How Much do Boston UberX Drivers Make in a Night?(bostinno.streetwise.co) |
How Much do Boston UberX Drivers Make in a Night?(bostinno.streetwise.co) |
I also found it interesting that the rental fees include a 30 cent parking-violation fee. At my office we had a problem with Uber who were constantly parking illegally in front of our building. So they're getting the benefit of illegal parking without paying the (admittedly small) fee that cabbies have to pay. Of course it costs less! Especially if you don't count keeping up your car and the community!
Also, if this is self-employment (which it sounds like it is) then the drivers can deduct $0.56 per mile they drive from their taxes.
As for a violation fee, I assume that for cabbies that's to cover the cost of tickets they get, not that it exempts them from receiving them. With Uber, you can judge the risk yourself. Presumably, just like with a taxi, it makes sense to accept an occasional ticket as the cost of doing business.
Overall, it seems like it's economically reasonable to be an Uber driver.
The big difference between Uber and a cab is that the existing regulatory regimes in many cities allow the cab company owners to extract most of the value from their drivers.
You deduct it from your reported income, not your taxes. This is a fairly important distinction, although it is still a useful benefit.
Only semi on topic, but via [0]:
New Hampshire and Virginia do not require motor vehicle insurance. In New Hampshire vehicle owners must satisfy a personal responsibility requirement; instead of paying monthly premiums, and prove that they are capable of paying in case of an accident. In Virginia vehicle owners may pay an uninsured motorist fee. In Mississippi vehicle owners may post bonds or cash.
[0] http://en.wikipedia.org/wiki/Vehicle_insurance_in_the_United...
The long-term question is, will Uber stay a better-behaved taxi service owner if/when it cracks the market?
(Also, the close button on site's popup "please sign up to be spammed" window is almost invisible with dark grey on black. So scammy.)
"As self-employed, independent contractors, though, UberX drivers receive a Form 1099-MISC...Subsequently, UberX drivers are hit with a 5.6 percent tax deduction for each mile they drive...if he or she drove 100 miles, he or she will be taxed $56 (5.6 percent tax x 100 miles driven)."
Why is this the case? In my experience with 1099s, they have nothing to do with miles driven. In any case, I don't understand how 5.6% of 100 = $56. Could somebody please elaborate on this?
It's not clear why UberX drivers are being hit with a deduction by Uber on their 1099s, since they--not Uber--are the ones that get the deduction. It sounds like the writer is simply confused about what is actually happening. Based on the magic math of the rest of the article, I'm guessing that the writer doesn't know what they're talking about.
There is a $0.56 per mile deduction for business miles, which is $56 per 100 miles. This is not deducted from their take-home income as the author seems to think.
Beats working for a Boston IT company where you make about 100-120K a year but get taxed like crazy.
Boston Cab charges [the undercover Globe reporter] the standard shift rate of $77, plus an $18 premium for a newer cab, as well as a city-sanctioned, 30-cent parking violation fee. Factor in the sales tax ($5.96) and optional collision damage waiver ($5), and his cost per shift is $106.26, not including gas.
But then you have to factor in that for UberX you have to own your own car, your own insurance and you have maintenance costs associated with your car. Probably still comes out cheaper / have more flexibilty with UberX, but would like to see a more in depth comparison of the costs of both.
As for insurance, I think $200/mo is probably a conservative guess. I pay way less than that as a 20-something male driving a "high risk" vehicle.
That brings us to $800/mo, leaving $700 to cover maintenance. I'm sure maintenance costs would be quite a bit above average given how much the car is driven, but I can't imagine they'd come anywhere near $700/mo, especially in the first five years (the term of the loan). After the car is paid for, you can either continue to drive it if it's cheaper to do that, or you can sell it for a few thousand bucks and start over. Plus, you don't have to buy your own car, since you've already got it, which would save you a few hundred every month.
Not exactly an in-depth look at the issue, but it seem likely that you're better off owning your own vehicle.
Unrelated, but my worry (for the drivers, anyway, both full-time and casual) is that given the low barriers to entry, a lot of people who own vehicles already will see how they can make some decent money on a casual basis with just slightly higher maintenance costs, and before long, there will be enough UberX drivers that the amount of time spent waiting to get a fare will bring the hourly wages down considerably. Maybe they'll limit the number of new drivers after a point or something, I have no idea, but I'd be concerned about that if I were a driver.
Not exactly relevant, but I was chatting with one UberX driver a few weekends ago, and she told me that the company sends each driver a monthly spreadsheet of metrics for that driver, allowing them to track their own performance. I thought that was interesting.
I drive for both Lyft and Uber: Most passengers don't tip, and even when they do they usually use the app, so there's very little under-reporting. In my experience: The most cash tip I've ever recieved was $20 for returning an iPhone to a user, and the most cash tip I've ever gotten in a night from just rides is on the order of $10, and I'd say about 80% of my nights net $0 cash tip.
You do, however, get a really nice tax advantage if you drive a fuel efficient car, the federal deduction is $.55/mile, and I estimate my operating costs (fuel, maintenance, but not depreciation since my car already has 115k), to be about $.20/mile.
It might be neat for priceomics to do a report on this. Hey, priceomics, want to interview me?
By that logic you could just become an IT contractor and under-report your income. I would not necessarily put "allows me to easily commit tax fraud" as a benefit of job, but YMMV.
Uber's Kaitlin Durkosh confirmed UberX drivers receive up
to 80 percent of each fare. "On average, uberX drivers in
Boston make about $25.93 an hour, which equates to nearly
$54,000 a year (gross income), if drivers work 40
hours/week for 52 weeks/year... gross income can be even
higher if partner drivers decide to work more than 40
hours/week, Durkosh continued.
>Beats working for a Boston IT company where you make about 100-120K a year but get taxed like crazy.
Looking forward to your follow-up post, noname123, "Why I became a coke dealer." :)
That's one way to put "if you work every night, you won't have a social life."
That said, regulations are different everywhere, so while this is probably the most common arrangement in the US, other setups are not necessarily illegal.
Conservative? I think you are severely underestimating the cost of obtaining insurance that covers the liability of injuring multiple passengers that you are transporting around as a "for hire" driver.
Much like AirBnB, people seem to overlook this cost and responsibility. That will change when an Uber driver slams into another car with 5 passengers, killing someone, or an AirBnB user, there "illegally", burns down an apartment complex. It will be the end of these businesses.
I'm not saying that these models can't work. But right now, much of the cost advantages come from working around regulations.
The insurance premiums for these companies (I know Lyft partners with Met Life) probably is adjusted downwards relative to taxis, because of several factors, but the biggest one being that the drivers own their own cars and are out of it if they wreck it, so there's a good reason not to drive dangerously. A larger proportion of Uber and Lyft drivers have been driving american streets for longer periods, and also have educations, for whatever statistical benefit that confers. Finally, the taxis are, in the end, smaller companies, so the rideshares can negotiate better deals and also provide far more statistical data to the adjusters, which enables a narrower margin.
Well, I'm not going to claim to be an expert on such matters, but I believe $1MM is the minimum that is offered for liability insurance on a driver's policy here in Canada. I'm not sure how far that'd go if you killed multiple passengers in a vehicle accident, especially if you were found negligent.
Again, this isn't to say that these are insurmountable problems, by any means. You can insure anything for the right price. But how many people are actually sufficiently insured? And how many users are checking, or even care? I can't see this not being a problem in the future.
The car you want to be driving for this task, if you are making a new purchase, is a used hybrid. A used honda insight goes for ~$16k, monthly payment on a five-year is $250/month with not very good credit, gets 34mpg while running, and you don't have to really worry too much about making payments in case you lose your job, your car, or both.
It's more important among lyft drivers to not accept cash tips because it's a safety issue; as a community, accepting cash tips can lead to danger if pink mustaches become a target for crime. Usually I refuse cash tips and relent only if they insist (this mostly happens with service industry clients).
In San Diego, there is a driver that donates 50% of tips to charities; she has a blog where she posts her tallied earnings for transparency on the process.
http://support.uber.com/hc/en-us/articles/202290128-Do-I-hav...
One caveat: The lyft system has been thrashing a lot over this time period; since they have been expanding clientele, expanding drivers (not necessarily evenly), then they changed their compensation policy to have "happy hours" with discounted rates, at which time the algorithm to calculate "prime time" rates started to go really crazy, flipping between +200% to -20% over the course of 45 minutes, then they got rid of the happy hours and went straight 20% off (and tempered the prime time algorithm), then they removed their commission, then they added a $1/ride bonus...
It's been really crazy keeping up with all the changes, but what's interesting is that I've found by ignoring the part of my brain that wants to be consternated about this and pressing forward and honing my driving strategy has basically led to a reasonable income trend that is basically independent of the craziness.