot of acreage to farm. You can't work crops a measly 2 or 4 rows at a time any more, like you could 50 years ago. You'll lose money if you try it. Lot of farmers did just that. Spend $100,000 on seed, plant and grow and harvest the crops, and at the end of it all, get $105,000, or maybe $95,000, or less, depending on the commodity prices. And they'd extend their loans and try again next year, hoping for better prices. Eventually, when they have nothing more to put up as collateral, the bank won't loan them any more and they have to quit. Yes, most farmers were bad at finance. Banks too sometimes got burned. Land values could collapse any time, and then suddenly the collateral isn't enough to cover the loans.
There was a joke about a farmer who won the lottery. When asked what he would do with the money he said he'd just farm until it was all gone.
Anyway, there's more to this financial ineptitude than mere lack of math skills. It seems more a mental issue. People engaging in wishful thinking, refusing to see that their fantastic idea isn't a goldmine, or even novel. And refusing to do the math, rather than inability. They don't want to know.
(Score: 3, Interesting) by HiThere on Saturday March 03 2018, @07:29PM (1 child)
That's not as much of a joke as you think. My grandfather wanted to be a farmer, but would work as a licensed electrician for a few years every decade to build up a nest-egg that he would slowly deplete by farming. He knew he couldn't earn a living farming, but he liked it a lot better than being an electrician. (I, OTOH, never liked farming. It involves an incredible amount of hard physical work, getting up very early, being out on cold, rainy weather, and it's boring. But *he* liked it. And so does at least one of my brothers. Who also doesn't quite break even, and knows that he can't quite break even. If he had a good well he could probably break even, but not turn a profit. OTOH, because they both knew they couldn't break even, they didn't go into debt and get saddled with loans.)
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 2) by JoeMerchant on Saturday March 03 2018, @09:53PM
People enjoy driving, it's why over-the-road truck drivers will work for poverty level compensation.
Some people enjoy working with kids and virtually volunteer as teachers' aides in the elementary schools - and that's fine for them.
If Uber drivers enjoy what they do and know that it's screwing them financially then that's fine, let them drive because they enjoy meeting random strangers in random places at random times on an on-call basis and driving them where they want to go. It can be interesting, even exciting sometimes...
The problem is that a lot of people will see the short term paycheck and think they're making a living when instead they're actually digging themselves into debt... so that's where fact-based education needs to come in and help those who might not be thinking long-term for themselves.
When somebody declares bankruptcy, the rest of the world that hasn't declared bankruptcy gets to pick up their tab. I'd rather not be picking up the tabs of any happily deluded Uber drivers, or similarly deceived workers at minimal net-gain jobs.
Україна досі не є частиною Росії Слава Україні🌻 https://news.stanford.edu/2023/02/17/will-russia-ukraine-war-end
(Score: 3, Interesting) by canopic jug on Saturday March 03 2018, @08:27PM
Or look at farming. Farmers have been squeezed for decades, forced to get bigger and bigger.
From my understanding that is because of the tax breaks and other subsidies for large farms.
If things are left to the market, without subsidies, then the smaller farms turn out to be more efficient at production. However, at least in some areas there is the problem of real estate speculation and farmers get taxed as if they were sitting on an office park or large residential neighborhood. Then in pretty much all areas, due to population pressure, farms that do get sold end up priced as if they were going to be used as office parks or residential neighborhoods. That puts the new farmer in terrible debt from day 0.
Soil and microclimates are not fungible commodities. There are very, very good reasons that farmsteads were staked out on specific plots, especially during the last centuries when dynamite and machines became available. However, gone is gone [scientificamerican.com] and even if one day people figure out that you can't eat money they won't have anything to work with or on.
Maybe rockwool and hydroponics will feed the oligarchs and their immediate support system. Maybe not. The book, Make Room! Make Room! [wikipedia.org], and not the movie based on it, is too depressing because in the 50+ years since its publication it has become less and less like science fiction. In some ways the book is too optimistic and doesn't have terminator seeds and monsanto politics.
Money is not free speech. Elections should not be auctions.
(Score: 0) by Anonymous Coward on Saturday March 03 2018, @07:09PM
Are you suggesting the the way Betsy DeVoss made her money is what contributes to Americans being unable to do math, and figure out that Uber is a scam?
Uber School: have a living room that is empty during the day? Can you read?
Uber Laundry: amortize your appliances!
Uber Barber!
Uber Opioids.
(Score: 0) by Anonymous Coward on Saturday March 03 2018, @07:06PM (2 children)
I fondly remember the time when the US school system was ever so slightly better than the abomination we have now. There was slightly less rote memorization and less useless standardized testing! Wow! What a grand system it was for creating worker drones.
(Score: 2) by Grishnakh on Sunday March 04 2018, @02:28AM (1 child)
I went through the US school system in the 80s and very early 90s. It was a complete abomination back then, and that was ~30 years ago now. If it ever wasn't an abomination, it must have been well before I was born.
(Score: 2) by canopic jug on Sunday March 04 2018, @11:05AM
it must have been well before I was born.
I think it was only a little before your time. "Reaganomics" had a swift, negative effect on the US schools. Talking with people that went through those schools in the 1970s or earlier gives me the impression that while not great they were acceptable. Of course some particular schools stood out noticeably on either end of the curve. However, the average seemed to have good results. The defund-sabotage-privatize tactics, with the accompanying PR smears, really only started with Reagan and have only ramped up since then. There's so many ways that causes trouble that many dissertations could be written on that.
However, way earlier, it was possible, if one had ambition and the opportunity to later move, to start out in a one room school and rise high up in research or industry. A long since deceased older colleague of someone I know who was himself born in the 30's went to a one room school and still became a top researcher and academic. The teacher at his school had replaced the desk with his bed and would lie in it the whole day and direct the classroom with the help of a buggy whip. Apparently he could zap with extreme precision and reach every single student at their desk if they got out of line or made an incorrect answer. It was possible to learn. But unlike today rather than metaphorically beating the learning out of students it was beaten into them, sometimes physically. In these times corporeal punishment is avoidable but what needs to be revived is the focus on learning.
In a different state, another, who was a joker to his dying day, did very well in small business despite having gone to a one room school. One of his best pranks was long running. He told that he and his friends made up a story about another kid who was too far away to do the daily walk to school. So they arranged with their teacher to bring extra homework and tests home to the imaginary student. By graduation time, the imaginary student had gotten his diploma with the minimal passing grade and the teacher gave it to this joker and his friend to bring to the imaginary student. Either the teacher was aware of what they were doing and went along with the prank or was really into getting the students to learn. I mention it only because I'd like to think it was the latter based on the small handful I knew of from that school.
It's not going to come back on its own however. Some push is needed to bring that goal-oriented teaching back. Defunding and demeaning the teachers [newsok.com] while burying them in irrelevant paperwork [commondreams.org] is not going to do that.
Money is not free speech. Elections should not be auctions.
(Score: 2) by JoeMerchant on Saturday March 03 2018, @08:09PM (1 child)
The pizza driver example is one way for a kid to siphon money out of their parents via the car their parents pay for...
Україна досі не є частиною Росії Слава Україні🌻 https://news.stanford.edu/2023/02/17/will-russia-ukraine-war-end
(Score: 0) by Anonymous Coward on Saturday March 03 2018, @11:43PM
Mining cryptocurrency involves less work though... ;)
(Score: 5, Informative) by Thexalon on Saturday March 03 2018, @06:21PM (4 children)
I can think of lots of reasons why an Uber/Lyft driver will do it, even though the wages suck so much:
1. The $3.37 per hour in their calculations for an Uber/Lyft driver is higher than the "tipped minimum wage". A not totally uncommon occurrence is restaurant and hotel management stealing the tips from their own employees. But why don't the employees that are being robbed by their bosses quit? Very simply, because the only alternative they see is not working at all, and they can't afford that option.
2. They don't understand asset depreciation, so from their point of view the profits are simply "Pay + tips - gas", not "Pay + tips - gas - cost of car mileage". This makes the pay seem substantially higher than it is.
3. People can drive for Uber/Lyft with criminal records that will prevent them from getting other legitimate jobs, and also bars them from most government assistance. For example, I know somebody with a misdemeanor assault on her record, and that's enough that she can't get a regular job, so she drives for Lyft to earn money for rent, utilities, and groceries. When your alternative is starving, street hustling a la Eric Garner, or becoming a career criminal, driving for Lyft seems like a good idea.
4. People can also drive for Uber/Lyft without drug testing. Your driver may be a pothead who is either unable or unwilling to "study for their drug test".
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Insightful) by dry on Saturday March 03 2018, @07:17PM (2 children)
The land of the free, where doing one stupid thing or even using certain plants, is enough to never have a proper job again.
(Score: 2) by Thexalon on Saturday March 03 2018, @07:29PM (1 child)
And the actual story of the friend with the misdemeanor assault is much worse than that: She was found guilty of an assault she never committed. Her ex-husband had, unbeknownst to her, hired her roommate and the roommate's boyfriend to frame her. Their initial scheme was to have the ex-husband send harassing text messages to the roommate and blame it on my friend. This failed, because the police were unable to connect the text messages in any way to my friend. 1 hour after the roommate and her accomplice learned this from the police, they switched to plan B: The boyfriend blocked my friend from leaving, pinned her up against the wall, gave her a black eye and a few other bruises, and when my friend scratched him to defend herself, the roommate called the cops and blamed my friend for starting it. 2 people's word against 1, and a bumbling lawyer in his first trial (he had not informed my friend of this) who somehow was unable to bring the substantial evidence that this is what had happened into the trial, was enough to convince a jury that a 110-pound woman had assaulted a 4-time felon twice her size for absolutely no reason.
Why did the ex do all this, you ask? Because he thought her criminal record would help him take full custody of their child.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by dry on Saturday March 03 2018, @08:07PM
The miscarriage of justice is shitty too, along with all the people who are pretty much forced to plead guilty rather then take the lottery of being convicted for worse. Still seems like a minor crime to be banned from having a regular job again. Most people have screwed up at one time. Shit, I ended up in jail for a month when I was young and generally it doesn't affect my employment chances. I also often have a joint before bed, without worries because it is generally illegal here to do drug tests and I'm not using heavy machinery.
(Score: 0) by Anonymous Coward on Sunday March 04 2018, @02:17AM
double negatives don't always not sucks.
(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.
Appended to the end of comments you post. Max: 120 chars.
(Score: 2) by JoeMerchant on Saturday March 03 2018, @07:57PM
Because people are not smart about long term repercussions, like depreciation of a vehicle.
Also, Uber/Lyft owner/drivers aren't nearly as cost-efficient at operating their vehicles as regular professionally maintained fleets of dedicated taxi cabs.
Lower income + higher costs makes the 30% overall loser result very believable.
Based on what? Think of someone you know with an IQ of 100, now take a moment to consider that half the people in the world are stupider than that. It's not surprising at all that 30% of Uber/Lyft drivers are net-losers, especially with all the stories that circulate about how nice and new the cars are as compared to taxi cabs.
Україна досі не є частиною Росії Слава Україні🌻 https://news.stanford.edu/2023/02/17/will-russia-ukraine-war-end
(Score: 2) by mrpg on Saturday March 03 2018, @08:19PM (2 children)
They think someday they'll win. If they buy 14 and it draws 15 they see it as being close.
If they buy 23 and it draws 32 they see it as being close. And people don't use a ledger for their lottery.
Thank you, bye.
(Score: 0) by Anonymous Coward on Sunday March 04 2018, @12:10AM (1 child)
Buying a lottery actually makes more sense if your goal is to get really really rich. For a lot of people it's the best chance for them to have a 100+ million dollars in their lifetime. So if that's your goal then I'd say it's worth a shot. Tons of people spend more on lattes and the odds of them getting 100+ million from that are even lower ;).
How many poor people in the USA could _work_ their way up to a 100 million dollars? And what are the odds of that happening if they're not one of those with the aptitude and the "energy"? There are some people who can work two jobs but there are many people who'd fall sick if they tried that. In contrast buying a lottery ticket doesn't involve quite as much hard work.
And there certainly are a number of jackpot winners per year: https://www.powerball.com/winner-stories/jackpot/10 [powerball.com]
So in contrast how many people per year join the 100+ million dollars group who have achieved it by working hard from poverty? How many have worked hard to try the same thing and never succeeded in their lifetime?
There are many poor people who slog their way up into lower middle class and then their kids reap the rewards. But that's far from the same thing.
(Score: 0) by Anonymous Coward on Sunday March 04 2018, @12:22AM
See also: https://soylentnews.org/article.pl?sid=18/03/03/187209 [soylentnews.org]
https://www.technologyreview.com/s/610395/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/ [technologyreview.com]
It's as much bullshit telling the poor that they should work hard if they want to become really rich, as telling people that driving for Uber is a good deal. Someone is getting rich by their hard work but it's unlikely to be most of them.
Work so you have some reserves for bad times. Because you can bet your life there are going to be bad times.
(Score: 0) by Anonymous Coward on Saturday March 03 2018, @11:05PM
Yes, you are a dubious one.
I doubt anyone here can't see it, though, so why state the obvious?
(grin)
(Score: 2) by tekk on Sunday March 04 2018, @02:16AM
A big thing is that the costs are largely invisible. If I'm driving for Lyft, the only immediate cost I see is the gas money, but what actually bites you is the increased wear on your car. Driving for them would be far more profitable if you had a throwaway car, used some beat up old thing on its last legs to squeeze a few extra dollars out of it and then when it dies you're done.
(Score: 2, Interesting) by sonamchauhan on Sunday March 04 2018, @02:54AM
Perhaps because VC money is truly subsidising operations (i.e., they are upping payments to drivers to stop them quitting).
https://qz.com/967474/the-on-demand-economy-is-a-bubble-and-its-about-to-burst/ [qz.com]
Uber runs out of money in a year. It's signed a deal to buy 24,000 Volvo SUVs for $1 billion, to be delivered in 2019. The plan is humans drive them first, then they add sensors and software to convert them to driverless models and fire the drivers. No drivers = no payments to drivers = profit!!!
They're betting the tech will be ready by then.
BTW, they also have this bright long-term vision to expropriate taxpayer-built roads in cities:
https://www.gizmodo.com.au/2018/02/uber-and-lyft-have-a-hot-new-idea-for-screwing-over-city-dwellers/ [gizmodo.com.au]
"WE SUPPORT THAT AUTONOMOUS VEHICLES (AVS) IN DENSE URBAN AREAS SHOULD BE OPERATED ONLY IN SHARED FLEETS."
(Score: 2) by All Your Lawn Are Belong To Us on Monday March 05 2018, @03:50PM
Yes. People will. Because if they *think* they'll make money at it they'll try it. They'll learn differently and quit, but a whole new crop of people will be there the next day - people with either free time or people who are desperate.
When I worked as a cab driver in a very small (not urban) population, I just barely kept my head above water. I loved it - I'd do it for the rest of my life if it were profitable. But it wasn't. What is missing in the study above is how ride-hailing compares to conventional taxi services for sustainability.
Consider Multi-Level-Marketing. [wikipedia.org] 99% of people who join one will NOT make any money at it at all. Yet Amway still exists [cmu.edu], people still think they can make money at it, despite knowledge to the contrary [finance-guy.net].
Finally, bear in mind that just because it is overall unprofitable to participants does not mean there aren't drivers who do make money at it. Some will. Just like some people in the up-line really do make money with Amway. Just not enough, apparently, and one can question whether it is therefore societally worthwhile to allow the service to exist. (That's not a "no," just that the question should be asked.)
This sig for rent.