Uber-Lyft study author jams into reverse gear over abysmal pay claims The author behind a high-profile study on how much Lyft and Uber pay their drivers has U-turned – and says the taxi apps cough up more cash than he previously claimed. Dr Stephen Zoepf, of the Stanford University Center for Automotive Research in the US, now hopes to work more closely with the pair of tech upstarts in the wake …
The new numbers are still bad, but they will be completely lost now because he came out with such a low number to begin with.
When you do a calculation and come out with an exceptionally low (or high number), the first thing you normally do is double check all your calculations. If your still getting the same number, you check all your assumptions. And if your still getting the same number you get someone else to read over it and check you havent done something daft. Only then do you consider that maybe the number is correct.
This papers authors credibility has taken a massive hit now, and the story will be more about how he screwed up then about the results which still show 50% of drivers earning less than the minimum wage. Which should be the story... Always check your calculations, your assumptions and your data, otherwise your failure will become the story rather then the results you find...
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Its all about interpretation of a couple of questions. One interpretation gets $3.55, another interpretation gets $8.55, and a 3rd interpretation gets $10. Which interpretation is correct? I submit in my limited experience of these things all of them. If the interpretation of the answers given is subject to misunderstanding how much more so the interpretation of the question by those giving the answers? Especially if we hypothesise limited command of english by some respondents.
It does seem likely that really the data gathering should be done again.
And much of that is taxes on the fuel, tires, etc. When you consider that here in Cali the tax on fuel ($.417/gal + 2.25% gasoline or $.36/gal + 13% diesel) makes up somewhere around 25% of the purchase price the driver might be paying a greater percentage of tax than people in other occupations.
I took talking about "profit" instead of "wage" to mean that gas, car maintenance etc. was already deducted, and the $3.47 (or $8 or $10) an hour was the "profit" after those expenses are deducted.
Hence the comparison to a minimum wage job, where your entire wage is "profit" when measured the same way. Obviously in both cases you have to pay for food, housing and so forth so you won't have anything left over after a minimum wage job whether it is at McDonalds or driving for Uber, but those expenses are the same whatever minimum wage job you have.
@DougS, but those expenses aren't equal. The McDonald's worker pays to commute to work and basic living expenses while the Uber driver has exactly the same expenses plus the added wear and tear on the car and far more fuel since I imagine most of the fares don't come from their own apartment building so there is still an initial commute whether it be to the airport, downtown, etc.
If everything else is the same the added expense in fuel alone is enough to make a substantial difference. If they both manage $10.50/hr (the Cali minimum) and are roommates in LA, one has to buy far more fuel than the other. If both put in 25 hours per week the McD's worker isn't paying for the fuel burn that whole time while the Uberer is. If we assume our Uberer is driving a car that averages 40 mpg and they maintain LA's average speed of 26.8 mph that's $51 per week1 in fuel the McD's worker isn't spending which is a difference of about $2/hour straight off the top so the Uberer needs to pull down closer to $12.50/hr just to match the effective income the McD's worker has. It also means that the Uberer also pays $12.50/week more2 in taxes than their roommate.
1. Using $3.05/gallon that I paid at Costco last week
2. Yes, I understand that the fuel as well as depreciation on their car and possibly lots of other things is deductible on their income tax but neither is going to earn enough to pay any substantial income tax anyway.
This is all assumption, but there is perhaps a possibility that the initial $3.37 per hour might came about under specific speculation. That is concluded based on total workable hour per day.
If the researcher used something like a 12 hour shift instead of per working hour, you can easily get around the $3.37 per hour result. Using an example if Uber-Lyft driver worked for 4 hours for $10, over a 12 hours shift that is a $3.33 per hour wage.
The funny thing is I got 4 hours number based on the $3.37 per hour wage, which might reflect the actual number of hours Uber-Lyft drivers work in a given in a day. After all, 4 hours does fit nicely whether you are part-time or working on a 9-5 job.
So, does it mean 74% of Uber-Lyft drivers actually don't work full-time as driver? Based on my assumption, it looks like it.
Disclaimer: This is all assumptions. aka numbers from my arse. Don't take it for granted.
"the model seemed to be based on a high-turnover of drivers and another sucker along in a minute."
This is the entire basis in the recent "gig economy" phenomenon. Things like Uber and Airbnb started off as a nice sounding idea - if you happen to have an empty house for a weekend or are driving somewhere, why not make a few quid by letting someone pay you for letting them share? And while even that runs in to a variety of legal issues that most people just choose to ignore, in pure financial terms it really isn't a bad idea; if I'm driving anyway, giving someone a lift doesn't add significant extra cost so any pay is pure profit.
The problem quickly turns up when people try doing it as an actual job instead. At which point they quickly discover why they weren't already raking in the money running a taxi or hotel business to start with. Even if you still try to ignore all the legal issues like licensing and insurance (which isn't going particularly well for Uber and others), it turns out running a taxi service is a lot more expensive than most people think. Hence all the people jumping in, failing to make minimum wage, and then having to drop out again because it doesn't actually pay the bills. Normally this would be followed by "...but of course the enabling company always makes a profit by taking a cut", but in most cases even they haven't figured out how to actually make any money out of all this.
It's all a bit weird, because the idea of casual labour is hardly a new one, and the way Uber assigns work is not meaningfully different from the way manual labourers used to be picked up for working on the docks, and a lot of casual and manual work is still done in similar ways. But for some reason put an app between the hirers and the workers and suddenly everyone involved loses their minds and thinks a magic money tree has appeared somewhere in the process.
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