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(NPR)   MIT study proves Uber drivers are bad at math: 1/3 are losing money and the rest make half of minimum wage   ( npr.org) divider line
    More: Facepalm, drivers, Minimum wage, Uber drivers, Automobile, Generally Accepted Accounting Principles, median pretax profit, Uber spokesperson, Stephen M. Zoepf  
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1416 clicks; posted to Business » on 02 Mar 2018 at 8:12 AM (33 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2018-03-02 07:57:48 AM  
Uber Drivers.
 
2018-03-02 08:11:55 AM  
Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work
 
2018-03-02 08:12:13 AM  
In the DC market they have ads night and day for Lyfte and Uber. Not to use the service, but to drive for it. The turnover must be spectacular.
 
2018-03-02 08:26:40 AM  

Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work


So it's par the course for a Fark submission.
 
2018-03-02 08:27:44 AM  
An Uber spokesperson responded to the finding in a statement to The Guardian:
"While the paper is certainly attention grabbing, its methodology and findings are deeply flawed. We've reached out to the paper's authors to share our concerns and suggest ways we might work together to refine their approach."


it's not their job to fool drivers into thinking that your business model actually does anything for them
 
2018-03-02 08:28:54 AM  
If actually operating the vehicle were profitable, Uber would do it.
Since it is not possible, they subcontract the loss to idiots.
Ain't America great!
 
2018-03-02 08:30:46 AM  

Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work


The mileage deduction is only available if you itemize, which doesn't work for a lot of people for whom the standard deduction will alway be higher.  That means someone driving Uber would have to drive roughly 22,222 miles!
 
2018-03-02 08:31:52 AM  

snocone: If actually operating the vehicle were profitable, Uber would do it.
Since it is not possible, they subcontract the loss to idiots.
Ain't America great!


No.  It once was, but we're in the process of becoming great again.
 
2018-03-02 08:34:15 AM  
And still Uber subsidizes 50% of the cost of every ride.
 
2018-03-02 08:36:18 AM  

Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work


lolwut

the median pretax profit earned from driving is $3.37 per hour after taking expenses into account. Seventy-four percent of drivers earn less than their state's minimum wage

so they don't have to pay tax on their $3.37 because of mileage write offs. that doesn't increase their income above minimum wage.

maybe the tax tricks lowers taxes on their other income enough to increase that amount on a technicality?
 
2018-03-02 08:39:58 AM  
I have only used Uber 5 or 6 times, but the cars that picked us up were immaculate.   I don't like keeping the interior of my car clean when I am the one making the mess.  I have no idea how much time and $ is spent cleaning up after other idiots.  Then you add in the actual drive time, wait time, and car costs.  Unless their time is really valueless, I don't know why anyone would drive Uber.
 
2018-03-02 08:41:41 AM  
How are they only getting 59 cents per mile? I use uber several times per month as my household only has one car and I don't always feel like biking to work. ( A <5 mile ride for me costs 8 bucks and I usually give a 2 dollar tip to round it up to 10. Still way cheaper than owning a second car/driving/parking (parking at work is 10 bucks a day). Does Uber/Lyft take that much off the top?

Also factoring in the depreciation of the car is a bit wrong. Again nobody should buy a car to be an Uber driver. Being an uber driver is something you should do with your car during off hours. The things that are BS however are the uberpools. My city has doesn't have them but when I was in Boston I used it. Since it was at a really off time I was the only one in the car yet paid far less than the usual fee.
 
2018-03-02 08:46:17 AM  

The_Homeless_Guy: How are they only getting 59 cents per mile?


you have to drive to your next fare, which you don't get paid for.  or if one takes you way out in the sticks you have to retrace your path to get back to your central location, unpaid
 
2018-03-02 08:47:35 AM  
Decidedly un-uber
 
2018-03-02 08:48:56 AM  

czei: Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work

The mileage deduction is only available if you itemize, which doesn't work for a lot of people for whom the standard deduction will alway be higher.  That means someone driving Uber would have to drive roughly 22,222 miles!


This wasn't true in 2013 (last time I had contract work, a 1099, and mileage to deduct.)
 
2018-03-02 08:51:16 AM  

czei: Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work

The mileage deduction is only available if you itemize, which doesn't work for a lot of people for whom the standard deduction will alway be higher.  That means someone driving Uber would have to drive roughly 22,222 miles!


If they work 2,000 hours a year (standard FTE) and drive only 12 miles each hour, they would reach that easily.
 
2018-03-02 08:53:49 AM  

Evil Twin Skippy: In the DC market they have ads night and day for Lyfte and Uber. Not to use the service, but to drive for it. The turnover must be spectacular.


Or the growth is exponential.

If I had to bet though, I'd go with your choice.
 
kab
2018-03-02 08:54:34 AM  
but... but... gig economy!
 
2018-03-02 08:55:10 AM  

snocone: If actually operating the vehicle were profitable, Uber would do it.
Since it is not possible, they subcontract the loss to idiots.
Ain't America great!


Why do you think that? Lots of companies subcontract out lots of functions because they don't want the headache of dealing with it.

Almost no Vegas casino operates the hotel.
 
2018-03-02 09:03:41 AM  

czei: Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work

The mileage deduction is only available if you itemize, which doesn't work for a lot of people for whom the standard deduction will alway be higher.  That means someone driving Uber would have to drive roughly 22,222 miles!


22k a year? So your hyperbolic example breaks down to like 60 miles a day on a car driven for business?

Not compelling. 

If you drive a few days a month for weed money you likely don't itemize. Every person trying to "pay the rent every day" itemizes.
 
2018-03-02 09:18:43 AM  

Evil Twin Skippy: In the DC market they have ads night and day for Lyfte and Uber. Not to use the service, but to drive for it. The turnover must be spectacular.


How long do you expect people to last driving around DC all day for less than a living wage before they ragequit?
 
2018-03-02 09:26:58 AM  
It always seemed to me that Uber's value was more in an add-on to your regular life. Have to commute an hour to work everyday? Make money and give someone a ride along the way. Kinda similar to the idea of no empty trailers on semis. It never seemed to me to be a good basis for income the way a taxi might.
 
2018-03-02 09:33:04 AM  
Without reading the article I'm guessing it's because they're too dumb to properly calculate their expenses such as gas, maintenance, depreciation, and all that driving without a fare.
 
2018-03-02 09:35:51 AM  

czei: Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work

The mileage deduction is only available if you itemize, which doesn't work for a lot of people for whom the standard deduction will alway be higher.  That means someone driving Uber would have to drive roughly 22,222 miles!


That's not a lot...

If they worked 2000 hours per year (a full time job), they would only need to average 11 miles per hour.

/22 at 1000 hours
//still losing money when you count depreciation on their car for most people
///need to drive a VW Jetta for 250,000 Miles to make it woek
 
2018-03-02 09:37:02 AM  

bark_atda_moon: I have only used Uber 5 or 6 times, but the cars that picked us up were immaculate.   I don't like keeping the interior of my car clean when I am the one making the mess.  I have no idea how much time and $ is spent cleaning up after other idiots.  Then you add in the actual drive time, wait time, and car costs.  Unless their time is really valueless, I don't know why anyone would drive Uber.


It is literally perfect for Grad Students and people between jobs!
 
2018-03-02 09:39:02 AM  

ColonelCathcart: bark_atda_moon: I have only used Uber 5 or 6 times, but the cars that picked us up were immaculate.   I don't like keeping the interior of my car clean when I am the one making the mess.  I have no idea how much time and $ is spent cleaning up after other idiots.  Then you add in the actual drive time, wait time, and car costs.  Unless their time is really valueless, I don't know why anyone would drive Uber.

It is literally perfect for Grad Students and people between jobs!


people who quit drinking but their wife still wants them out of the house occasionally...
 
2018-03-02 09:42:39 AM  

Russ1642: Without reading the article I'm guessing it's because they're too dumb to properly calculate their expenses such as gas, maintenance, depreciation, and all that driving without a fare.


Oh, I just about guaranty that's the case with most of them.  I've known a number of "small business" (i.e. etsy or multi-level marketing) types that think they do well because "Look at how much I made!"  Of course, they are just referring to revenue.

I avoid saying anything because it's not my place to rain on their parade, but it'd be almost fun to sit down with them and build a basic balance sheet and income statement.
 
2018-03-02 09:47:57 AM  

Evil Twin Skippy: In the DC market they have ads night and day for Lyfte and Uber. Not to use the service, but to drive for it. The turnover must be spectacular.


I think it's more about demand for rides always increasing and wait times going up.
 
2018-03-02 09:52:54 AM  
Yeah. When I pointed this out over a year ago, I was gently chided for how wrong I must've been - I mean, so many folks were happy working for Uber that I had to have been wrong.

Fark Uber. You're being exploited, willingly, because you're idiots. Uber loves you, because you'll not just fleece yourselves, you'll get in goddamned line to tell the world how cool it is that Uber fleeces you so gently - on your own time, on your own terms.
 
2018-03-02 09:57:16 AM  

FormlessOne: Yeah. When I pointed this out over a year ago, I was gently chided for how wrong I must've been - I mean, so many folks were happy working for Uber that I had to have been wrong.

Fark Uber. You're being exploited, willingly, because you're idiots. Uber loves you, because you'll not just fleece yourselves, you'll get in goddamned line to tell the world how cool it is that Uber fleeces you so gently - on your own time, on your own terms.


This.  

Think taxis are expensive?  That's because you were paying a professional driver a living wage.  Like a human should be paid.

Uber killed the taxi industry and replaced it with servitude by amateurs.
 
2018-03-02 09:58:59 AM  

Russ1642: Without reading the article I'm guessing it's because they're too dumb to properly calculate their expenses such as gas, maintenance, depreciation, and all that driving without a fare.


Yes. ("Well, duh." seemed a rude response, as you're obviously correct.)

The conclusions are based on surveys of more than 1,100 drivers who told researchers about their revenue, how many miles they drove and what type of car they used. The study's authors then combined that with typical costs associated with a certain car's insurance, maintenance, gas and depreciation, which was gathered in data from Edmunds, Kelly Blue Book and the Environmental Protection Agency.

Drivers earning the median amount of revenue are getting $0.59 per mile driven, researchers say, but expenses work out to $0.30 per mile, meaning a driver makes a median profit of $0.29 for each mile.


I mean, if you've ever had to compute corporate expenses for vehicular travel, this would've been obvious - but, these folks probably haven't done so, and the fun part is watching as the middlemen on a business, for which the contractors willingly sign up and shoulder almost all of the risk and expense of the business, rake in a windfall of profit on the labor of those contractors.

It's farking bizarre.
 
2018-03-02 09:59:25 AM  

Giant Clown Shoe: Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a car for business. In 2016, that number was $0.54 per mile. "Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower"

The math in the study is incomplete and and headline is incorrect?

Nice work


 Unfortunately, the Uber driver I rode with the one time I've used Uber had no idea that he could even take this deduction.  I doubt many Uber drivers have the money to pay someone to help them with their taxes or advise them to keep good records so that they can take these deductions properly. Uber should have been educating their drivers about things like this.
 
2018-03-02 10:04:32 AM  
two rides with tips an hour doubles that.
 
2018-03-02 10:23:35 AM  
Remember that time Uber & Lyft forced 10,000 people to use their cars to drive people around? What jerks.
 
2018-03-02 10:26:04 AM  

Gubbo: snocone: If actually operating the vehicle were profitable, Uber would do it.
Since it is not possible, they subcontract the loss to idiots.
Ain't America great!

Why do you think that? Lots of companies subcontract out lots of functions because they don't want the headache of dealing with it.

Almost no Vegas casino operates the hotel.


Ah, you mean pimps.
Ain't America Great!
 
2018-03-02 10:28:54 AM  

snocone: If actually operating the vehicle were profitable, Uber would do it.
Since it is not possible, they subcontract the loss to idiots.
Ain't America great!


Yeah, it is, cause those people don't have to work for uber, they could choose to do something else.
 
2018-03-02 10:31:26 AM  
I don't like using Uber or Lyft, but yesterday I was reminded why they exist.

I'm in Atlanta. I met a colleague in the lobby of the hotel. Should we get an Uber? Nah - there's a taxi right out front. We get in. We give him the address. It's about 8 miles away.

"Can you direct me there?"

No biatch. You picked us up at a hotel. I'm not from here. I had to give him turn by turn directions, then at the end of the trip he added $2 to the meter that I then had to spend a couple minutes arguing about before I just paid him and got out.

So yeah - my advice to Uber is to just charge more. I'll pay.
 
2018-03-02 10:34:17 AM  

kab: but... but... gig economy!


Realistically we're going there no matter what.

We should probably find a way to make it work...

How much do traditional cab drivers make?
 
2018-03-02 10:34:58 AM  
Uber is the perfect tax dodge, you get to make some supplemental income with minimal effort while claiming business losses against your total income

It's a freaking gravy train.
 
2018-03-02 10:38:51 AM  
I've used Uber a few times*, it's a really convenient app, but every time I've felt "this is cheap... too cheap" and tipped the driver with cash.  Cabbies don't make that much money in most of America, nor do the companies that employ them.  Scaling up vehicle maintenance and gasoline while selecting the most cost effective vehicles for their drivers should give them an edge over Uber... obviously the drivers are just eating the costs of vehicle maintenance at Uber.

That said, Uber is really god damn convenient, I remember calling a cab company saying I need a ride home from a bar and hearing "It'll be there in an hour".  Just don't be an ass and tip the driver well if you have to use it.

*It all started when I went to DC for a cousin's wedding, don't judge me until you've had to try to coax your 68 year old mom into not taking in all the sights of a subway station only to say "no, it's fine, we'll catch the next one" 3 times between the airport and the hotel.  My sister suggested Uber as a "new experience" and the rest is history... I still have most of a $20.00 metro card in my wallet.
 
2018-03-02 10:43:32 AM  

Whiskey Dickens: Think taxis are expensive? That's because you were paying a professional driver a living wage. Like a human should be paid.


Pity they didn't act like it.
 
2018-03-02 10:46:55 AM  

bark_atda_moon: I have only used Uber 5 or 6 times, but the cars that picked us up were immaculate.   I don't like keeping the interior of my car clean when I am the one making the mess.  I have no idea how much time and $ is spent cleaning up after other idiots.  Then you add in the actual drive time, wait time, and car costs.  Unless their time is really valueless, I don't know why anyone would drive Uber.


I did it for 2 months because I was fired and needed the money. I stopped doing it because a 15-year-old murdered a driver with a stolen machete about 40 miles from where I live.

Thankfully, I once again have a real job with insurance and benefits that doesn't make me feel like a f*ck up.
 
2018-03-02 10:47:29 AM  
Getting people to use their own vehicles to do work for you depends on the peple you hire being desperate or idiots. I applied for a job and they asked me if I'd mind using my own truck and I said no. They tried to sell me on it by saying I could deduct mileage and everything and I told them they could lease me a truck and deduct that cost too. Running a fleet of vehicles is a huge cost and these ride sharing companies are paying people garbage wages and offloading all the expenses but selling it as some kind of liberating experience. fark that.
 
2018-03-02 10:56:33 AM  

Whiskey Dickens: FormlessOne: Yeah. When I pointed this out over a year ago, I was gently chided for how wrong I must've been - I mean, so many folks were happy working for Uber that I had to have been wrong.

Fark Uber. You're being exploited, willingly, because you're idiots. Uber loves you, because you'll not just fleece yourselves, you'll get in goddamned line to tell the world how cool it is that Uber fleeces you so gently - on your own time, on your own terms.

This.  

Think taxis are expensive?  That's because you were paying a professional driver a living wage.  Like a human should be paid.

Uber killed the taxi industry and replaced it with servitude by amateurs.


Professional and Taxi driver are things that should not be used in the same sentence.

Why should I pay crazy high cab fare rates to ride around in a decommissioned cop car from the 1990s, that smells like vomit, with no ac, and a dumpster fire for a driver.

I live in Ocala, Florida.  We have a cab service called Dan the Taxi Man.  He has six cabs, and dispatches from one.

Min 15 dollar charge for a ride, and if his drivers do not feel like they are taking you far enough, they refuse to drive you..,

If you do not have cash, they all have square readers, if you want to pay that way, 20 dollar surcharge.

Uber costs 8 bucks to take me the 5 miles to the car.  New, clean smelling cars, talkative drivers, and I have valid etas for travel.

And if you think cab companies pay the drivers a living wage....
 
2018-03-02 10:58:52 AM  

SkylineRecords: bark_atda_moon: I have only used Uber 5 or 6 times, but the cars that picked us up were immaculate.   I don't like keeping the interior of my car clean when I am the one making the mess.  I have no idea how much time and $ is spent cleaning up after other idiots.  Then you add in the actual drive time, wait time, and car costs.  Unless their time is really valueless, I don't know why anyone would drive Uber.

I did it for 2 months because I was fired and needed the money. I stopped doing it because a 15-year-old murdered a driver with a stolen machete about 40 miles from where I live.

Thankfully, I once again have a real job with insurance and benefits that doesn't make me feel like a f*ck up.


So the Protestant Self-Worth tied to work got to you too?
 
2018-03-02 11:18:54 AM  

theflatline: Whiskey Dickens: FormlessOne: Yeah. When I pointed this out over a year ago, I was gently chided for how wrong I must've been - I mean, so many folks were happy working for Uber that I had to have been wrong.

Fark Uber. You're being exploited, willingly, because you're idiots. Uber loves you, because you'll not just fleece yourselves, you'll get in goddamned line to tell the world how cool it is that Uber fleeces you so gently - on your own time, on your own terms.

This.  

Think taxis are expensive?  That's because you were paying a professional driver a living wage.  Like a human should be paid.

Uber killed the taxi industry and replaced it with servitude by amateurs.

Professional and Taxi driver are things that should not be used in the same sentence.

Why should I pay crazy high cab fare rates to ride around in a decommissioned cop car from the 1990s, that smells like vomit, with no ac, and a dumpster fire for a driver.

I live in Ocala, Florida.  We have a cab service called Dan the Taxi Man.  He has six cabs, and dispatches from one.

Min 15 dollar charge for a ride, and if his drivers do not feel like they are taking you far enough, they refuse to drive you..,

If you do not have cash, they all have square readers, if you want to pay that way, 20 dollar surcharge.

Uber costs 8 bucks to take me the 5 miles to the car.  New, clean smelling cars, talkative drivers, and I have valid etas for travel.

And if you think cab companies pay the drivers a living wage....


The "talkative" part is what makes me hate Uber.   I just want a quiet ride where I'm going.  Talking to strangers is stressful.
 
2018-03-02 11:23:03 AM  

theflatline: Whiskey Dickens: FormlessOne: Yeah. When I pointed this out over a year ago, I was gently chided for how wrong I must've been - I mean, so many folks were happy working for Uber that I had to have been wrong.

Fark Uber. You're being exploited, willingly, because you're idiots. Uber loves you, because you'll not just fleece yourselves, you'll get in goddamned line to tell the world how cool it is that Uber fleeces you so gently - on your own time, on your own terms.

This.  

Think taxis are expensive?  That's because you were paying a professional driver a living wage.  Like a human should be paid.

Uber killed the taxi industry and replaced it with servitude by amateurs.

Professional and Taxi driver are things that should not be used in the same sentence.

Why should I pay crazy high cab fare rates to ride around in a decommissioned cop car from the 1990s, that smells like vomit, with no ac, and a dumpster fire for a driver.

I live in Ocala, Florida.  We have a cab service called Dan the Taxi Man.  He has six cabs, and dispatches from one.

Min 15 dollar charge for a ride, and if his drivers do not feel like they are taking you far enough, they refuse to drive you..,

If you do not have cash, they all have square readers, if you want to pay that way, 20 dollar surcharge.

Uber costs 8 bucks to take me the 5 miles to the car.  New, clean smelling cars, talkative drivers, and I have valid etas for travel.

And if you think cab companies pay the drivers a living wage....


And the taxi company probably doesn't make much in profits for the owners either. And that's why everything sucks. If Uber priced its services to actually let everyone involved make money, it would probably not be price competitive with taxis.

It's not unlike the same issues with flying or taking the bus. The expenses to the business are so high, yet the customers are so price sensitive, that neither the business nor the customers can ever really be satisfied.
 
2018-03-02 11:27:21 AM  
It all comes down to the cost of owning and operating the vehicle.  If you consider that a non-work related cost (i.e. you'd have to have a car no matter what) then you could decide not to count the cost of the car into the equation and only look at gas (wear and tear on the vehicle is a different consideration) at which point the compensation for drivers looks better, but still not great.  If you consider the cost of owning and operating the car part of the equation and off-set compensation received from Uber trips vs. the sunk costs of paying for the car and insurance and gas and depreciation on the car......then your result looks very different.

Much like how one might analyze an AirBnB location owner's position.  If you look at the rental money as extra cash, it looks one way.  If you try and balance it off against the cost of the mortgage, then it looks very different.
 
2018-03-02 11:41:39 AM  

Peki: It always seemed to me that Uber's value was more in an add-on to your regular life. Have to commute an hour to work everyday? Make money and give someone a ride along the way. Kinda similar to the idea of no empty trailers on semis. It never seemed to me to be a good basis for income the way a taxi might.


You don't get to see the destination of your fare before you pick up.  Uber's value is destroying the taxi industry, at least as far as the executives at Uber care.  The drivers mean shiat to them, and the people they're affecting in the real taxi industry mean even less than shiat to them.
 
kab
2018-03-02 11:44:19 AM  

Telos: kab: but... but... gig economy!

Realistically we're going there no matter what.

We should probably find a way to make it work...

How much do traditional cab drivers make?


Unless you're going to convince creditors to take gig payments, I'd say good luck with that.
 
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