While it's relatively easy to believe that the income from driving for Uber and Lyft is lower than most people imagine and it is relatively easy to believe that a small fraction of drivers are actually losing money by driving, it is difficult to believe that that fully 1/3 of drivers are continuing to impoverish themselves.

I'm not saying it's not true, but without supporting details it seems clickbaity.

https://news.ycombinator.com/item?id=16498551

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.

At IRS rate, that's a cost of $54,000.

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.

Edits: I mistakenly said the study used IRS Mileage Rate. It does not.

[1] http://mikes-review.com/does-a-toyota-prius-really-get-50-mi...

[2] https://www.nerdwallet.com/blog/insurance/best-ridesharing-i...

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.

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".

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).

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.

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 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.

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.

Are drivers misled into believing they will make more? Is the cost per mile intentionally hidden from them?

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.

1. This is at subsidised Uber pricing, where Uber is loosing money at an alarming rate.

2. This means driving for Uber is terrible economicly.

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.

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.

And I've had others who are really frustrated with the app, the GPS, traffic, the company, their compensation, the Pooling services, riders, etc.

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.

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.

I really wish I knew the other factors that go into this to understand the root causes better.

TLDR: It's probably correct but also highly misleading in how it's characterized.

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.

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.

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

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.

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?

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.

https://www.irs.gov/newsroom/standard-mileage-rates-for-2018...

Perhaps these companies should charge at least that rate, not to mention the drivers should be setting their own rates on top of that.

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.

> https://news.ycombinator.com/item?id=16498551

> The MIT CEEPR Research: http://ceepr.mit.edu/files/papers/2018-005-Brief.pdf

So any study that says it is more expensive than that to drive for Uber is wrong.

The paper actually seems to be trying to make the point that Uber drivers are gaming the tax system because their actual costs are lower than the IRS allowance.

$0.30 seems like a fairly reasonable number and it also matches up well with renting a car that's intended to be driven for a week like this and just buying gas for it. (There's also some cost associated with deadheading to the next pickup.)

The $0.59/mile revenue does seem a bit low. UberX or Lyft would seem to typically have pricing in the neighborhood of $1.00 to $1.50 per mile of which about 75% goes to the driver. So $1/mile would seem likely to be a better revenue number in which case the net is more like $0.70/mile and I would have to believe most drivers, even in a larger city, are driving 10 miles or more in a typical hour.

I doubt driving for these services is a huge win once all costs are taken into account but it seems closer to being a minimum wage job than a total bust.

That gets your $15.5k down much closer to zero.

The article's bottom line is that Uber/Lyft drivers are getting paid way, way below minimum wage when all expenses are taken into account. That's left intact by the above calulcations, even if the numbers vary by 20% high or low.

But all of these costs go up if you drive more miles. Your vehicle depreciates more if you put more miles on it (but not if it's parked in your garage), you need more frequent oil and tire changes, and your insurance rates go up because you're more likely to make a claim the more miles you drive annually. And rideshare insurance is more expensive.

That's not how Uber was originally promoted to drivers at all. Uber was originally promoted to high-end professional car drivers.

Fairly sure that the parameters of driving for Uber/Lyft preclude every single aspect of what makes that activity enjoyable for an 18-22 year old.

Do they allow you to set a destination area so that your fares are limited to this, or do you just get to review and accept fares so you can choose ones in the right direction? I wasn't aware it could be used to just pick up someone going the same direction.

I can see something like that doing very well, but I can also see how Uber might want to brand it slightly differently, as those drivers may be slightly less invested in driving for Uber and might be more likely to flake or not be as accommodating to passengers.

They say more than 80% of Uber drivers work less than 40 hours per week so that "median profit of $3/hr" is probably for someone working 10 hours per week.

I've not heard that phrase before. It brilliantly captures exactly how such a clearly predatory business model was blindly accepted by drivers and passengers alike. My ethics won't let me use either as a passenger, regardless of the "good deal"; I never could, and this is an issue with my work as management insists any business travel uses Uber. I flat out refuse. Our CEO's mouth dropped when I explained why, replying in a tiny voice "I'd never considered it that way".

I saw a Dominos delivery driver in a high end Jaguar. I can only presume it was a young person borrowing their parents' car to do deliveries as their summer job or whatnot. It was amusing to me (having an economics background), because I couldn't figure out what the lesson was being taught here.

Doing some back of napkin math, there was absolutely no way for this kid to generate enough money to make up for the cost of operating this car in a suburban neighborhood. Between the high maintenance cost and the low gas mileage of a luxury car, he was losing money every minute that the jag was being operated (barring, of course, some insane tips for big orders).

As far as real estate: yes, it doesn't take a financial genius to realize that renting income after all expenses is far lower than most people estimate and net profit hovers around $0-100 in vast majority of even profitable cases. Besides, you aren't the first person to think about investing in RE, so all the economic profit is generally already priced into the value of land, so you won't be able to get a bargain.

Initially the lease looks very attractive, because you get a swanky new car, combined with bonuses and stuff that you get as a new driver.

Few months in, the incentive turns into a shackle. You start realizing that incentives are dwindling and the monthly payments are eating into most of your Uber earnings, which was masked by higher new driver incentives initially.

At this point, loss aversion kicks in, and forces the driver to drive crazy number of hours every day, just to make a decent profit over operating costs and the monthly due for the car.

With more such drivers in the market, and an ever dipping price for rides, $/Mile reduces.

That's the incentive.

update: If you think Uber/Lyft in the US is bad, talk to Uber/Ola drivers in India. Many of them are sleep deprived and driving, to make ends meet. And often barely earn enough to justify the costs.

Yeah but would you rather flip burgers and smell like french fries the whole time? Driving people around is not completely unpleasant in comparison.

They absolutely are. I know someone who ended up signing one of those rental car leases with Lyft to become a driver. The numbers the company provided made it seem like it would be quite easy to pay off each week. As it turns out, it was just like the old "company store".

Should be higher. Insurance, energy and maintenance will be cheaper at the scale of Uber's fleet. Driving style might be optimized for MPG. Cars will be available 24/7 with no downtime.

Is this 55k from part-time Ubering, or is this 55k in total, most of which comes from their "real" full-time job and a small fraction from Ubering, or is it 55k from full-time Ubering in direct contradiction of what you said, or what?

When I query drivers, I often get the same sentiment that they are with Uber by choice. Unhappy uber drivers leave, either because the platform penalizes them by way of bad ratings, the economics don't work, or some other reason.

While the numbers from the study seem abysmal when distilled down to the per-hour profit, it hasn't dissuaded drivers from stick with the platform as a viable mean of income.

It sounds like the 1100 drivers surveyed displayed different characteristics. I'd be more interested in more granular data, such as the per-hour rate based on the number of miles driven, length of tenure, location, star rating.

Edit, adding: In Lyft’s ExpressDrive program, the quota to get free rental is 105 rides per week. They apparently think it should be a full time job. You might get 3 rides per hour during peak periods, if nobody barfs in your car after closing the bar, but mostly you’ll average about 2 rides per hour over a week.

It absolutely is, and the way their incentives are structured, they clearly do mean it to be.