Income of an uber driver | Hacker News Reader

Income of an uber driver

uberpeople.net

43 pointsprostoalex48 comments

To those of who you are against including the depreciation cost of the car. Here's the math:

Income: He works 10-12 hours to make $150/day and works every day of hte year. He will make $54,750

Expenses: He calculated 94,900 miles driven total assuming working 365 days a year. That's about 260 miles a day of driving.

Gas cost $12,775 Oil changes $855 Tire replacement $960 Misc Repairs: $5000

So that adds up to $19,950 in expenses. You could reduce that by doing oil changes yourself but whatever. Misc repairs at $5,000 depends on the car itself.

So that comes out to be about $34,800 or $39,800 if you're really hating on Misc repairs.

Let's also assume that he is in fact working 10 hours a day to get that $150/day.

So his hourly wage is about $9.5/hour It's $10.9/hour if you don't include the $5,000 toward repairs.

I've limited it to expenses that directly relate to the uber driving specifically and not costs such as depreciation and insurance with come with car ownership versus actually putting miles on your car driving it around.

It's interesting that the final wage comes out to around exactly what minimum wage is. Market forces at work? Driving for UberX isn't exactly a skilled job, and there are enough people with driver's licenses out there that there will always be enough supply of labor (unlike, say, software engineers).

Basically, Uber is paying minimum wage not really any different than Walmart, which is around what you'd expect for a low skill profession. And it's hard to say if the Uber drivers can even unionize effectively to capture more of the profits, because there's always so many potential scabs in the wings.

The only real solution here is a higher minimum wage, which would filter through to UberX driver earnings through market forces.

Minimum wage only if you consider 365 days of work at 10 hours/day... If you drive Uber for only 8h / day 5 days a week, you'll go way under that.

Minimum wage is calculated hourly, and as such it doesn't matter how many hours a day or how many days a year you work.

The vast majority of minimum wage workers DO NOT work anything close to every day of the year, and it's very weird that you'd expect that of people.

Presumably you would have less wear and tear on the car by driving it less. This entirely accepts the initial purchase of the car as a sunk cost, so the number of hours doesn't really factor in, the rest of the costs are all hourly, unlikely the car purchase which is a one time cost.

You can't count both depreciation and the cost of a new car. If you include depreciation, you should only count the transaction costs of a new car (taxes, fees). Otherwise, you're counting the decrease in car value twice: once as the value decreases and once when you replace that lost value with a new car.

You can, however, count both depreciation and the delta between the car you would otherwise have and the car that Uber requires you to drive to be eligible.

On the other hand, most minimum wage jobs don't reimburse you for the costs or time spent commuting to and from work. I wonder if that significantly impacts the comparison.

In the other direction, I think the US also has higher self-employment taxes, and of course you don't get health insurance and other benefits. I wonder if that impacts the comparison, too.

>On the other hand, most minimum wage jobs don't reimburse you for the costs or time spent commuting to and from work

Uber definitely does not compensate your commute back to your home when you turn the app off.

I'm also pretty sure that Uber does not compensate you during your drive to pick up your first passenger, so unless your first passenger is waiting at your parking location, you have an un-reimbursed commute to work as well.

The $9.5/hour or $10.9/hour figure mentioned in the OP compensates for the time/distance traveled to pickup point, including your drive to pick up your first passenger. That was the figure I was referring to. You get misleading results if you compare a gross income from a minimum wage job to a net income from Uber.

> most minimum wage jobs don't reimburse you for the costs or time spent commuting to and from work

The compensating factor here would that Uber drivers are not compensated for the time/distance traveled to pickup point.

> I think the US also has higher self-employment taxes

The carrot with that is more generous allowances for tax optimization (deductions, SEP IRA limits).

> you don't get health insurance and other benefits

That is on par with other minimum wage jobs.

> The compensating factor here would that Uber drivers are not compensated for the time/distance traveled to pickup point.

> That is on par with other minimum wage jobs.

I asked a friend working a minimum wage job and she said she got benefits including insurance. Maybe she's an outlier?

Why is his daily mileage so high? He states he makes $1.10 per mile, drives 260 miles a day, but only makes $150 a day.

This implies that less than half his mileage is being utilized. With an operating cost of about $0.22/mile (it's actually higher given depreciation from excess mileage - I'd guess it's closer to $0.3), he is probably making maybe $0.36/mile driven. (factoring depreciation, < $0.28/mile), which means his net during the year is something like $26k to $34k.

My take-aways:

1. The biggest surprise is how low his mileage utilization is. With an efficient dispatch system that Uber offers, I would have expected much higher mileage utilization -- someone shouldn't need to drive around for long searching for rides like a taxi would.

2. He needs to get a more fuel efficient car. His MPG is only 26, which hurts his bottom line.

> Why is his daily mileage so high? He states he makes $1.10 per mile, drives 260 miles a day, but only makes $150 a day.

He's not paid for the mileage spent on the way to pick up someone, only after they get in.

Or on his way home (unless he happens to get a passenger going to his neighborhood).

Of course, but I'm surprised he's spending as much mileage picking people up as what he is earning driving them -- it suggests inefficiency in the dispatching system.

He does say that his MPG is normally 30 when driving for himself, but becomes lower when driving rides because of all the waiting and stop starting.

My sense is that Uber's current rates aren't entirely sustainable for drivers.

They're able to recruit people who already own a car, and treat it mostly as a sunk cost, when in reality being an Uber driver will significantly decrease the vehicles lifespan and increase maintenance costs.

Mine too, but I'd say it is more that Über is exploiting driver behavior.

If you assume there's the $9.50 wage someone calculated above. + maybe some premium for being able to schedule work hours yourself. + surge pricing, which doesn't seem accounted for.

Transportation companies are making money on the inability of drivers to calculate their expenses properly. People are likely "more satisfied" w/ Uber b/c they don't calculate what the actual money they make.

It's interesting, b/c it makes you wonder about other questions around Uber's model in the longer term as drivers have more information.

== This brings up an interesting issue -- will driverless cars actually _reduce_ profits (of transportation companies) and _increase_ competition?

Correct me if i'm wrong, but Uber started out as a service that connected people without a ride to those who happened to be on the road within a few miles away and willing to give a lift for a few bucks. So what happened? Did Uber pivot or did people start building their lives around Uber and became dissatisfied with the their business model? I don't quite understand this mainly because I don't live in a city where Uber is very popular.

> "Correct me if i'm wrong, but Uber started out as a service that connected people without a ride to those who happened to be on the road within a few miles away and willing to give a lift for a few bucks"

This never happened, as much as Uber would like to imagine themselves a grassroots, populist movement.

Uber started out a service that connected black cars/limos to riders. The idea was to provide competition to taxis, and the easiest existing source of professional drivers was limo drivers, who had a great deal of down time between bookings - and Uber helped fill in the gaps and provide extra income.

Uber was never a "connect riders to random people willing to give a lift" - other companies tried this model, most notably Sidecar, though even then I think most of its driver-base were at least semi-profesisonal.

You'd need to look at Uber's current marketing materials. Most current drivers are probably fairly newly recruited.

Within the last three months, I've seen short text ads where driving for Uber is marketed as a job that pays $21+/hr.

You're thinking of Lyft. Uber has always been a professional cab or limo service.

So...he uses his personal car to drive for Uber, then deducts the cost of the car from the money he made and says he ended up with nothing? It's like someone running AirBnB in their house and spending all money on mortgage and then saying that they make no money on AirBnb. Unless, of course, he uses the car for absolutely nothing else apart from driving for Uber, and wouldn't get a car otherwise.

With AirBnb, you rent out an item that is mainly fixed costs and incurs little variable costs per utilization. With p2p car rental like Get-around, it's the opposite. with Uber, it's even more so on variable costs, as it actively requires your time.

The costs include TWO new cars and a ton of other miscellaneous fees. I'm sure that the point being made is valid to some extent, but the calculations are way out of proportion.

This entire thing shows just how terrible people are at figuring out the math.

1. All told, he calculates $12,000 in depreciation costs him $30,500, because he inexplicably adds a new car at the end of the year to his costs.

2. If the manufacturer recommends an oil change every 5,000 miles, they also recommend one every six months regardless of mileage. So two of those oil changes are "free", but he still gets to deduct them from taxes I would guess.

3. He figured out he forgot to include insurance, but then didn't take the time to include it. He has to pay for insurance anyway, but will now get to deduct from taxes. The only real cost here will be the increase in his premiums when his insurance company figures out what he's doing.

4. People chiming in that you should only drive for Uber part time. The profit per mile is probably worse for part time driving, but it certainly isn't better.

5. One guy seems really upset that he used 94,900 miles to do the calculations, since this is nearly an impossible number of miles to drive in a year. It doesn't matter. If it takes him two or three years, the numbers work out basically the same because he is really basing them all on mileage, not time.

>4. People chiming in that you should only drive for Uber part time. The profit per mile is probably worse for part time driving, but it certainly isn't better.

Some times of day are much more profitable than others because there are a lot more people taking rides, so there's less time spent waiting and shorter distance between each ride.

He's putting 95k miles a year on the vehicle with his assumption (which tends to be conservative for the transportation industry, a car service guy mentioned to me once his black cars tend to accrue 150k/200k miles a year, since "you don't make much money by keeping it parked").

There aren't a lot of vehicles which you can buy used, put 95k miles a year, and end up with reliable vehicle 12 months later. You basically trade up initial investment cost vs subsequent maintenance cost.

Also, if he has good credit, I could see how automakers' aggressive 0% financing could result in a lower monthly payment for a new car than a used vehicle (since no one will finance a used car at 0%).

The OP also fails to take into account the utility of having a vehicle. It's not like you will not be using your car for personal errands.

The cost needs to be decomposed into two pieces: consumption and investment. These two are very often conflated when discussing home ownership.

It seems like Uber drivers often don't understand the economics of driving for Uber. Fulltime driving for Uber only seems to make sense for people who have no other choice and are very frugal (or negligent) about their car. Part time may make sense for some people with too much "car" and time on hand. Against both of these groups, the desperate and the part-timers, it's hard to compete and make a living...

Repairs are not linear with miles driven. If you average vary low mileage (aka under 6k / year) you can bump that up to ~6k/year on the cheap as many components like tires age even if there not being used.

http://www.edmunds.com/car-care/how-old-and-dangerous-are-yo...

I suspect many city drivers could work for at peak times late Friday and on the weakened without adding a lot of maintenance costs.

I always thought the concept of asset and time sharing was to convert what you already had into extra cash, just to offset the full price and maintenance of what you already had if you found yourself needing a few hours of income during some spontaneous downtime.

I dont know the feasibility of, for example, keeping pace with a median income earner, or even a minimum wage earner, because honestly I've never done a real estimation of the business.

At first glance, with car payments, gasoline, oil changes, tire changes, insurance, and deductible payments for the inevitable collisions (with court litigation from a single accident without even physical injury lasting in years of time-consuming litigation), driving for a rideshare is something I quickly turned down as an employment consideration.

A modern car from honda/toyota maintained properly is good for well over 250k miles. I've seen plenty of these calculations and they always seem to use the worse case as the example. Also.. Next time don't buy a chevy.

Maintained properly but also driven softly. When you drive for money you drive hard plus stop-and-go city driving is hard on a car by itself.

A used car with 100k Uber-miles on it will be worth considerably less than the same car with 100k highway miles, and rightfully so.

Think of the positives of an Uber job: (a) you can use your car for your 2nd job for free; (b) you meet your state's welfare-to-work requirements!

Uberpool will be nice. Then you only pick up customers if they are on your route, like on the way to or back from work, or on a road trip.

So, fuel efficient cars would be good also yeah?

This is easy. If Uber driver does not make money, there will be less Uber drivers, so the fee will come up. There's nothing need to be complainted about.

Uber has been running TV ads in New York City that specifically say:

"Mayor de Blasio's plan to stop Uber will cost 10,000 jobs..."

So it's fair to have some more detailed discussion about what these purported jobs are.

Also, we live in a country that protects workers. We try to make sure they're safe. We try to make sure they're fairly compensated. Not everyone has the same degree of life and career flexibility of the average young techie. So even though this particular guy can probably go find another gig, "if the pay's so crappy they can just go get other jobs" isn't a universal solution.

In my experience the result seems to be more crappy cars and less "hip" drivers, if that's worth anything. I read the original plan the founder wanted was an instant "classy" ride. When I choose uberx I don't really expect it to be classy anymore, which is fine most of the time. But it has been something I've noticed. I wouldn't expect a driver to make nothing just to have a new car to drive for uber.

UberX wasn't in the original plan at all. The "classy" was UberBlack.

I've seen this line a lot, and I've never bought it. The only in result I forsee is misery, as more-and-more desperate people work for less and less of a cut.

Compare with H1b visa holders working for well under market rate.

Another possibility is that there's a steady outflow of drivers, but it's matched by a steady inflow of new drivers. The fees stay the same.

Except the demand on the buyer side tends to be pretty elastic, and will go down with prices going up.

This assumes zero churn. With how aggressively Uber is recruiting drivers, I would hypothesize that it takes the average driver a few (maybe as many as 4-6) months before they realize it is a losing proposition.

Miles are overrated as a unit of wear. I sincerely doubt a one year old car with 100k miles will require replacement. I would double or triple the authors expected vehicle lifespan.

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