She leased a 2015 Honda Civic, which has a rated fuel economy of 31 MPG.
Assuming she gets the rated gas mileage from her civic, she's buying 24 gallons of gasoline per week for 2.39 [1] per, costing her $57.
AAA gives an estimated 5.51 cents per mile for maintenance and tires [2], costing her $41.
So, take home pay after expenses is $604 - $160 - $57 - $41 = $346, or $12.3/hr.
IANAA, so I don't know which of these expenses qualify for deductions when she files. But an annual pay (after expenses) of $17,992 doesn't leave much wiggle room for paying for an accountant, assuming Uber indentured servitude is her only income generating activity.
0. http://infinitemonkeycorps.net/projects/cityspeed/
1. http://www.losangelesgasprices.com/
2. http://exchange.aaa.com/wp-content/uploads/2016/04/2016-YDC-...
The overall point is well taken, though. There are several hits to real income for Uber drivers that aren't shared by other types of low-wage worker, and while "set your own hours" offers more upside than a normal part-time job, it's limited by how many high-demand hours there are in a week. Rather than extra overtime pay, I imagine hours past her current 28 would give steadily diminishing returns.
But, according to [0] (I'm not sure how accurate/reputable it is; again, IANAA), the deductible portion of $60452=$31,408 is only $2,218.90.
Gas at $5752=$2,964 already extends past that cap.
Assuming her income is taxed before the lease payments are made, and hits her full deductible, she's paying total taxes of $4,437.81
So, net after-tax, after-expense income - I didn't realize that about routine maintenance - is $604-$160-($57 - ($2,218.90/52)) - ($4,437.81/52) = $344 / wk, or $13/hr.
Compared to working multiple inflexibly-houred minimum wage jobs, it's definitely better.
But in no way is it lucrative, or even lower middle class.
The newspaper is from Seattle, but the driver featured in the article whose numbers were used for the calculations in this thread was actually in Los Angeles.
> You realize that the people that demographics of people who like to drive for Uber are those coming from minimum wage jobs, who have none of the above either.
After deducting the portion of SE taxes equivalent to the employer share of payroll taxes (which isn't counted in employee wages), the wage is equivalent to $10.43/hr, which is only a hair above minimum wage in CA.
And, in CA, minimum wage earners are covered by mandates for unemployment coverage and, depending on employer, paid family leave and (since July 2015) paid sick leave.
IIRC, the paid sick leave benefit in CA is prorated in amount based on hours worked, but still available to part time employees for those employers covered; unemployment coverage applies to part time work (weekly benefits are based on weekly earnings, so part-time workers get less benefit than full-time workers with the same wage); California disability insurance and paid family leave (the two are linked) are not restricted to only full-time workers.
That's not really true - one of the big advantages of driving for Uber is you set your own hours, so you can take time off whenever you would like.
There is when comparing hourly compensation in a role that provides no paid time off with hourly compensation in role that provides paid time off. For instance, a $10/hr that accrues 1 hour of paid sick leave for every 30 hours of work (the minimum for an accrual plan meeting California's paid sick leave mandate) is better paid than a $10/hr job that does not (the actual value is up to $10.33/hr, though restrictions on the use of paid sick leave may make it somewhat less but always greater than $10/hr.)
> "Paid" time off is as much of a lie as "employer" payroll taxes.
Employer-share payroll taxes are not a lie, either; they are both real taxes, and they really do not come out of your gross pay (they may reduce the gross pay the employer is willing to offer, but that doesn't make them "a lie", it just means they have other effects.)
The distinction probably was most critically important to people who had employment contracts in place that straddled the time when payroll taxes were first implemented, since the employee share was the part that the employee's reimbursement was reduced below the status quo ante, whereas the employer share was not.
Like paid time off, its important to keep the difference in mind when comparing employment that has employer-share payroll taxes (generally, W-2 employment) with employment that does not but instead pays the equivalent of both shares as self-employment taxes (1099), since the nominal pay of the two kinds of employments is not directly comparable without adjusting for the differences.
The effect (minimum wage employees not withstanding) is the same as if the entire tax was employee-share. It is coming out of the worker's pocket. Therefore the 'employer' part is a lie and mostly an ingenious way to hide the tax from the voting base (because unlike other taxes, it does not show up on your pay stub or tax return).
That said it's true that you need to take both these things into account in order to make an apples-to-apples comparison between self-employment income and a given W2 job. But that goes both ways, a $10.33/h job with unpaid time off is the same thing as a $10/h job with 'paid' time off and you have no reason to prefer the latter.
Which is just barely above California's minimum wage ($10.00) today, and not (as suggested upthread) better than the most generous minimum wage proposals.
I'm not sure if you factored in commercial insurance for a leased vehicle which will be more expensive per month, compared to personal auto insurance for own car. Factoring the commercial/rideshare auto insurance in, will leave little wiggle room.
Not quite. You only take off some of the employment taxes, not the income taxes (which you would still have to pay as a regular W2 employee). It will likely only be about a dollar an hour or so.
However the advantage of being self-employed is that you can deduct expenses such as fuel. (Which brings up another point...fuel will need to be considered when calculating net income).
My quick+dirty calculation accounted for just the net added self-employment taxes, plus other differences like state unemployment, employer's share of health insurance, sick days, etc.
No, its not. If those expenses aren't reimbursed by your employer (which often they are), you can deduct them as a W-2 employee, as well, so there is no benefit on that point to being a 1099 contractor vs. a W-2 employee.