MIT Study:Median Uber and Lyft Profits Less Than Half Minimum Wage; 30% Lose Money | Hacker News Reader

MIT Study:Median Uber and Lyft Profits Less Than Half Minimum Wage; 30% Lose Money

nakedcapitalism.com

It would be interesting to know if a lot of people are just doing things wrong that they can correct. The price of the car seems like a critical decision based on insurance and depreciation.

a business model based on the lack of mathematical and financial skills of the participants.

"If you are using either Uber or Lyft, stop. Now. You are contributing directly to the growth of the precariat and the debasement of work. The fact that you use an app to distance yourself from the exploitation of desperate and not very savvy drivers doesn’t change the nature of what you are doing." Yves Smith @yvessmith

Who are you quoting?

This is a direct quote from the linked article

Updated post with source - Yves Smith @yvessmith

The article.

Senator Elizabeth Warren once said that financial contracts should have disclaimers such as other products have (this is safe for children older than 3 years, don't drink too much of this, etc). She was talking about mortgages.

Maybe we should have something along those lines for this type of company, especially since these companies have a good deal of knowledge that they are not sharing with their workers.

Every person I have known who drove for these services had given zero - zero! thought to depreciation. Sure, it covers gas money but when your $24,000 car is worth $5000 in three years it won't be a great deal.

Mr Money Mustache also did a piece on how much you really made driving uber: http://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-...

One of his quotes from that article:

“Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like? “

(the answer is of course that it would look like very much like Uber or any other ridesharing company)

a business model based on the lack of mathematical and financial skills of the participants.

Like state lotteries?

This is a lot worse than I thought. Last I heard Uber was subsidizing fares, and they're losing tons of money. If it's still not enough for drivers not to lose money, then the difference between what riders are paying and what the service actually costs must be immense.

It's worth noting that insurance companies require a relatively substantial fee for Uber drivers yet most of the people driving don't report being drivers to insurance companies. I am not sure if this study accounts for this.

Yes but if you're in an accident and the insurance company finds out you were Uber driving they will deny your claim. In that scenario you're out the cost of the accident and all the insurance payments you made. Spread that concentrated risk across the whole population of Uber drivers and you'll get the same result.

Previous discussion: https://news.ycombinator.com/item?id=16501017

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

Also worth highlighting from that discussion is a link to the actual paper, as found in https://news.ycombinator.com/item?id=16499850

The most interesting tidbit to me: only about 4% of the drivers keep doing it (for Uber anyway) for more than a year. Does this mean Uber requires an ever-replenished supply of fresh drivers? If so, then they might have a not-very-sunny future once there aren't as many left. Like a virus that has infected too many members of the population, who now have an immunity; not enough fresh births to keep it going.

Interesting. I've discussed this with others on HN previously. Seems this one goes toward confirming my suspicions.

https://news.ycombinator.com/item?id=14605111

Now the moral dillema of whether or not to continue to use these services or revert back to terribly inconvenient taxi services is really going to nag at me.

Id like to see the same study done to taxi drivers. I suspect the situation is no better if you look at their return on invested time and money.

The concern you suspected is the same one I suspected too. In 2015 i did some uber driving for "fun". I quickly realized that it was just a way to extract the net worth of a car, from the car, without selling it. When you think of it that way, i see some significant utility...however Uber doesn't position it to drivers as "get the money stuck in your car, out of your car!" instead they say "earn cash" and stuff like that.

It would be interesting to see it done with taxi drivers, but they don't typically own the cars they drive, do they? I would have imagined they were all at least making minimum wage after all is said and done.

They’re a super exploited group, often new immigrants too.

Many times they “rent” the car, paying a daily fee for the seat, and then get to collect all the income for the day. Many times it means working 7-8 hours before making any returns of their own. It’s your typical “work for yourself” type scam, when really you’re an employee with no acknowledged rights.

I have no love of uber or the taxi industry, i guess i just don’t see one as better than the other, and it’s hard to say either is worse. I suspect it is the way it is because consumers don’t want to pay what it would take to really give the drivers minimum wage. I dare say this is an indication that it’s a realistic primary target for early AI automation.

Maybe the answer is like the waitering ("waiting"?) industry in the USA. They get paid shit and have to rely on tips to get by, so tipping is mandatory.

So if you want to have a clean conscience, maybe tip your driver something like 50% the difference between Uber and a taxi, and start a campaign so all ride-share users do this.

Yes, more mandatory tipping will make everyone happier.

But abolishing tipping would allow restaurants to pay a fair wage: http://www.chicagotribune.com/business/ct-eliminate-tipping-...

“Allow” as if mom and pop restaurants will pay more than the minimum legally necessary.

Uber has no tipping (or does it?) and hence, here we are discussing the findings of this MIT study...

Uber does have tipping built in.

> whether or not to continue

I think it's possible to continue ethically: Just tip according to the amount the ride costs/ is worth.

Using the numbers in this article should help. It seems like paying the amount of the ride in a tip would lead to an ethical amount.

I would be interest in a deep understanding of the top performers in this system and if there was a way to optimize this. I feel like even with a median number in this study, with such a wide distribution of education, technological and business savvy, how much of the poor performance here is related to the "freedom" in the system and the lack of structure that might move the profitability needle for the drivers.

Here you go:

https://blog.acolyer.org/2018/02/20/putting-data-in-the-driv...

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

Reply on news.ycombinator.com