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Mr. Money Mustache, UBER Driver

Unrelated Surprise: Did you know there is now an MMM Android App? It’s really good. Beautiful offline reading. Alerts you to new articles automatically, if you want. Thousands of users already. Free. Many more features (plus an Apple version) to come. It’s on the Google Play Store.

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About two years ago, I switched from taking my personal car to the airport, to hailing Ubers and Lyfts. The math of it was pretty simple: Uber was cheaper than paying for my driving and parking*. And that was before the considerable joy and time savings of not having to park in the airport lot and cram in among the huddled masses in the shuttle buses. Nowadays I sit in the back and get some work done like an Executive, leaving the driving to someone else.

Once I arrive at my destination city, these ride sharing services have replaced at least 90% of instances where a car rental would be useful. Between walking, renting a bike, public transit and calling a Lyft, a car rental is only useful for destinations deep in the boondocks such as a ski resort or a distant beach cabin. Which is another great improvement, since renting a car at an airport has never been a fun experience.

But during all these Luxury Executive rides, I’d often get to talking with the driver. We would talk about life, family, money and business. I always inquired about their experience with rideshare driving, and the response was inevitably something like this:

UBER DRIVER: “Oh, it’s pretty good. On a good day I’ll make a hundred bucks, sometimes even two hundred if I really work it and stay up late.”

MMM: “Is that your profit after subtracting the cost of driving?”

UBER DRIVER: “No, that doesn’t include gas. But I’ll only use, like, not even a full tank – maybe thirty bucks”

“Hmm”, I would think to myself.

“If this driver is burning through $30 of gas, (twelve gallons), they’re probably covering over 250 miles. Whether they realize it or not, it’s costing them $125 in direct car costs before even accounting to the damage to their health or the risk of injury. Thus, the net profit might be as low as $50 for a big day on the road, or five bucks an hour.”

There’s no way Uber could be such a successful company if the pay rate were really this low. Is there?

But on the other hand, some of my Uber drives to the airport have included a Dodge Ram pickup truck (V-8 engine, fancy wheels, bought brand new on credit), a BMW X5 and even a Hummer H3 (with over 250,000 miles on the odometer). Maybe people really are that  uninformed about the cost of driving. As my friend Bill said when we talked about this:

“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)

To resolve this mystery (and as a way of getting some test miles on my new electric car), Mr. Money Mustache decided to go deep undercover in September 2016, and sign up as a driver for both Uber and Lyft services.

The Initiation

Using another driver’s referral code, I signed up on the Uber system and started to follow the instructions. I needed a background check, medical exam, car safety inspection and a few other daunting things. Luckily, Uber runs facilities called “Greenlight Centers” which put all this stuff in one place. The closest one to me was about 40 miles away in Denver, so I charged up my new Leaf and headed down.

When I arrived, I found an interesting scene that nicely personifies our new sharing economy. It was a mashup of an Apple Store and the DMV. Modern design and furniture, good music and glossy tablets everywhere, combined with an ocean of slightly desperate and bored looking people waiting to start their new driving careers. And Mr. Money Mustache, trying to blend in.

It was a funny feeling, spending those three precious hours of my Tuesday morning, waiting in queues and filling out forms. I was keen to learn about the driver experience and how things work in the New Economy. But I also felt a bit of the nervous “I’m applying for a new job” energy of the other applicants, and like a bit of a fraud for being here when I had absolutely no interest in truly having a job.

There was a trendy little cafe in the corner of the room, so I strolled over and picked up a Clif bar and a coffee. Due to my naive privilege as a former tech worker, I expected it all to be free – after all, don’t all offices offer free coffee and snacks, along with a keg of local beer and another tap for Kombucha? But a man popped out from around the corner and rung me up for $3.85. On top of that, it was a bland coffee in a small cup. This was an interesting reminder that working in a lower-training job is a different world than the one you and I probably both inhabit, here at the top of the economy.

When the process was finally done, my 25-year-old Uber concierge looked up from his iPad and issued me a genuinely warm congratulations and we shook hands.

“So that’s it?”, I asked

“Yeah! That’s it! You could go out and get in your car start making some money RIGHT NOW!”

“Hmmm…”

“Nah”, I thought to myself. “Eighty miles of driving plus three hours in an office building is more than enough wasted indoor time for me for the next little while.” 

The spoiled retiree in me loves hard work, but only the right kind of hard work. The sedentary locked-indoors variety of work always falls to the bottom of the list. As you can tell by the low frequency of these blog posts.

My First Ride

Eventually, I was ready to give it a whirl. I cleaned up my car, stuck the Uber decal on the windshield, put on some nice clothes, mounted my phone on a sturdy dashboard clamp, and fired up the app. Within minutes, I had my first ring.

RIDE REQUESTED! John, 5 minutes away.

The ring was deafeningly loud, because (as I later learned after half an hour of looking unsuccessfully for a way to change it) the Uber app overrides your ring volume setting and sets it to !!MAXIMUM!!  I was so startled that I could hardly slide the “accept” button, but I eventually got safely on the road. I recognized the address as Longmont’s “Pumphouse” brew pub, right downtown.

I headed down the hill and scoped the area, and eventually found John. As he hopped in the car I slid the “start trip” button and his destination was revealed as the local Marijuana shop, just 1.9 miles away.

John and I exchanged pleasant conversation and he was impressed by the quick silence of the electric car. I dropped him off at Native Roots and then parked nearby, expecting another fare to pop up just as quickly.

Ride 1: 5 minutes waiting, 5 minutes driving, 1.2 miles unpaid, 1.9 miles paid. Net fare to me: $3.37

But the second fare wasn’t quite as quick. Fifteen minutes later, the Uber app rang again. It was John, now properly restocked and thrilled that I was still there in the weed shop parking lot. We headed back to the Pumphouse.

Ride 2: 15 minutes waiting, 5 minutes driving, 1.9 miles paid. Net fare to me: $3.37 … plus TIP $5.00!

Hey this wasn’t so bad: that five dollar tip really brought up the average. I was thirty minutes into my career and up about 12 bucks, minus five miles of car costs.

After another five minutes of idle time, the app rang again. This time it was a suburban address listed as 12 minutes (which turned out to be almost four miles) away. I decided to take the ride anyway, in the spirit of experimentation.

I got to the house, but nobody was there. After a minute, I used the Uber app to send the customer a text message. “Oh sorry!”, he said, “My phone GPS isn’t working well because we’re inside so it probably shows us in the wrong place! We’re just on the next street.”

I drove around a bit more and eventually found the young couple, and the app revealed a nice surprise: they were headed all the way to Boulder, which was over 12 miles from this part of Longmont. Surely now I would start earning the big bucks.

After 24 minutes of smooth, expert driving and pleasant conversation, I dropped them off at a restaurant. But I was surprised to see that the total wasn’t that impressive:

Ride 3: 10 minutes waiting, 4 miles unpaid, 12.4 miles paid. Net fare to me: $13.96. No Tip.

Driving in the Happening City

Now I was in Boulder, which has a much bigger scene than Longmont. Everybody is rich, every night is a big night, the University of Colorado is right downtown and it’s all action – there are no real suburbs. Due to high rider demand, the city operates in a perpetual “Surge Mode” which means Uber Fares are 20-30% more lucrative, and there is virtually no wait time for fares. And now, I was right downtown. So the app shrieked its notification tone immediately.

The customer was only a mile away, but due to the incredible slowness of trying to drive a 14-foot-long, 3300 pound Racing Wheelchair in a dense city it took me a lot of slow gliding in traffic and waiting at long traffic lights to get there. It was a couple of younger guys, heading back downtown.

We slogged through the dense traffic yet again at roughly one third of bicycling speed, and I earned my five dollar fare.

The app rang again, and I saw from the map it was yet another non-downtown person, probably looking for another ride downtown.

I decided not to play this game anymore, contributing to car traffic in a city that needs fewer cars. So I let this ride request go to another driver and set my destination to Longmont, hoping to find a customer heading that way so I could get paid for the ride home. There were none.

So I flew the Leaf back along the highway to home, and stopped at the grocery store to pick up some fresh food and a free battery charge for the car.

Total stats for the day:

4 Rides
1:51 hours
18.6 miles unpaid
17.2 miles paid
$32 including tips
~$18 of car costs
roughly $7 per hour net


Ongoing observations

After joining Uber as a driver, it was easy to add on a Lyft license: you can submit scans or photos of the same examination info to both companies. So over the course of 2017, I fired up both Uber and Lyft apps many more times to do some more driving and collect some more observations. I tried night driving, special events, and quite a few different parts of the metro area. I had a lot of fun, but made very little money.

  • One time, I was summoned by a 13-year-old girl coming out of the middle school, effectively turning me into Mr. Schoolbus Dad. After finding her in the school lineup, she directed me to the elementary school, where we picked up her little brother. I dropped them both off safely at home in a rusty suburban area nearby. (note – readers have since informed me that this shouldn’t have even been allowed, as you must be over 18 to summon an Uber. She must have been using her mom’s account, and I was apparently breaking the rules by not knowing them)
  • Another ride was from a college student, deep in the Colorado U campus. It took me forever to navigate the throngs of after school foot and vehicle traffic and find this young lad in the crowd. During the ensuing 3MPH transit of Boulder, I couldn’t help but remark, “Wow! I apologize for how slow this trip is going. I’m usually on my bike when I cross Boulder, which is a lot faster.”
    Our final destination was a strip mall, and he directed me meticulously through the entire parking lot so he could be let off within 20 feet of the front door of the restaurant. End fare for about 35 minutes of work, even with surge pricing, was another six bucks. My resolve to avoid driving cars in Boulder was reinforced.
  • My favorite times to be a driver were Friday nights. It was fun to feel the energy of people going out on the town, and find out what was going on.  I could see Uber driving to be a good escape for single people looking to meet new friends (or romances), because I almost always got along well with the customers, often exchanging business cards or email addresses with people when we found something in common.
    On longer rides with people over 30, the topic almost invariably led to life, business, and money, which led to Mustachianism, which led to me admitting my secret identity. Thus, some of my past Uber customers may even be reading this article today(?)
  • But in the end, it was hard to stay motivated to keep doing this experiment. There is just usually something better to do than driving around in a car, and I wasn’t willing to sacrifice too much of my life to gather more data. And with the financial gain of rideshare driving being negligble, I am surprised that there are so many people who do it.

How to Make the Most of a Low-Profit Situation

Still, as with everything in life, I did my best to optimize Uber driving for both fun and money. From my experience as well as reading online forums, the best way you can do it is:

  • Use the referral and bonus system heavily. Actual driving doesn’t pay well, but I have seen bonuses pop up on my app offering between $100-$500 to refer other drivers. There are also “weekly guarantee” offers that come up occasionally, offering more pay in exchange for meeting a certain threshold.
  • Use the lowest cost and most fuel-efficient car you can find. Uber requires you to have a fairly new (under 10 years) car, so get something on the older side of that spectrum, but with low miles. A 2009 Prius, for example, uses less than half the fuel of most cars of similar size.
  • Focus your driving around on “Surge Pricing”. By watching the app throughout the days and months, you will learn when your area enters periods of higher demand. Special events like Halloween, late weekend nights or major league sports events are popular times.
  • Try to find trips involving highways. Since you get paid mostly by the mile, you earn almost ten times more money at 60 MPH than you make in on a long trip through central city where you might average only 6 MPH. (There is an “hourly” component to your wage as well, but it is incredibly low, somewhere in the single digits per hour.)
  • Experiment with the “set destination” feature to filter for rides going your way. Taking fares with you on your commute to work or to an airport.
  • Make the most of your downtime: there will still be lots of waiting between fares. If you bring a book, podcast, laptop or make business-related calls that help you learn a trade that pays more than driving, you can get yourself into a more lucrative trade.

Suggestions for Uber and Lyft

During the course of this experiment, I happened to receive emails from relatively senior people at both Uber and Lyft for unrelated reasons. So I took the opportunity to make some suggestions to make things friendlier for drivers:

  • Report the total driving time and miles for each ride and each shift, clearly specifying paid and unpaid miles and hours.
  • Provide drivers with an estimate of the car costs incurred, and estimated hourly earnings after these costs.
  • Allow drivers to specify the types of rides they are willing to accept. For example, “only ring me for riders within 1 mile”, or “I would like to be paid for for both pickup mileage and rider mileage.”
  • Provide drivers with the details of where the person is going, or at least how long of a ride it is. Right now, Uber has all this incredibly useful information at the time of booking, but deliberately withholds it from the driver.
  • And here’s the best one:
    Instead of setting a reasonably high price per mile (around $1 in my area) and an almost-zero-dollars-per-hour rate for the driver’s time, let’s do the opposite:
    – 50 cents per mile, which just covers the cost of the car
    – plus 33 cents per minute (driver’s net after Uber fees), which is about $20.00 per hour.
    This has many benefits. It reduces any temptation for drivers to rush or break the speed limit. It makes urban trips (where nobody should be using a car anyway) more expensive. It makes more necessary highway trips cheaper. And it guarantees that if a driver has a customer in their car, they are not losing money.

I was surprised that both companies immediately dismissed all of these suggestions, with a round of vague excuses. This was a disappointment to the Economic Libertarian in me, because it seems obvious that  an open market between buyer and seller is the key to more efficiency.

In fact, early in my driving career I learned how much the unpaid driving was hurting my profitability so I stopped accepting distant fares. The app quickly sent me this note:

 

Yeah, right. How about you just stop ringing me with fares that are ridiculously far away, or give me the opportunity to GET PAID FOR THE DRIVING, instead?

When these companies deliberately tilt the field, they are being sneaky, which causes them to lose public trust, which causes the public to vote in a bunch of sclerotic regulation to protect the drivers and the public. If you, as a company, just avoid being a dick to people in the first place and treat them with complete openness and good old-fashioned honesty, they are more likely to let you run free.

Since I started this experiment a year ago, Uber has fallen into a world of trouble and bad publicity. Their internal culture of sexual harassment was blown wide open, along with the misdeeds of the wild and temperamental former CEO. From specific programs to evade government regulation to annoying treatment of drivers, Uber triggered a widespread backlash which became the #deleteuber campaign. Saying “Uber” is now a bit like uttering the words “ConAgra” or “Philip Morris” or “Exxon”.

Meanwhile, from the very beginning I noticed a friendlier tone in the way Lyft operates – see this 2016 interview with Lyft more laid-back founder John Zimmer.

In the End..

In general, I really want companies like Uber and Lyft (and Tesla, AirBnb, Google, Amazon and many of the other tech companies that have been stirring things up so much lately) to succeed, because the benefits to all of us greatly outweigh the inconvenience of the disruption.

For example, some people worry about what will happen to driving jobs as self-driving vehicles gradually take over. But I’m excited about the ways this can make our lives safer, quieter, and less expensive as we give up on owning personal cars, ride bikes much more, and use automated cars as a service whenever the bike is impractical. Technology provides a lumpy ride, but it also provides change which is an essential ingredient in every human life to avoid getting into a rut. So, share on.


Further Reading: How Big Oil Will Diean interesting walk through the changes today’s technologies have already set in place – leading us very quickly to a place where nobody in 2010 would have even guessed.

 

this sentence surely made you ask, “but what about the BUS, Mustache?!?” – good question. Of course I’d always choose biking, then public transit as the first two options, but the airport is 45 miles away (well over 2 hours by bike) and the bus requires a transfer in Denver, which makes it even slower than biking. Also, both Uber and Lyft have referral programs which give you credit for referring friends – I still have a few credits in my Uber account.

If you want to try Uber or Lyft, sign by randomly choosing one of these codes from friends, and you’ll get $10 off of your first ride (and give a small surprise to some of the members of the MMM-HQ coworking space!)

Uber #1

Lyft #1 Lyft #2 Lyft #3

  • Anonymous November 22, 2017, 3:58 pm

    Great view points on driving for Uber. Being the bike enthusiast that you are it would be an interesting article topic to see how profitable/benedicial it is to be a bike courier in Denver. I’ve seen that there are bike courier companies in Denver.

    Reply
  • Anonymous November 22, 2017, 4:22 pm

    Thanks for this great analysis, MMM.

    A financial expert in my country promoted Uber as a side job to ‘double your income’.

    I was always doubtful – and it turns out I make the same amount if money doing surveys! Unfortunately, the money is sporadic, but for a couple of clicks on the computer, while doing other things, it’s worth it to me.

    Only last night, I applied for an ad as a contracted courier – parcels, instead of people. They won’t divulge the pay rate until you apply and attend a training session over an hour’s drive away. I decided not to go ahead with it.

    Reply
  • Ten Bucks a Week November 22, 2017, 4:25 pm

    I did the exact same thing, but took advantage of $10 a ride bonus ($750 after 75 rides). Quit as soon as I hit it because I did the math as well. I had my wife refer me, so another $750 for her.
    Uber certain doesn’t want to tell you your costs because then it will remove the newly enlightened drivers. Uber is essentially cashing out your car through depreciation. I wonder if people would be willing to work for a service that offers you money for people to hit and kick your car. You would also be expected to drive to them for free.

    Reply
  • Dannar November 22, 2017, 4:26 pm

    As an Uber driver who does this part time as a means of income in addition to my Full Time Graduate school schedule, I’d have to say my experience has been completely different.

    I primarily drive between 8pm and 3am on Friday’s and Saturdays in Fort Collins, CO.

    If I work that full 7 hours, I’ll generally make about $200 for 150 miles driven. My mazda3 cost me about 34 cents per mile to operate. So 150 miles cost about $50. TL;DR most nights my net income is $1/mile.

    In 2017 so far I’ve driven about 4500 miles for Uber, making my cost about $1200. I have receipts for all of my maintenance, etc…

    I’ve made about $6000 with the 4500 miles driven, meaning my actual income for the part time job was slightly more than $1/mile.

    $150/7 hours of work is about $22/hour.

    Here is the real kicker:

    When I do my taxes in January, I get an IRS approved standard deduction of 53 cents per mile driven.

    So when I get my taxes back, I’ll have an additionally $2200 just from wear&tear + gasoline, in addition I’ll be able to claim about $400 more in deductions for things like car washes, and other things.

    This will bring my net income back up to nearly $7000 for the equivalent of about 2 months of “40 hours a week” work.

    Anyone that isn’t making money with Uber and Lyft is clearly not trying.

    Could I make the equivalent of $25/hour working 9am to 5pm? No. Absolutely not. That’s why I choose not to work those hours.

    @MMM – How much did you get on your tax return? Have you included your return on your taxes?

    Sincerely-
    An Uber driver making $25/hour after expenses.

    Reply
  • FF,Pharm.D. November 22, 2017, 4:27 pm

    Ha! Thanks for doing this experiment, I was actually considering doing this if I ever pull the trigger on a new electric car (a used Tesla Model 3, years down the line perhaps?)!

    Speaking of electric cars and Tesla, anyone catch the new Roadster? Only $200,000 for that sexy beast! 😂😂😂

    Reply
  • Nice joy November 22, 2017, 4:50 pm

    How did you calculate -18 for car costs

    Reply
    • TomTrottier November 22, 2017, 11:34 pm

      I wondered too. It’s really the marginal costs that matter – not the “sunk” expenses you have from owning & driving that car anyway. It would be “unfare” to allocate the annual or monthly costs you would have even if not ubering.

      Reply
  • Matt November 22, 2017, 5:01 pm

    Interesting to see real and complete data on this.

    I’d be interested in an experiment with Deliveroo or something like it where you can deliver food by bike. On the surface it appears you get the benefits of riding a bike and get paid for it (AND potentially reduce the number of people lining up at drive throughs), but I wonder what it’s really like.

    Reply
  • rif November 22, 2017, 5:01 pm

    There’s a pretty strong theory that says that Uber + Lyft (and similar) are only in business at all because they’re converting billions of investor dollars into low-cost rides, and that when that money runs out, the companies will fold. The argument is that from an economics perspective, Uber etc. are actually high total-cost providers of ride service compared to traditional taxi services, with no real economies of scale. For a great read on this, see the series “Can Uber Ever Deliver?” by Hubert Horan.

    Reply
  • Anonymous November 22, 2017, 5:03 pm

    Airbnb employee here! Loved reading this article. I also bike everywhere in my city (even finally bought a fender-like device to deal with rain). Just a super minor nitpick: Airbnb is spelled with an uppercase A and all other letters lowercased.

    Reply
  • koshtra November 22, 2017, 5:32 pm

    Chiming in with Blue Dove: my wife has a side gig doing tax prep, which she mostly likes, but having to tell young people who are filing taxes after a year of driving that they need to pay both the employer and the employee sides of the employment taxes, to the tune of 15% of their income, is a part that she doesn’t like.

    Reply
  • Martin Back November 22, 2017, 7:18 pm

    You can use the $.535 per mile that is allowed from the IRS for mileage deductions but the actual cost can be significantly less if have the right type of car. I drive Uber only on weekends, Saturday night and Sunday night. I drive about 10-12 hours each night. I bought my 2016 Hyundai Sonata used with 29k miles for 13,100 dollars. It was previously a rental car. It is perfect for Uber because it is large enough to fit people comfortably in the back seat, has a large trunk and in 10 months I have averaged over 32 MPG. I use the money I get from Uber to pay my insurance, gas, car maintenance and payment. It will be paid off around 12 to 13 months of driving. I have put 35k miles on the car in 9 months but I don’t really care about that because it is paying for itself and I get to claim a business loss on my taxes which makes my refund from my real job higher. After the car is paid off completely, I will put the money back and when this car starts costing more to repair than it’s worth then I will replace it. I should be able to drive it through 200k miles which should be 4+ years. It works for me.

    Reply
  • Ducktight November 22, 2017, 7:22 pm

    This image sort of says it all about driving for Uber:
    https://i.redd.it/fp2wp2vv08bz.jpg

    Reply
  • RichH180 November 22, 2017, 8:21 pm

    I would think with your skill/tool set something like Task Rabbit (https://www.taskrabbit.com/) would be a better fit.

    There’s also amazon flex (supposedly $18-$25)if you want to play more with the high end electric go cart :-)

    It would be really interesting to hear your experience with either of these jobs.

    Reply
  • isaac November 22, 2017, 9:08 pm

    a lot of people say Ann Arbor is impossible to drive in, but if you know your way around you can get around pretty quickly even when everyone else is stuck going 3 mph……. I’d be surprised if Boulder wasn’t similar in that regard

    Reply
  • mike November 22, 2017, 9:08 pm

    MMM’s articles are definitely a must read. So informative and novel.

    My take:
    1. I feel sorry for Uber/Lyft drivers (must tip better).
    2. Though I love ridesharing, and it’s always worked well for me, it doesn’t make sense to the driver.
    3. My wife uses this app where we can order a tube of toothpaste from the local grocery store, and it’s delivered to the house. Even if the cost is a bit higher, it doesn’t make financial sense for someone to get the paste and drive to house.
    4. I love MMM’s take on things. Wish he’d post a little more often.

    Reply
  • Brent Weaver November 22, 2017, 10:04 pm

    MMM –

    Nice undercover work!

    As a serial entrepreneur, I am always thinking about how businesses, services, and products that I come in contact with are making money. I’ve taken a lot of Uber rides and done the napkin math – that your experiment clearly articulates – and often wondered how they were making above the legal minimum wage.

    Clearly, most Uber drivers are not.

    While I enjoy the inexpensiveness and convenience of Uber as a customer… I also like to make sure the people behind the services I use are paid a fair market wage for what they are doing. I think Uber has pushed the drivers to the extreme on helping them get market share. The same goes for the other task-rabbit style services out there like Instacart and Handy.

    I feel they are violating the 1099 relationship with people, creating jobs that have zero barriers to entry but require upfront capital (in the form of their own vehicle), and then they are getting away with $5 per hour wages once you account for the capital expense.

    If Uber had to provide the vehicles and pay them as employees, the business model would not work as it currently is set up.

    Which means it’s probably illegal, but drivers haven’t been able to figure out a way around it yet with the law.

    Keep up the good work.

    Reply
  • ZeroGBuff November 22, 2017, 11:04 pm

    Thanks for the info, MMM! Two thoughts struck me as I was reading this post:

    1) Holy crap, that’s an expensive ride! Have these people not heard of RTD?!?

    2) Wow, drivers don’t get paid much, but many probably don’t realize it.

    As for #1, this is another example of choosing where to live. I’m in Boulder, a few minutes’ walk from a park’n’ride. This means that $9 gets me almost anywhere around the greater Denver area, including the airport, all day, no limit. If I’m going anywhere that charges for parking, it’s a no-brainer. Plus, it means my car isn’t adding to traffic, and even the minimal emissions from my hybrid don’t enter the atmosphere. Besides, if it’s a football Saturday in Boulder, my bike is much faster anyway.

    As for #2, I had pondered driving for one of these services to earn a few extra bucks on the side, but after seeing your numbers, I think I’m better off spending that time watching Pop-Up Business School videos and starting a new side-hustle!

    Reply
  • Eli Gaffke November 22, 2017, 11:16 pm

    I found this to be very insightful. I actually just signed to be an Uber driver today.
    I had 3 fares.
    1 of them tipped me a buck for 3 mile ride, mainly because he wanted me to do the slow pull away on his buddy when he was trying to open the car door, who was late getting down from the apartment. I think my first ride would have tipped me, but I realized I hadn’t turned on tipping yet.

    I think I might get a tip jar to avoid some of the taxes that the online tips are susceptible to. Kinda like tipping a waitress with cash versus adding it onto the credit card bill.

    With waiting times and pickup times I drove for about a hour and 15 mins. I got $13.10 with a tip. My first ride popped up in 2 mins of turning on. It took me to a destination where my next pick up was 2 short blocks over. And ended up bringing me back to where I had started the night after I had finished my last call for my day job. A trade, a trade that is slow right now because nobodies furnaces are breaking down yet.

    My last run I chose the option for riders only that would be on my route home. I got one ride and it was barely out of my way and I got home about 15 mins later than expected. It was a $7.03 free to the rider, Uber got $3.39, and I got $3.64. Between driving from acceptance to drop off was 15 mins. And half the time I spent driving to pick up customer was part of my normal route, so no big deal.

    I had another ride come up that was supposed to be in my route home path, but I took too long to accept because I needed both hands on the wheel navigating a cloverleaf. And the map was being weird and showing north based on my direction of travel not true north, so I was confused as to where it wanted me to drive. And then it timed out.

    I am tempted to setup an old phone as a cabin camera for security. Then maybe people won’t steal out of my tip jar.

    Also MMM you weren’t supposed to be picking up 13 kids!!! UBER says specifically if you suspect them to be under 18 ask for ID, and if they can’t they are under age. cancel the fare!

    Reply
  • Paul November 22, 2017, 11:27 pm

    On top of it all, they have admitted that they don’t have pricing power:

    “Uber’s drivers dilemma: Fare hikes and cuts don’t change pay” Wall Street Journal, November 12, 2017

    Given that the only way for Uber to put more money in drivers’ pockets is to cut their vig, and given that Uber already loses money on every trip how do they 1. Increase compensation to stop churn and treat drivers fairly and 2. What is their path to profitability?

    As it is, as this article says, a lot of these trips would not be taken otherwise. Living in Boston I can tell you that the Uber cars are choking already crowded streets and taking people and revenue off of a pretty decent public transit network. I’ve also noticed a lot of out of state cars now plying the trade, saturation in NY and RI perhaps.

    Aside from keeping intoxicated individuals, as I assume your first fare was or soon would be, this is a generally bad idea and from what has been reported a toxic corporation.

    Reply
  • Chris Kassel November 22, 2017, 11:35 pm

    I’ve been an Uber driver for 2 years. The mileage deduction is very useful. I use older cheap cars and write off around $20,000 annually with a $1,500 car and pay alot less taxes on my other ventures as a consequence. It works out for me just fine. I see every extra mile I drive as another $0.54 less income to pay taxes on.
    Its obvious #Richpunks don’t see a $20,000 reduction in net income as a good thing but for us poor people it’s awesome to never owe taxes…

    Reply
  • Misha November 23, 2017, 3:43 am

    I’m a rideshare driver… I have done the math and understand that it is not a high-income situation, however, I have certain physical disabilities and am unable to perform most kinds of jobs. I AM, however, able to drive and the flexibility of rideshare means there are no set hours or days (or bosses)?… I just work when I feel like it.

    Yes, I know it won’t make me rich but it pays enough to cover all my vehicle’s expenses including insurance, oil changes and fuel for both the personal use of my vehicle and rideshare, plus helps supplement my disability income upon which I can barely survive.

    Also, I’m alone a lot and driving gets me out of the house… I decorate my vehicle for the season or holiday du jour and offer free snacks, then I get to chat and laugh and sometimes sing with lots of fun people which creates the best “corporate culture” of any job of my career.

    Once a driver “catches on” to the rhythm of his/her city, they can mostly avoid the excessive wait times and unpaid long distance driving. Just park somewhere between riders and decline ride offers that are too far away… You have those options.

    Anyway, I enjoy it and it may not be a road to wealth for most folks, but it’s great for me. 😁

    Reply
  • Dharma Bum November 23, 2017, 5:23 am

    It would be interesting to read about you going undercover as a regular cab driver, and comparing the experience.

    Reply
  • Nunna Business November 23, 2017, 5:38 am

    I make between $1000 – $1200 weekly(this is after ride share takes its cut). I always make sure I get my weekly bonus. Bonuses range from $40 to $305 each week. Some people drive for tips, I drive for bonuses. Lol! I never drive further than 2 miles out of my way to pick up a passenger. I only wait as long as the time the passenger is given (1min40sec or 5 minutes). If passenger doesnt show in the time they are allowed, I hit no show and recieve my $5 cancellation fee. I stay away from “downtown” as much as possible. If I end up downtown or if a ride gets dropped off there, I quickly get out of there. I refuse to get caught up in that mess. Downtown there is too much traffic and mostly short rides which take up too much of my time. I use on average $80 a week in gas. I make sure to drive during “Prime Time” to make sure I accumulate my Prime Time rides required to obtain my bonus. I treat this like a regular job. I start work between 6am to 7am. Then I’ll take at least a 2-3 hour break and stop working at 6pm. I drive 6 days a week but mainly drive during needed hours so I can qualify for my weekly bonus. On Saturday I only drive during specific hours. It does add crazy miles to your car and your car gets a lot of oil changes but its flexible. For example:Im going to be in Cuba for 12 days next month. I decide when I work. Sometimes I make errands in between my work day or even rides. Its a business to me. I left my comfy job with my personal office that provided lots of flexibility and freedom. I had 27 PTO days, 10 sick days per year and I could work remotely. I hated the company I worked for and have eliminated so much stress. Its about figuring out how to drive smart…Im constantly trying to figure out smarter ways to drive. BTW…I drive for Lyft. I drove for Uber for one week and never ever again. Uber is horrible…from the majority of passengers you pick up to the horrible company. I prefer Lyft. Uber is like Walmart of the world and Lyft is like Target.

    Reply
  • fleurdelys November 23, 2017, 9:11 am

    In Montreal we have a new taxi service http://teomtl.com
    you can basically be a taxi driver, paid 15$ per hour, without owning a taxi. All cars are electric and they have an app to request a taxi.
    Might be a good business idea in other cities (the company own taxi licenses unlike uber)

    Reply
  • TheHappyPhilosopher November 23, 2017, 10:48 am

    I’ve taken exactly 2 rides on Lyft, and I have to say it was a great experience. The cars were cleaner and drivers friendlier than almost and cab I’ve been in.

    What would be really interesting to me is the next level of sharing, where ride sharing became nearly ubiquitous. Just think if you were getting ready to go to work, or the airport or whatever, and you right before you got in your car you hit a button on your phone that gave you a couple of people to pick up and drop off on your way there for a small amount of money. Think of the efficiency of this on a massive scale. Who knows, maybe you could cut traffic and fuel consumption by 50% or more.

    Reply
  • Kris November 23, 2017, 11:21 am

    As a customer, I also wish that Uber would allow the driver to have more info before they accept a fare – I’ve had several experiences where they accepted the fare, but after learning where I was going (45 minute drive away from the city/clubs etc), then declined the fare. I’m sure they’re not ‘supposed’ to do this, but, it’s understandable. It did make for a poor customer experience – but mostly because it could VERY easily be avoided by Uber just letting the drivers have more info BEFORE accepting a fare.

    But then I value transparency, and treating other people with respect, and from what I’ve seen, those don’t really seem to be values that Uber as a company, shares. If they were more transparent with and treated their drivers with more respect, it would actually result in a better customer experience.

    It sounds like Lyft might be a little better for the drivers; I’ll be trying them out for my ride from the airport when I return home after Thanksgiving.

    Reply
    • Mr. Money Mustache November 23, 2017, 2:22 pm

      Well said! As a customer(long before becoming a driver) I always felt the same way: I don’t want drivers to go out of their way to pick me up, and I don’t want to leave them far from their preferred service area.

      But since becoming a driver and realizing how low the pay is, I have changed my habits and started giving relatively large tips (25% of the ride value) for most rides. Especially any rides that don’t give my driver lots of profitable highway miles.

      Reply
    • Glenn November 29, 2017, 11:49 pm

      Uber now alerts drivers at the moment the ride is requested, if the riders trip will be 45 + mins or 60+ minutes.

      As for, “allowed to” refuse trips… yes, they can. Drivers can refuse any ride for any reason. (Except for service animals covered by federal law.) Riders are GUESTS in the drivers PERSONAL VEHICLE. Drivers have 100% discretion over who can ride in their car. Riders can be refused, and even kicked out of the car on the side of the road mid trip when the situation warrants.

      Drivers have a very comprehensive reporting tree to report any issues from riders. A bad report from a driver can get a riders account suspended and even permanently terminated.

      For riders, rating drivers is optional.

      For drivers, rating passengers is mandatory for all trips. Drivers can’t even advance to the next screen or receive anymore trip requests until they have rated the most recent rider.

      Be nice to your Uber drivers. They have 100% authority and discretion over the occupants and behaviors in their cars.

      Reply
  • veronica November 23, 2017, 12:58 pm

    I wish people would stop referring to Uber/Lyft as ride sharing services. They are NOT ridesharing services, they are taxi services. A true ride sharing service is BlaBlaCar (yeah, they really have to change the name) which operates in Europe. There the driver plots their itinerary and then fills up the empty seats in their car with other people who are going the same way. It was a great way to get around France to those cities that are not well services by SNCF. A true ride sharing service is a classic win-win-win: good for the person making the trip, good for the person needing a lift and good for the environment because cars are being used to their maximum. Note that this is for intercity trips.

    Reply
  • mary w November 23, 2017, 1:11 pm

    I’e used Uber infrequently – a few trips a year to/from the airport. It seems that several years ago the drivers I encountered were doing it part-time. Now most of the drivers seem to be doing it full-time – frequently former taxi drivers.

    Reply
  • Kate November 24, 2017, 3:18 am

    Interesting article, I didn’t know the pay was this bad.
    I”m sorry that this is slightly off topic, but:

    “Wow! I apologize for how slow this trip is going. I’m usually on my bike when I cross Boulder, which is a lot faster.”

    I would like to add a quick reminder here that not all health issues are visible.

    Unintentionally rubbing it in like this happens to me relatively often, I’m young and look perfectly ‘normal’. How I respond depends on my mood. I either ignore it and smile, or (if pain and fatigue have caused my mood to plummet enough) I explain why I can’t bike that distance and thus am ‘forced’ to find an alternative.

    (And I do tip my drivers, it’s a lot better than the hassle of public transport, and a lot cheaper than a ‘real’ taxi.)

    Reply
  • WantNotToWantNot November 24, 2017, 5:33 am

    Great piece of Immersion Journalism, MMM!

    You demonstrate better than any other piece I’ve read exactly why I have never hailed an Uber or a Lyft, and I never will.

    While I too embrace and encourage innovation, and I love a bargain, these two ride-sharing services function exactly like Walmart (another mega-successful business I refuse to use). The equation is this: attract customers with low prices and keep labor costs as low as possible by shifting costs onto the employees themselves.

    I would rather pay a higher price for a registered taxi service, and know that wages are fair, the company is honest, and I’m contributing to someone else’s ability to make a decent living. If I ever see a new taxi company emerge that can offer lower-cost ride-sharing and treat its workers fairly, then I will take it. But so far, I don’t see that.

    The ‘gig economy’ is the result of a Walmart-ized country of consumers who drank the Kool-Aid of “more-more-more for less-less-less is ALWAYS better-better-better.” Decades of brain-washing have lowered society’s expectations that workers deserve fair pay and, moreover, have the right to fight for it. Of course this is only part of the story, but it is a slice few like to talk about because it means taking uncomfortable political action and it disrupts the faith that everything coming out of Silicon Valley is egalitarian, utopian, and progressive.

    Of course, all this works just fine for those of us who are FI, watching the stock market rise, and able to live on income from investments (as I am, due to the luck of privilege and decades of frugality). But I am worried about the long game, so I vote against my own interests constantly. This gig economy will catch up with us eventually and the pendulum will swing back, but a generation or two will have lost out in the broadest sense. People will eventually wake up to the real costs of being a cog in the gig economy (as you so clearly laid out, MMM) and they will feel cheated. The erosion of trust has already happened, as we see in our national politics, and is one symptom of the larger problem of greed. As John Bogle has written, we need a sense of “Enough.”

    Reply
  • BC November 24, 2017, 10:05 am

    There are some bigger picture things to consider when looking at Uber and Lyft that I’m not sure are reflected in this blog (which was great, BTW):

    One, it’s employment with a very low barrier to entry. Often in larger cities I’ve traveled to, drivers were immigrants and this was something that gave them almost instant employment while they work on pursuing something better. My driver in Baltimore drove Uber when he wasn’t in school, and it was the perfect job for him in that moment because of its flexibility. He could work a lot on days when he didn’t have school and when he did, less. I always talk to my drivers and the story I usually get when I ask if it’s financially worth it, is yes and no. My Baltimore driver said he’s had days when he’s made $400 in a few hours and hung it up for the day (airport runs and longer distance trips) and some days it’s slim pickings.

    The flexibility also makes it a good side hustle, especially for those with unusual jobs. All of my current side hustles are ones without a schedule because I never can be certain when I will need to do something for my day job. Uber/Lyft allow for that and is why I’m considering a ride-sharing experiment of my own.

    Great for retirees too:
    http://www.thecitypages.com/news-opinion/uber-senior/

    BUT, I haven’t tried it yet, primarily because right now I try to drive my car as little as possible. Someone in our city did start a pedicab last year, and apparently it will have an app next year, so I might try that instead. Getting paid to exercise! As for Uber/Lyft, we will see.

    Reply
  • ZJ Thorne November 25, 2017, 7:47 am

    Uber/Lyft can be a godsend when I have to travel to parts of the country without public transportation. My late father lived over an hour away from the airport via car. I could not have come to help without a friendly uber driver making that long-journey for me. Is it true that you can set your app as a driver to only accept trips over a certain time/mileage?

    Reply
  • Danyel November 26, 2017, 2:31 pm

    Remember when these ride sharing companies got started it was more, “hey I’m going this way looks you’re going this way too, let’s share a ride and you can kick me some gas money.” Then people started “hacking” these companies, using them as a source of income. I think it would still work for extra gas money but not a real job.

    Reply
  • Sean November 26, 2017, 7:18 pm

    Hey MMM, I am a “surge only” driver which is conveniently predictable in my town. I live in a college football town (go hokies!) so I drive in my town during move-in weekend, home football games, parents weekend, etc. I drive a luxurious 2013 Honda Civic for my driving and have calculated costs including insurance and other fixed costs (which are obviously very mileage dependent) around .29 cents a mile.

    I have never earned less than $25/hr (top line before costs) and my best ever was $140 for 2hr the morning after this years Clemson game. $70/hr!!!!! I don’t get on the road without 2x surge pricing, but admittedly I drive something like 6 hrs a month. I think I am the perfect fit for Uber, I am a surge pricing driver which is exactly what the system needs to cover high demand periods. I would post pictures to prove my earnings and might make a blog post about the subject soon on my humble website.

    Overall I am happy with my Uber experience, I am also registered with Lyft but it isn’t as popular in my town, so I have given about 50 -1 more Uber than Lyft rides.

    Reply
  • Dave November 27, 2017, 9:59 am

    Interesting experiment. We’re a one-car house and sometimes I have an hour or so to kill while my wife is working out and it doesn’t make sense to drive home just to drive back later. The gym and work is in an area right now that doesn’t make it feasible to bike at this point, so I just sit in the car and read, or go to the mall to leech wifi.

    I’ve contemplated signing up for Uber/Lyft to kill some time and make a few dollars. Not sure if I could make it work out to be fiscally beneficial on such a time constraint though…

    Reply
  • Stephane November 27, 2017, 1:05 pm

    My best usage for Uber is when traveling in foreign countries. Often the taxis see you as a foreigner and double, even 4x the amount of the usual fare. It cost me more than at home in Canada! So Uber levels the playing field for that scam. A word of warning though, if you create your Uber account in a foreign country and a foreign phone number, it might be harder to transfer over.
    I can bus to the airport, so I don’t need Uber for that. The other use I have for Uber is late at night when public transport isn’t running. And even then I can usually get public transport to get me partway there.
    As a driver for Uber, the only reason I would do it is to expose people to electric vehicles. People have all sorts of strange ideas about them, so the more they know about them and dispel the silly rumors, the better. Also, for the time being, I can get a free charge at city hall, so that would reduce some of the overhead.

    Reply
  • MKE November 27, 2017, 1:56 pm

    Glad to see cars getting bashed again, rather than extolled. I understand there is the occasional Uber driver who makes a few bucks. I have never used it because I don’t care to exploit some poor, uninformed person who can’t do the math. The people paying Uber for rides are also part of the problem.

    Modern-day American capitalism is predatory. It’s more easily exposed at Uber than at other places. MMM’s suggestions were things Lyft and Uber already knew. Part of running the modern corporation is deliberate exploitation. Treating employees well is for suckers and chumps (obliquely mentioned in one of the Freakonomics book’s chapters on drug dealers). That he naively expected large companies raking in money for the board and top executives to take an employee at all seriously was good for a chuckle.

    Reply
  • John November 27, 2017, 11:54 pm

    Enjoyed the article as usual.

    I do agree that most drivers underestimate their driving costs. (i.e. My brother “making good money” driving his new leased vehicle…).

    But I think your calculations are pessimistic for most drivers once you factor in the sunk costs.
    Most drivers are going to own a depreciating car and pay about the same for insurance no matter if they drive Uber/Lyft of not.

    With regards to depreciation, there are really two components. An age component and a mileage component. So, I would suggest you only should count the mileage component of this for most drivers because they are going to own the car anyway.

    There probably isn’t a simple formula for calculating this and I’d guess it will vary significantly with model make and age of the car. But as an example, I looked up the blue book price of a 2012 Nissan Sentra. The private sale estimate is about 7k for a car with 75k miles on it and 5.2k for a car with 150k.
    if someone had been driving Uber or Lyft part time for the last two or three years and this is what caused them to put the extra 75k on their Nissan then the depreciation it would have cost them would be about 1.8k or 2.5 cents per mile.

    What about insurance?
    This is also mostly a sunk cost for most drivers.

    The coverage that Uber provides while you are driving for them is quite reasonable in my view. It covers liability, under insured motorist, comprehensive/collision “as long as you maintain auto insurance that includes collision coverage for that vehicle while not on an Uber trip”

    The comprehensive collision does have a $1000 deductible so you would need to factor in a bit of cost/risk for this.
    Of course, if you’re a good Mustachian and purchase only reasonably priced used cars and choose not to carry comprehensive insurance because you can comfortably self-insure, then you’d need to factor in a bit of extra cost/risk for the extra driving. But this should be small for good drivers.

    Reply
    • Mr. Money Mustache November 30, 2017, 3:31 pm

      Hi John – good points, although I’d still argue that we should think of all car costs as scaling directly with the mileage. Because if you do things the Mustachian way:
      – you can often go car-free (making car costs zero)
      – for occasional use, you can rent cars via a conventional company, or from friends, Zipcar or Turo
      – for higher but still below-average use, you can have an older car (my van is almost 20 years old, worth under 2 grand, and is still serving me perfectly after 7 years of ownership – because I only drive it a few hundred miles per year).
      – Insurance scales with mileage, either with more basic policies, or with pay-per-mile insurance like Metromile
      – Car registration fees often scale with the value and newness of the vehicle
      – Crash and health risk (possibly the biggest costs of driving) scales directly with how much you drive.

      With all that said, I still agree that it’s possible to get driving below 50 cents per mile with the right mid-2000s 4 cylinder low-maintenance cars.

      Reply
  • Kevin November 28, 2017, 7:31 am

    Everyone here should look up Tony Seba on youtube. He is an economist talking about electric cars and Uber. It is really interesting and worth your time. The “future” is only about 5 years away.

    Reply
  • Andrew Mullen November 28, 2017, 9:00 am

    I had a very similar experience with Uber. I did find it fun and enjoyed providing reliable transportation for people out patronizing local business, but, in the end, the costs just exceeded the benefit. This service does keep intoxicated people off of our roads and can provide a boost to businesses in areas with poor public transit. I feel like this type of business should almost be subsidized by local govs…For example-A city could provide drivers access to share fleets of long range EV’s like the Bolt, Leaf, Ioniq, etc., and provide free DC fast charging for those driving personally owned vehicles. So, basically the costs of providing a valuable service like this should be spread among the community that benefits from it instead of just falling into the lap of the driver.

    Reply
    • Ryno November 28, 2017, 2:43 pm

      I would rather see the people who are directly benefiting from the service pay for it (uber riders). I think the free market takes care of this. If there aren’t enough people willing to be drivers in a particular area then the price to ride will increase and the pay to drivers will as well. I know MMM and a lot of his readers are really into subsidies but I think people lose sight of the true cost of things that way. I.e., “I want to drive all over town going to 3 different stores to use $5 worth of coupons, I know I will just use the subsidised uber ride for $2”. Or the unnecessary MRI “only costs a $30 copay”.

      Reply
      • Mr. Money Mustache November 28, 2017, 4:13 pm

        Whoa there Ryno – I’m a free marketeer too. I am not in favor of subsidies *unless* they address a market oversight or in some cases a social need. For example, progressive income tax brackets make the rich subsidize the public services of the poor, to a certain extent.

        Andrew’s point about Uber-style transportation being a public benefit (similar to a bus service) could be a valid point. If it were made cheap enough, it could even undercut buses and replace them with a more efficient multi-person transport system (Uberpool is a crack at this).

        But even better than subsidies in my opinion is taxes on externalities. So, a gas tax and high road use fees for vehicles, with cheaper or free ones for smaller vehicles like bikes. Also, a higher land tax in cities in exchange for lower income or sales taxes, to discourage sprawl.

        Reply
        • Ryan Anderson November 29, 2017, 9:44 am

          Raising taxes to properly reflect externalities I can definitely get behind. I would love to see the price of gas doubled through a $2.50 tax per gallon. I think that would solve a lot of the issues: pollution, sprawl, expensive road repairs, etc. I think public transportation is great but it shouldn’t be subsidised. Only those who can’t afford it should be given free or subsidised passes. Everyone else should pay the needed price to make it a balanced budget endeavor.

          I feel the same way about electric vehicle credits and subsidies; it creates market imbalances (the cost of driving is artificially lowered and who decides which company gets them?). Taxing gas to make gas cars more expensive and thus electric vehicles more attractive makes the most sense to me.

          BTW, love your blog. I reference it so much with friends and family they think I’m on your payroll.

          Reply
  • Frank November 29, 2017, 11:21 am

    Hi MMM,
    How much of your earnings went to cover taxes?I assume there is some taxation on the money you made? I am not bitching, i am just curious. I must admit that i am not a big fan of Uber. When they started operating in Denmark they were reported to the police for violations of the danish taxi code. Even when it was obvious that they were breaking the law they ignored it and kept on like nothing had happened. They have made it possible for drivers to evade taxes and they have hidden their earnings in offshore tax shelters. Once the risk of massive fines loomed on the horizon, they ceased operations in Denmark. End Of Rant.
    P.s:
    I would like to give you a very big thank you for running this site. Your writings have been a huge inspiration for me during my struggle to get out from under a huge debt. At this time, i am 3 months away from killing the debt completely and reaching net zero. When i reach net zero there will be a lot of chest-thumping, and then it is time start investing. I will never go into debt again. I might do some bragging on the forum though ;-)
    Best wishes to all my fellow mustachians
    -Frank

    Reply
  • The Rideshare Guy November 29, 2017, 3:36 pm

    Glad to see you trying out Uber and Lyft and your observations are pretty spot on. A lot of people get into this line of work looking to make some extra cash but eventually realize that there’s a lot more that goes into it than they expected: taxes, insurance and of course increased vehicle costs/depreciation.

    And like with any job, there are positives and negatives, but I think what makes driving for Uber/Lyft unique is that there is a lot of earnings variability. As you learned, better/more savvy drivers can earn more and on the back end, your net profit is higher the more efficient your vehicle is.

    The companies themselves don’t seem to have driver’s best interests at heart and even though you’re technically an independent contractor, they exert a lot of control over you and are constantly nudging you to accept certain rides for example. Fortunately, the start-up costs are low and there isn’t a lot of risk so I think anyone who’s interested should do their due diligence but ultimately try it out for themselves. There is so much variability and so many different reasons to drive that it really is a personal experience more than anything.

    Reply
  • R. Stuart Fischer November 29, 2017, 6:00 pm

    This is one of those pieces that makes me wish someone would write a book titled “When Good People Have Bad Politics.” The author sounds like a truly decent and kind and sympathetic person; yet he identifies himself as an adherent of a nightmarishly cruel ideology: libertarianism. But the way he does so actually goes a long way toward answering that question of why good people have sometimes have bad politics.

    Consider this quote from the post: “This was a disappointment to the Economic Libertarian in me, because it seems obvious that an open market between buyer and seller is the key to more efficiency.” Now I’m no economist, but I’m inclined to think this is true.

    But here’s the problem with both the observation, and with the blinkered, naive person who would use the observation in support of the ideology of libertarianism: Efficiency isn’t the central issue. Profit is. There may well be cases where the two things correlate, but it’s not a given: what is a given is that the central concern of the company’s founders and executives is profit. (Talk about something that “seems obvious.”) And when profit is the central concern, absent the regulatory checks that libertarians find anathema, it will almost inevitably lead to putting workers in a position of economic serfdom, never mind how “inefficient” that may be.

    So if, as the piece seems to imply, one is concerned about one’s labor being adequately compensated, then one needs to look to labor organizing, to worker ownership and/or say so in the disposition of profits, and the like. A barely regulated “free” market is not the answer; it only provides “liberty” to the owners.

    Reply
  • SMM November 30, 2017, 8:58 am

    Thanks for providing your analysis. I’m surprised to see the hourly rate be so low after factoring in all of the car costs. Some of my friends rave about Uber and I thought about experimenting with it. But I don’t like driving as much to do so. But the best part about it would be safety in terms of knowing a bit about the customers you are picking up not to mention no actual money exchange.

    Reply
  • joelax November 30, 2017, 9:49 pm

    Nice article. I also considered driving for Uber a couple of years ago, going so far as to sign up and start the process. Here’s something MMM didn’t even mention though…I stopped when I looked into appropriate car insurance that would cover me if I did use the vehicle for driving for Uber. At that time, depending on where you lived (varies widely depending on the state you reside in and are driving in), most insurance companies would drop you from your regular policy if you used the vehicle for Uber. Yes, when you had a rider in your car you were covered by Uber’s policy, but it was a grey area if you were driving to pick up a rider or just driving around waiting for a rider. Uber’s coverage was not always easy to cash in on during these times (from what I heard/read). Turns out that if your regular car insurance company found out you drove for Uber, they had the right to drop you as you were using your car for commerical purposes. If you were upfront and tried to straighten this out with your insurance company, they would drop you altogether. At that time I was getting a new old (2007) car as an upgrade from my 2004 Honda Civic stick shift with a rusted out hood as the clutch was going. AllState decided to drop me from the insurance with my Honda Civic (even though this didn’t meet Uber’s requirements) just because I called and asked them.

    Granted, the insurance aspect is very fluid and lots of companies are catching up to speed or offering more reasonable insurance than the traditional commercial products which were very costly and probably no Uber driver would have chosen (minus Uber’s black car service).

    Anyway, an interesting book I read about the whole economy: https://www.amazon.com/Raw-Deal-Capitalism-Screwing-American/dp/1250071585

    I have different opinions about automation than the author, but part of the point was that these companies don’t necessarily care about their employees. So while MMM’s recommendations made perfect sense, Uber (or any of these companies) really don’t care. There seems to be an ample pool of people not willing to see the whole picture, be abused and “profit” for a period, then leave only to be replaced by more people willing to do the same. Anecdotally, to the annoyance of my girlfriend, I would ask most of the Uber drivers I rode with about their experience and the profitability. Most had a very loose grasp on it, most weren’t doing it for longer than 6 months or so, and none had any clue about the actual insurance implications.

    Anyway, thanks for posting.

    Reply
  • Tony December 1, 2017, 9:07 am

    I saw an article on this on MSN this morning. I thought “hmm, I wonder if MMM started a trend about this?” Sure enough, it was basically an article about this post. The word is getting out!

    Reply
  • Gabe December 1, 2017, 1:32 pm

    What a cool experiment. I’ve often wondered what the true costs and profit was from being a ride-share driver. Thanks for spending a year doing this and providing a breakdown!

    Reply
  • Jeff December 1, 2017, 3:11 pm

    I drove Uber & Lyft in Boulder in 2014 and 2015. I distinctly remember getting a $232 fare on halloween from Boulder to Lafayette (I think the surge was 9.8x or something crazy). I made a nice little income with minimal time investment, but I will say that I relied HEAVILY on the hourly fare guarantees, which nowadays are far less common/lucrative.

    In Boulder Uber would sometimes ‘guarantee’ $40-50/hour if you met their requirements during certain hours (5pm – 3am weekend nights). Due a sneaky system I discovered, I was able to give 10 small Boulder city rides (taking about 3 hours total), then go home and sleep and still get paid for all 10 hours that night. I probably pocketed $700-800 a weekend while only working 6 hours or so.

    Later on I got into referrals. Lyft would payout double-sided $750 bonuses for uber drivers to sign up with them. I hit that hard while it lasted; it allowed me to travel Asia for a while.

    Nowadays though, I can’t imagine why anyone continues to drive for these services, especially if its not surge hours. There’s way too much competition and the company controls every aspect of your experience as a driver. Needless to say, I haven’t driven for either company in over 2 years and moved on to better opportunities.

    Reply
  • Mike December 2, 2017, 12:45 pm

    Please do a food truck business adventure! Buy a cheap food truck on Craigslist and go from there. Would love to see the results of this by you!

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  • taxman December 4, 2017, 8:12 am

    Did anyone mention the IRS tax write-offs ? The standard mileage deduction is great. If you have a mostly depreciated vehicle (older prius etc) you can actually make decent money with selective driving and “operating at a loss” The other thing MMM didn’t include in his original calculation is self employment tax.

    Reply

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