Uber and Lyft push back on Seattle mayor’s plan to pay drivers more money
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> Kevin Schofield of SCC Insight analyzed both studies last month and found that they “skew their analysis and recommendations in the direction that favors the one who commissioned their study.”
This is such a blatantly bad framing of the article they cite:
https://sccinsight.com/2020/07/21/the-war-heats-up-over-seat...
The skew in question is around Parrot & Reich's study, which prioritizes full-time drivers (and doesn't include tips, if I read correctly), vs. the Cornell study with Uber/Lyft which includes all drivers and includes tips.
I'm legitimately curious to understand. Shouldn't we, at some point, reach an equilibrium in these markets?
People sometimes forget that labor is a market too even if you price it at free. One that has price points and different quality at those points. They also quietly forget that changing the rules in that market affects dozens of other markets. Take for example what Cali did. They basically ran Uber out of the market. That means there is now a pool of labor that someone else can use. That will lower wages in that spectrum of talent. That is the supply and demand working, or the 'invisible hand'. Take for example the mona lisa. There is one of them so its 'price' is basically huge. But lets say he had spent years cranking out thousands of copies. What would it be worth? Not nearly as much. Scarcity drives prices up. Plenty drives prices down. The same is almost always true in almost all markets. What creates 'scarcity' and 'plenty' can be manipulated too, and is.
My latest Uber trip was 10 minutes, 3 miles long and 10 bucks.
Assuming it's a typical trip and also assuming the driver spends half of the time getting to the customer, we have, $30 and 18 miles per hour.
18 miles is one gallon of fuel at $2.00 and, say, another $3.00 in car amortization.
Subtract fees, add tips and incentives and we end up with, give or take, $25.
That seems like a reasonable salary?
Your numbers might work out, but studies indicate less income in practice, and there are plenty of potential sources of error in your methodology, so I'd be inclined to believe there's something wrong with that ballpark estimate.
Please feel free to add your data. I don't think it will change the estimate dramatically. An airport trip takes about an hour and costs $80, which sums up to similar numbers.
> that assumes drivers are able to drive 100% of the time
No, it doesn't. Reread my message.
> it assumes all times of day are equally viable
True. I've ignored surge pricing.
An airport trip for me is usually around $15 and 20min. That's in the same ballpark, but even if we get several people from HN to weigh in that doesn't paint a comprehensive picture or account for local variation.
> that assumes drivers are able to drive 100% of the time
> No, it doesn't. Reread my message.
That was my mistake. In my mind I was assuming it would take a car as long to get to me as it would for them to take me where I'm going -- exactly equaling your $30 estimate assuming 0 downtime. Regardless, both the 5min to get to you and 5min of waiting between rides are potential sources of error. Throwing an anecdote into the mix, I've never waited less than 6min for an uber, and I live in a major city. Answering that conclusively needs more data than just the two of us.
> it assumes all times of day are equally viable
> True. I've ignored surge pricing.
And slow periods where drivers wait an hour, late nights where a driver has a higher chance of getting stiffed and needing to clean vomit from their seats, periods just following surge pricing where many drivers have swarmed to an area but the actual available riders have plummeted, and so on.
Again, your ballpark numbers might actually be close, but extrapolating a single experience into an entire industry's unit economics is error-prone and IMO irresponsible.
I guess sometimes it may be less. For airport rides it may be more. Do you have a better estimate?
Also your next ride is probably not on the same block as your last.
The only exception to this occurs when a group of workers is receiving a wage actually below its market worth. This is likely to happen only in rare and special circumstances or localities where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization.
It may be thought that if the law forces the payment of a higher wage in a given industry, that industry can then charge higher prices for its product, so that the burden of paying the higher wage is merely shifted to consumers. Such shifts, however, are not easily made, nor are the consequences of artificial wage-raising so easily escaped. A higher price for the product may not be possible: it may merely drive consumers to the equivalent imported products or to some substitute. Or, if consumers continue to buy the product of the industry in which wages have been raised, the higher price will cause them to buy less of it. While some workers in the industry may be benefited from the higher wage, therefore, others will be thrown out of employment altogether. On the other hand, if the price of the product is not raised, marginal producers in the industry will be driven out of business; so that reduced production and consequent unemployment will merely be brought about in another way.
When such consequences are pointed out, there are those who reply: “Very well; if it is true that the X industry cannot exist except by paying starvation wages, then it will be just as well if the minimum wage puts it out of existence altogether.” But this brave pronouncement overlooks the realities. It overlooks, first of all, that consumers will suffer the loss of that product. It forgets, in the second place, that it is merely condemning the people who worked in that industry to unemployment. And it ignores, finally, that bad as were the wages paid in the X industry, they were the best among all the alternatives that seemed open to the workers in that industry; otherwise the workers would have gone into another. If, therefore, the X industry is driven out of existence by a minimum wage law, then the workers previously employed in that industry will be forced to turn to alternative courses that seemed less attractive to them in the first place. Their competition for jobs will drive down the pay offered even in these alternative occupations. There is no escape from the conclusion that the minimum wage will increase unemployment."
[...]
"As to the prices, wages and profits that should determine the distribution of that product, the best prices are not the highest prices, but the prices that encourage the largest volume of production and the largest volume of sales. The best wage rates for labor are not the highest wage rates, but the wage rates that permit full production, full employment and the largest sustained payrolls. The best profits, from the standpoint not only of industry but of labor, are not the lowest profits, but the profits that encourage most people to become employers or to provide more employment than before."
Henry Hazlitt “Economics in One Lesson.”