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Comment by dnautics | Hacker News Reader

I'm not sure how her back to back drives add up to only $10/hr. I drive Uber/Lyft in San Diego, routinely don't get back-to-back rides and have some long stretches of downtime, and usually make $1000 on a 50 hour on-call week (~30h of actual drive time). So that's about $20/hour. If you minus gas (~150/wk) that's a little bit less; I drive a honda insight, which gets slightly worse gas mileage than the prius, and the per hour and per mile in SF is higher than than in San Diego.

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> and usually make $1000 on a 50 hour on-call week (~30h of actual drive time). So that's about $20/hour.

Now subtract car payments, insurance, wear and tear, etc.

Here's an example of how this breaks down:

You work 215 hours per month on average (50 * 4.3 weeks) and make $4,300 revenue during that time (or $51,600/year).

- Subtract self-employment tax 15.3% - ~$7900

- Taxable income 37,650 - ~$5,300 in taxes so subtract that

- You put about 70k miles per year on your car assuming an average speed of about 45mph (30 hours * 45mph * 4.3 weeks * 12) - IRS says that's $.56 per mile - ~$39k or basically your entire car + a bit more in one year. This includes the cost of gas.

- The Prius is about a $23k car, financed completely at 3% for 5 years brings you payments to about $400/mo or about $4,800/year

So 51,600 - 7,900 - 5,300 - 39,000 - 4,800 = -5,400 ouch

Most of your cost is in car wear and tear, so let's waive a magic wand and make that go away, it's a Toyota after all. But we can't get rid of gas costs, so let's substitute that in.

A prius gets about 51mpg in the city. It looks like I can get gas for about $2.80/gal in San Diego right now. You'll need about 1.4k gallons per year. Assuming gas prices stay the same, about $3.8k per year in gas. edit I see I'm estimating about half the gas pricing you are, so just double my figure here.

So 51,600 - 7,900 - 5,300 - 4,800 - 3,800 = $29,800 in take home pay

edit or $26k take home when using your gas figures which makes it an even $10/hr

At your self described work hours of 50hr/wk or 2600hr/year, that's $11.50/hr

I assume you wash your car and keep it clean because of passengers, so subtract that out also. I'm going to guess that your take-home pay ends up at around $10/hr if we assume your car takes no wear and tear of any sort driving 70,000 miles a year.

edit I'm not even counting commercial car insurance, which I'm sure you have, or state taxes, inspections, licensing costs, etc. or any other expenses.

edit Taxi insurance appears to run around $7-10k per year.

edit so let's use the new gas figures, you end up with about $21k take home when you subtract $7k of taxi insurance. Or about $8/hr.

Once you deduct state taxes, property taxes etc. I'm sure there's other expenses I'm missing, I have a feeling your take home pay is about on par with California minimum wage.

That's an excellent breakdown, thank you for doing that.

I think Uber's current pricing advantage over standard cabs relies on their driver's not being aware of these costs (especially Taxi insurance). That said, I think they could just raise prices to cover it and still have a great business.

Also, $10/hour is more than I ever made as a shift worker. It sucks, but plenty of people are willing to work for that rate. Thus the OP may be making a moot point.

Yeah. I think in the end he's making about what he could make working minimum wage...and plenty of people do that.

The IRS $.56/mile takes into account estimated gas costs, wear&tear and insurance. You are double dipping.

Also income tax is deducted off of profits not driver revenue.

Yeah you're right. The IRS mileage covers insurance. You can alternately calculate your true expense and deduct that, for example, since he's operating a taxi service, he's probably required to have taxi insurance or risk committing insurance fraud. Since that insurance is much higher than normal car insurance, he probably can deduct more.

it's not a taxi service, and I have one of the insurance companies that is ok with ridesharing. I am sure they have plenty of actuarial data that allows them to set the rates accurately.

I'm not double dipping because I won't be deducting gasoline or insurance expenses as a part of the .56/mi deduction. (I don't keep my gas receipts)

Sure, uber is not a taxi service in the same way McDonald's is not a restaurant.

So. If I were still a postdoc (~40k/year with three years of experience), I would still be paying car payments, insurance. Now, I make those payments and (I think) I can deduct them from my taxes.

Of course comparing to a postdoc is unfair because you're putting in ~80 hours a week, which is certainly below minimum wage, and the postdoc market is totally insane.

Nonetheless, I am definitely making more than minimum wage - for the first time in my life I have savings and investments. Not to mention the fact that I have launched a nonprofit, sinking quite a bit of my own out-of-pocket to get that running. Granted, the take home was much higher at the beginning of the year (avg 1400/wk) than it is now.

CA Minimum wage is $9/hr.

80 hours/wk * 52 weeks * $9 = $37,440 pre-taxes

> Now, I make those payments and (I think) I can deduct them from my taxes.

If you use your vehicle for only business purposes, then yes, you can. If you mix personal and business use, you have to determine the percentage of use, and you can deduce the business percentage.

Since your business involves your car better than 40 hours/week, you should be able to deduct most of the payments.

> Granted, the take home was much higher at the beginning of the year (avg 1400/wk) than it is now.

So wait, do you make 1000/wk now before or after you deduct expenses and taxes or before? I'm assuming that's your pretax/expense earn?

Regardless, if it's working for you and you enjoy it, that's cool. I just hope you're modeling your expenses and taxes correctly and don't get freaked out come tax season.

Most people I know who 1099 get it grossly wrong every year. Which is why it's recommended you do quarterly taxes.

You should be using pre tax numbers for expenses.

He should be using pre-tax numbers for everything - not only is he not deducting any expenses, he's comparing the final after-tax number with the before-tax minimum wage.

Still, assuming his research is accurate at best it comes out at like ~$12 per hour before tax, unless you play russian roulette on the insurance. This of course assumes that it's your full-time job, otherwise the car payments will further reduce the hourly rate.

Sorry, your wrong.

Self employment tax is higher than just social security tax so you need to look at after tax earrings to compare a 1099 job to a w-2 job. Also, more expences can be deducted as an uber driver than a wage slave ex: a percentage of your cell phone bill and car depreciation.

No, I'm assuming he should be bringing home about what the after-tax minimum wage earner brings home for 50 hour work weeks at minimum wage.

But you are right, I should deduct expenses before taxes.

I don't think the end-result is terribly different though. Maybe $1-2/hr

Can you give an example where what I provided was incorrect?

- Car payments are the same

- Gas is the same

- Insurance is the same

- Vehicle wear and tear is the same

I'm sure I made a mistake somewhere or overlooked something...

At the start:

"You work 215 hours per month on average (50 * 4.3 weeks) and make $4,300 revenue during that time (or $51,600/year). - Subtract self-employment tax 15.3% - ~$7900 - Taxable income 37,650 - ~$5,300 in taxes so subtract that"

You don't pay self employment tax on revenue you pay it on profit. So if your paying ex:10,000 in expences for gas then you would pay (51,600 - 10,000) * 15.3% = 6364$ in self employment taxes.

Yup, you're correct. I should deduct the expenses first.

There are other costs besides gas, there's wear and tear on your car, maintenance, interest (if you financed your vehicle, say through one of Uber's subprime lenders), insurance (does your insurance company know that you are using your car for commercial transport?). Do you spend time washing/cleaning the outside and interior of the car? I would at least double the gas cost, so say $300/wk. Do you pay self employment tax? It seems like you are at closer to maybe ~$13/hr or so, with no benefits. A regular (non-exempt) employee would also get overtime if they worked 50hrs.

San Francisco also might have more competition from other drivers.

This is a common mistake people make in hot shot driving also. (People who use 1 ton trucks to haul cars/equipment around). They think great, I'm getting $1.50/mi and fuel is only costing me $0.75/mi, I'm making money. Then you factor in truck/trailer payment, insurance, business related fees(you need that DOT sticker), wear and tear, and cash to buy a new truck every 3-4 years and suddenly you're in the hole big time and all you're doing it racking up milage on your new Dodge.

Should insurance be higher or lower for commercial transport, and if so, why?

Arguably yes. The vehicle is in-use for a greater percentage of the average day increasing the likelihood of being involved in an accident. Also, the vehicle is expected to be carrying more than the owner leading to additional injury claims in court.

Using a non-commercial insurance policy for a commercial-use vehicle is fraud and routinely leads to declined claims.

The vehicle driver might be aware of that and take the risk anyway, but passengers are usually not aware of this and need some protections.

I'm not interested in that, I'm interested in whether or not commercial transport increases insurance costs on average.

Although this question is slightly less interesting because of typical insurance policies being neutral on the number of kilometers driven.

This is easily one of the best contributions I've read in HN in the last month regarding Uber. Nothing beats someone who has actual experience (for better or worse).

Yeah, $10/hour sounds strangely low. Perhaps she's getting a more-frequent dose of the GPS issues than most, or something else, but I think we can take it as given that the median UberX driver -- while not making the $30+/hour that Uber would like you to imagine -- is making comfortably north of $10/hour. If they weren't, they simply wouldn't still be driving for Uber.

She dropped out after had enough experience and data to do the math. It seems like there are a number of people not realistically adding up their true costs.

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