$2.75 or $25 Per Hour? How Much Are Uber Drivers Really Making?

Comments

1
So, the city council wants both to regulate and increase ride sharing costs and reduce the number of cars in the city (and the need for mandatory parking). Honestly so do I, but I don't have Dr. Strange-like superpowers.
2
I feel like this is not that hard, just set legislation that makes Uber and Lyft guarantee $15 per hour worked on the clock (either driving or on the way to pick up an accepted fare). That way if drivers are working but are being stiffed in fares their employer (even if it’s contract Uber and Lyft are still their employers) has to at least pay them minimum wage.
4
If the drivers are taking in roughly $1 per mile (plus a smidge), and the IRS default write-off for expensing mileage is $0.54 per mile (plus a smidge), that means the drivers are earning less than 50¢ per mile for all practical purposes, after expenses. That means you'd have to be driving about 30 paid miles every hour to earn minimum wage.

While I suppose it's possible to be driving that kind of miles during peak hours, I doubt it offsets the hours you sit around waiting for a fare. Just doing a bit of back-of-the-napkin math makes it look far more likely that drivers are probably earning way less than minimum wage on average, after true expenses.

(Sidenote: I'm aware that the IRS mileage rate is imperfect. But I've had jobs in the past where I had to expense a vehicle, and the IRS is surprisingly close for a midsize, mid-priced, relatively new sedan. You might be able to shave a bit off that, but an Uber/Lyft driver is going to get crap ratings if they try to drive around an old clunker or a Honda Fit to try to save on their car expenses).
5
Do these earnings estimates account for the cost of ownin/operating the car? I think they don’t if they are really before expenses. If you subtracted the standard IRS estimate (.53/mile now?), does it pencil out at all?
6
Ok, @4 can obviously type faster than me.
8
@4 Huh?? The amount you can write off per mile doesn't affect how much you earn, only how much you pay taxes on. So if you write off .54 then you only pay taxes on the remaining .46 cents. If your income tax rate is say, 20% then you're paying about 9 cents per mile in tax and earning the other 91. And that's not including any additional write offs (vehicle cost, maintenance, etc).
9
I'm reminded of the animation feature "Jimmy Neutron, Boy Genius" who travelled across the galaxy to rescue his and his friends' parents from an "advanced alien civilization." Upon arriving he finds their scientists have devised a means for the entire population to devolve into amoebic blobs so they can live 24/7 inside their mobility devices, their cars. Another unexpected thing Neutron faces is indifference toward their human captives who are to be ritually slaughtered for public entertainment in a Romanesque arena.
10
@8, Uber/Lyft does not supply cars to their drivers. An Uber/Lyft driver must drive their own car, pay for their own gas, insurance, oil changes, tires, etc. So, the cost of operating the car must be deducted from their base pay in order to determine what they really earn after expenses.

Most people wildly underestimate the cost of owning and operating a car. Even if you already own a car, and only drive for Uber/Lyft part time for a bit of extra cash, you are still required to cary higher liability and collision insurance, you're paying for extra gas, you're putting extra miles on your car which means you have to pay for more frequent maintenance and you'll have to replace it sooner. Almost none of us actually sit down and keep accurate records of all of our vehicle expenses, unless you have to maintain such records for tax or employment purposes. I have done just that.

The exact cost of vehicle ownership varies, of course. Are we talking about a Honda Civic (`$17,000) or a Tesla S (~$85,000; don't laugh, someone actually bought a Tesla for the sole purpose of driving it for Uber a couple years ago)? Insurance costs vary depending on your age and the zip code you live in. Some cars have higher maintenance costs than other, get different gas mileage, etc.

So that is the purpose of the IRS standard milage deduction. That is the IRS's estimate of the average cost per mile to operate a vehicle. If you use a vehicle for something that is deductible, you can either (A) use the default IRS milage deduction, or (B) keep exact records of your vehicle costs and write it off specifically.

It turns out that the standard IRS deduction is actually pretty close to real life expenses for an average vehicle. They actually track the data and revise their standard deduction every year. So since I was trying to estimate what a Uber/Lyft driver makes, and the article supplied a gross income range before expenses, I needed to make an estimate of their expenses to figure out their net income after expenses. The IRS standard milage is a handy and reasonably accurate figure to use for the expense of operating a vehicle for commercial use.

Hence: Gross income (~$1.00+ per mile, per the article) - vehicle expenses (~54¢ per mile, per the IRS) = less than 50¢ per mile net income after expenses.

I'm guessing that some of the Uber/Lyft drivers who claim to make $25 an hour or more are wildly underestimating their actual vehicle expenses, or not taking that into consideration at all.
11
Forcing the Union on Uber and Lyft is what this is all about. 15,000 Ubers (then, plus Lyft) in the Seattle area and making less than minimum wage? Boy, there are a lot of chumps out there. The Mafia would love to get $500 to a thousand from them every year in dues. So why are they still driving, I would just go home if my numbers crunched like that. 15,000+.
Now the City Council, on admittedly incomplete data, passed legislation that would will eventually pass unchanged. Corruption in real time.