This begs an obvious question: why are people choosing to do this if it pays $0/hr? It’s voluntary. Can they find something better to do with their time?
They take those jobs because they lose all access to the chance of profitable jobs otherwise. The people working for door dash aren't exactly the sort of person with the ability to fully understand probabilities and statistics either. I'd say it's fair to assume their business model works by bullying the same psychological behaviors as videogame loot crates, lottery tickets, and casinos. That one huge order that pays $30 after tips quiets the anxiety of losing money on the previous ten orders even if the actual math places the driver in the red. Most people have a very poor sense for overhead costs like vehicle maintenance. The link between miles driven and the rate of repairs required just isn't there.
If the non financially viable companies did not exist then financially viable ones would.
I guess the US is a different environment where there's not enough customers who could afford realistic prices for Uber, and there's not enough alternatives for those who can't afford a personal vehicle.
Before Uber, I'd take public transport, phone for a minicab or walk to their office to get one. (and I still do)
Before Deliveroo, I'd call the local takeaway and get them to deliver, or walk there and collect it myself. (and I still do).
You can argue that they have improved the lives of people who find it hard to use the phone, However, that was already solved for food delivery before these new delivery services came along and I would be surprised if there weren't minicab firms that accepted SMS or web bookings.
When I say I'd just sit at home I wasn't joking. I and many friends (mostly women) would just not do shit most of the time and just watch TV instead. Hell I'd go years without visiting my cousin in Plano (a suburb) because commuting there is a multi day ordeal (I need to start from their home at 5 pm if I needed to use public transport).
Did I and others just exploit Ubers unreasonably cheap prices? Yes. Did it improbe our lives measurably? Also yes. If you were lucky enough to live in New York or some city like that power to you but not every place was blessed.
I understand that public transport and minicabs are poor in tiny villages where the only amenities are a pub and a church, but I assume that when something is a city, it is a large built-up area with all the normal amenities that I expect of a city (shops, offices, entertainment, bus routes, possibly a light railway etc.). Is Dallas really not like that? What is it? Just miles and miles of big houses?
Out of curiosity, what caused you to live in a car-dependent area without a car?
A job/app gig can both exploit someone and also give them the ability to survive where they might have few options otherwise. See sweatshops and the agricultural industry for example
I worked GrubHub back in 2018 when I was between jobs(took some time off to do side projects and did deliveries to make ends meet). These apps play this psychological game on you where you have to accept something like 95% of orders in order to get more quantity and quality(supposedly), so some people are desperate to take all the shitty no-tip orders just so they have a shot at getting better ones.
The funny thing was the lowest acceptance rate I had was 3%, and that's because I hung around a rich area of town and waited for those sweet $20-$50 orders that were only a few miles distance. Always felt like I got the golden ticket. I never got fired for having that low of an acceptance rate.
There were some fellow drivers I talked to on Reddit that got kind of a bad deal. They would drive for GrubHub or DoorDash at a town in Podunk, Nowhere with low demand and would often get sent those kind of orders that were 10+ miles away for $3. If that happens to be the demand, then you're either screwed taking bad orders or you're screwed if you reject too many of them and you get fired.
I think the reason I never got fired is because the LA area, at least while I was doing it, was hot(figuratively) and GrubHub just wanted to fill up the market with as many drivers as possible. In areas where they've fully met the demand, then your arse can be on the line if you reject too many orders.
Overall, it was a fun job to have for a while. But it would suck big-time if I had to actually do it for a living. Thank god I'm good enough at software engineering.
EDIT: Saw lots of hilarious things happen while I was on the job. It's amazing how many women order food while they're taking a bath and then either forget to answer their phone or they come to the door wrapped in towels. WTF! I once delivered a 2 dozen donuts to this one guy at ~10:30pm who was super high accidentally walked into the door before opening it. Also had some sad moments, like those times I delivered to an elder hospice. This one sick old lady wanted to give me a handsome tip, but I didn't want to accept it because I just felt like she deserved that ice cream in her condition and was just happy I brought it to her. But she insisted because she said it might be her last ice cream. :(
Wait a second... Are people not giving a cash tip in these cases? I do no-tip and give cash instead (which I thought was preferred). Is that a bad strategy?
It's only a bad strategy if most or all drivers pass on your orders. Some drivers take these offers in hope for cash. I chose to stop taking those offers because I found most people don't end up tipping me in cash. It was more profitable to drive 20 - 30 minutes to a hot spot or a rich neighborhood where I knew I would get worthwhile offers. (and also not end up in the hood!)
Either consumer tolerance for convenience spending is going to break, or the prices will just keep going up astronomically as a perverse form of inflation (indirectly suppressing all jobs who's compensation isn't similarly skyrocketing).
$2000 will get you a pretty decent vehicle and is probably a better investment than a $1000 repair.
I've since realised that cars are very expensive and you should probably not take a job that requires a lot of driving around in your own car if you don't get reimbursed for it.
As a pizza delivery driver, your pizza shop is your base and you only go out when there's an order that needs to be delivered. My friend used to work at Pizza Hut and he was getting reimbursed for gas (per mile but it was slightly more than his gas mileage so i suppose it covers for wear and tear?).
As far as i know, you're not getting reimbursed for delivering DoorDash and the pickup location could be on the other side of the town.
With pizza delivery, you have to drive to the person's house then back. So you cover the same road twice for a single delivery.
But with DoorDash, theoretically, then could see there's an order from A to B, find a driver near A, have the driver deliver to B, then match that driver up with an order from near B to near A. So the driver could do 2 deliveries in a single out and back trip.
With the assumption that you are going to eventually pay that $3 back into your vehicle, by paying for repairs or buying a new one, you basically just "borrowed" money from your vehicle.
so wouldn't it then make more sense to just sell the vehicle for $10003, then place that money in an interest earning asset like a bond, rather than "borrow" from the value of the vehicle?
chii is suggesting you sell the car. That converts the entire car at once. Then you don't have to spend any hours! As an optimization on top of that, they suggest you store the value in a bond, and pull $3 per hour out of the bond instead.
The real problem with this idea is that selling the car leaves you with no car.
Your objection that "you need the cash now" is based on a misunderstanding of chii's idea. chii's idea does get you all the cash now. It gets you the cash far far faster than $3 per hour. It gets you the cash so fast that you could actually invest almost all of it and pull out $3 per hour and do things you actually want to do during those hours.
It's not "buy a bond, have no money today, have more money tomorrow".
It's "buy a bond, drain the bond for $3 an hour today, have more money tomorrow".
Compared to having 10k under your mattress, the bond has no downside.
The bond is not the problem with the idea.
The problem is that you have no car.
Unless a car is a certain model, it's a liability instead of an asset, so it should be treated like any other expense. If you only use the car for local trips and commuting and taking the bus/biking is doable (perhaps less convenient), then buying a cheap car, keeping a few weeks of food on hand, and taking the bus to work whenever the car breaks down is likely way cheaper than buying a newer, more reliable car.
I used to have two cars (married with kids, so one car for each parent), and then decided to start biking to work to improve my health. I noticed that I can bike most days, and the insurance alone was enough to convince me to deal with the occasional inconveniences (e.g. when it snows, I bike to the bus stop).
The problem is that most people don't actually do the math and just assume that owning a car is better, when it's not most of the time.
it is better, since you cannot do a spur of the moment trip without a car.
It's just that some people over-pay for a car, so you're right about most people not doing the maths.
The deliverer has to be able to earn $1.15 (at least) per dollar depreciated from the vehicle for the work to be "worth it".
(Income - expenses) / hours worked = hourly wage
Is your hourly wage reasonable? If so, it may make sense to optimize away your expenses and generally stay the course. If it's not, would changing your work hours or location make it reasonable?
Unfortunately, I get your feeling that people only look at the income and ignore the rest of the equation (hey, I got $50 tonight! I had to drive 100 miles though...). If you're making $3/trip, you had better drive less than 6 miles or you just lose.
Then maybe you ask why they don't have a cheaper car.
Generally, a cheaper car costs far more to maintain. The total annual cost of ownership of a 2-year-old Camry is far lower than a 10-year-old Camry. But to get that lower cost, you have to temporarily convert more of your money into that car asset.
End result: your cash is stuck in your car, and DoorDash/Uber/whatever lets you liquidate it without selling your car.
That’s a poor example, since a Camry is notoriously reliable and needs minimal maintenance. And ten years really isn’t that old. The depreciation on the two year old car would outweigh the maintenance on the ten year old car. I believe that 5-10 years old is the sweet spot for TCO.
Really? Maybe 10 years ago but cars have become remarkably good recently. I wouldn’t expect a 10 year old car to give you many problems beyond maybe the difficulty of sourcing parts.
Examples:
- Direct Injection : Good for Emissions and Fuel economy, but many first generation systems have carbon build-up issues (Toyota D4S and -newer- Ford Ecoboosts don't have this problem because they have 2 sets of injectors)
- All the transmissions: Ford's DCT is notorious at this point for reliability issues, Hyundai's DCT is not looking so hot so far, Nissan's CVT is a joke, Subaru's CVT is a bit of a diceroll as to whether it blows up at 100k or not, the ZF 9 speed that many manufacturers uses has issues...
I'll note that SOME of these are newer problems, but most of them started happening around 10 years ago and are only finally getting smoothed out.
As a counterpoint, however, the costs of all of these newer safety systems is driving up repair costs in accidents, as well as the insurance premiums for newer cars.
But you can’t argue direct injection is worse than older fuel injection. You save more gas, get better performance (even though you don’t get as many valves), and have a cooler running engine with direct injection. That’s a net positive for the environment and your wallet over the life of your car
A lot of people see car payments as being "normal" and a necessary expense. I have never had a car payment, so adding $200+/month is not something I'm going to consider. However, many people don't have any real cash in savings[1] 40% would struggle with an unexpected $400 expense, 20% don't have $400 in the bank. Personally, I keep at least $500 in cash at home, and I keep enough to cover my single largest "expected" sudden expense (e.g. replace my car), or last at least 3 months without pay (6 months right now since I'm a contractor), whichever is bigger.
The culture around debt is truly alarming. People pay $20k+ at 4+% to drive a car that may be more "reliable", when they could pay ~$10k at 0% (or enter your opportunity cost here for keeping cash) for a car that's approximately as reliable over ~5 years. If both follow the same depreciation curve, buying an older car with cash is way better than buying a newer car on credit. My advice is: buy a cheaper car, pay yourself whatever the car payment would've been on the more expensive car, and use that fund to replace/repair your cheaper car (never pay more than 50% of the value of your car for a repair). I would be very surprised if the majority weren't better off buying older cars with cash than newer cars with credit.
- [1] https://www.cnbc.com/2019/07/20/heres-why-so-many-americans-...
A financially well-off family may have multiple cars, a garage, and some spare time. They can incur the risk of an old cheap car much more easily.
It’s true, though, that you could look at it as a draw-down on a car loan.
"The only reason I do it at all is because the few orders where customers tip high enough to make it worth it keep me going on some of them." - Lee, DoorDash worker in Hendersonville, TN
Also of course they may have not done the math yet, or they may be doing this to try and fill in the gaps between their other two shitty minimum-wage jobs that never give them enough hours to be an actual full-time employee with benefits.
It's quite likely that someone working multiple jobs will be worse off doing something like Uber and Doordash part time, but they feel like they're better off because they occasionally get that dopamine hit.
I think everyone should record everything about these types of side hustles. It's quite likely that the extra miles on your car completely erodes the money you make. The IRS allows deducting $0.50/mile, which is a pretty reasonable estimate for vehicle costs. I drive an older hybrid, which I paid cash for, and my cost is still ~$0.25/mile for repairs, insurance, depreciation, and gas (gas is <$0.10/mile if you get better than 26mpg, so it's very misleading).
The obvious answer is that it actually pays more.
So that means their estimate of expenses is about 200% higher than what it should be. Since they don't really provide sufficient data to recalculate their estimates, it's hard to say exactly what effect this might have on their conclusions, but it probably changes them significantly.
- insurance - $100/6 months for a second car (from when I was debating selling my second car) - repairs - $400/year (I do most of the routine work myself) - depreciation - $1000/year - misc fees - $150 (registration, parking, occasional tickets, etc)
My second car costs >$1500/year. I bought it used (~7 years old) for $10k, and I've had it for 5 years and it's currently worth ~$5k, so my depreciation estimate seems reasonable, perhaps conservative.
If I drive 10k miles/year (I drive less), that's >$0.15/mile + $0.07/mile (~40mpg Prius), so $0.25/mile seems like a decent low end estimate. If you drive more, depreciation will be higher.
I use the IRS figure of ~$0.50/mile to ball park an opportunity. When I calculated it for my car, I got closer to $0.25/mile, but that's because I got a good deal on a reliable, used, efficient car (~$10k for a 60k mile Prius) and I do most of my own maintenance. The average driver (having a shop do repairs, worse mileage, buy from dealer with loan) will likely be closer to the IRS figure.
The job requires no training and is untaxing both physically and mentally. Despite driver complaints, it's much more flexible than the vast majority of unskilled jobs. I'm sure for most long term drivers, the job basically sucks -- but it's still better than their next best alternative.
Couple this with the general lack of financial education among the populace (40% would have trouble with an unexpected $400 expense, 20% don't have $400 in their bank account) and we have a real problem.
As a society, we need to do a better job of teaching people how to evaluate opportunities. Driving 10 miles for a $3 delivery is probably a net loss, unless you can work out a clever tax arbitrage system (e.g. it costs you $0.25/mile to drive, but you deduct $0.50/mile on taxes).
- [1] https://www.cnbc.com/2019/07/20/heres-why-so-many-americans-...
I'm sure the churn is huge because the pay isn't there.
The actual number is that Average Gross Earnings are $18.54 per hour. Obviously there are also some expenses, but average expense is not actually $0.54/mile. $0.54/mile is what you get to deduct from your income on your tax return. (So there's actually a tax advantage here too.)
In other words, the guaranteed amount covers more than your expenses, your earnings come from tips, sometimes in the form of cash, and you get a preferential tax deduction on top. It's actually a great deal.
The simple answer to your question is that DoorDash has so many drivers because the job is easy to do and pays well. But for ideological reasons, some people think this kind of employment arrangement should be illegal.
The article explains this: "the DoorDash pay model appears aimed at having workers deliver food effectively for free in hopes of collecting tips."
My only guess after asking around is people think they "have to". People put their head down and forget to think about the bigger picture. Maybe working for DoorDash is the same type of thing?
Yup, it's called living in the real world.
Yep, it's totally someone's choice to live in a neighborhood with affordable housing as opposed to a mansion across the street from their place of employment. Gee, looks like we both know how to make irrational overgeneralizations.
What's wrong with the commute? The fact that, if you didn't have the commute, you could do all those same things and also anything else you can think of. The opportunity cost is enormous.
I don't think that's true.
In my case, I'd pay the opportunity cost of not being able to both do the PhD with the advisor I wanted and also have my daughter live where I wanted.
If I didn't take the commute, I could do my hobbies, but not simultaneously both do the PhD I wanted and have my daughter live where I wanted.
Only the commute lets me satisfy everything I want.
See?
You can't have your PhD advisor at home, but consider how many people commute to jobs that could be done just as effectively from home/remotely. How many man-hours are lost to that.
Also, it seems like you're using public transport. You're lucky that that is a) a viable option and b) pleasant enough that you don't want to murder people after a few weeks of doing it. The majority of commuters around the world are using personal transport, which has a huge carbon cost and does not allow for doing other things while commuting.
Finally, there are plenty of studies demonstrating the link between longer commute and lower well-being and mental health. https://link.springer.com/article/10.1007/s11116-019-09983-9
Personally, I wouldn't mind a 40 minute train trip and a 5 minute walk either side, but a 40 minute drive is awful. I've gone from a 40 minute drive to a 10 minute drive, and I feel "free-er" because of it.
Lived in a bigger place, but had the bad commute.
In certain cities, I'd be willing to bet much of the demographic who takes this kind of job are in similar positions. That is, they're looking for full-time work while wanting to make a little income on the side. In my brother's case, he makes minimum wage or better.
“I’m hungry; I’d like to give Doordash some money.” “Computer says no.” “Damn; can’t trust Doordash.”
People outsource tasks in part because they don't want to think about the details. Where do UPS trucks get their fuel? Do they use diesel or gas? How long between oil changes? Do the drivers get cold in the truck? Where do Door Dash drivers use the bathroom while they're working? Is the grocery store losing money on those end cap bargains? How does the electrician figure out how to not get shocked? How does the plumber solder pipes without burning my house down? How do roofers stay safe while installing their safety anchors? How long do painters' paint brushes last?
I don't want to think about any of that; I just want to have a reliable service provided with the details handled for me. Every bit of friction you put into the system with fuel surcharges, baggage fees, resort fees, blackout dates, surge pricing, weekend surcharges, and the like represents both financial and attention loss to me in terms of the value you are providing. (At least surge pricing, weekend call-out surcharges, and blackout dates I can understand as maybe essential to giving an attractive overall proposition.)
So you might keep doing loops back to the airport (or a good restaurant precinct) because most of the jobs are OK; but it’s only when I hop in the car for a $10 ride to the next suburb that you discover you’ll lose money on this ride.
Great for me as a consumer; lousy for the driver’s income; and a reason why (to answer the question asked) some drivers / riders accept loss-making fares: they don’t get told in advance how much the trip is worth.
Maybe because they want to do something purposeful with their life, even if it doesn't earn them any net cash? Maybe a "Thank you" and a smile from a delivery customer makes for a better day then just being "lazy" and watching TV/consuming social media?
They take those jobs because they lose all access to the chance of profitable jobs otherwise. The people working for door dash aren't exactly the sort of person with the ability to fully understand probabilities and statistics either. I'd say it's fair to assume their business model works by bullying the same psychological behaviors as videogame loot crates, lottery tickets, and casinos. That one huge order that pays $30 after tips quiets the anxiety of losing money on the previous ten orders even if the actual math places the driver in the red.