MIT gives one-star review to Lyft, Uber over abysmal '$3.37/hr' pay An analysis published by MIT has found that Uber and Lyft drivers in the US only net around $3.37 per hour on average, and nearly a third are probably losing money after car costs. A study [PDF] put out this week, and carried out by Stanford researchers Stephen Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo, has found that …
For what it's worth, neither Uber nor Lyft is making any money on this stuff either.
We've asked Uber and Lyft for comment. Uber earlier told The Guardian it reckoned the study's methodology and findings were "deeply flawed."
so Uber / Lyft make NO money ?
yet Uber reckon the study is wrong, so they ARE making money
but if the initail premise holds, how much tax paid would surely give us SOME idea of ca$h flow ?
so, how much tax do these Co's pay then ?
Agreed. Though it should be noted in this case the researcher himself has acknowedged they are (at least partially) right, there is a flaw in how has interpreted survey data and has said he needs the weekend to rerun the figures.
IMO Uber’s new CEO should be given a bit of a chance as he appears to have far more of a conscience than the previous one. Afterall he has rotten foundations to underpin and replace and that will take some work.
In which the drivers lose money to drive cars that the "service" loses money to finance, using technology that is trivial and independently implemented hundreds of times already.
It is not that you wonder how the venture capitalists behind these things ever managed to get rich. You wonder how did they manage to stay alive all the way to adulthood with that degree of stupidity.
"You wonder how did they manage to stay alive all the way to adulthood with that degree of stupidity."
Because one sucker is born every second and they have highly developed sucker detection facilities.
You don't think VCs risk their own money do you? They find people with money and charge them to risk it on their behalf. Money goes down tubes, too bad, VC gets management fee.
Vulture Capitalists work to make their filthy moolah on the potential of the companies to make money in the future possible with an IPO.
They have stumped up a huge amount of dosh for Uber etc that the VC's will really take a hammering if they cut and run now. So they stay for the course in the hope that they'll make killing when Uber IPO's.
TBH, I hope that at least Uber dies a slow lingering death as drivers leave them for companies that treat them properly and VC's take it where it hurts. (called a 'haircut')
I worked for a company that was preyed on by the VC's. We were on track to deliver but they got cold feet and pulled the plug a month before we had finished development. VC's suck big time. Vultures the lot of them.
"I worked for a company that was preyed on by the VC's."
I've seen this particular version of the story happen so many times that my usual advice for anyone working for an outfit that gets infested with VCs is to abandon ship before everyone else does and floods the job market.
"my usual advice for anyone working for an outfit that gets infested with VCs is to abandon ship before everyone else does and floods the job market."
But most will stay in the hope the company becomes the next Google or Amazon and they can cash out and retire. Odds are not in their favour, but then a lot of people play lotteries too.
Uber, Lift, Deliveroo, etc just take it to the ultimate extreme.
On top of everything else this is a clear case of illegal competition via price dumping. A business operating legally and paying the minimum salary cannot compete with someone who is operating illegally and paying half of it.
What the study didn't factor was the quality of the staff (now the employee).
I would wager a bet that the vast majority of the employee's of these service providers are individuals that couldn't get a job a Mick'y Dee's supersizing a shit burger and fries to go!
Does any one think they deserve more than $4.00/hour.......................................NOT!
Tut-tut. Let's focus on what is important: the Uber IPO, which is a year-ish out. And consider the options plays on a company that will come out the gate with a market cap greater than FB.
What is it that they do? A technology company you say?
I have a driver for my network adapter, TYVM. Why would I buy one for $3.37?
If most of the drivers are losing money too, the only thing being accomplished is driving taxis out of business. Consumers win with cheaper fares temporarily, but after taxis are gone Uber will jack up the rates to enjoy their new monopoly. Hopefully they get more competition than Lyft before that happens.
"If most of the drivers are losing money too, the only thing being accomplished is driving taxis out of business. Consumers win with cheaper fares temporarily, but after taxis are gone Uber will jack up the rates to enjoy their new monopoly. Hopefully they get more competition than Lyft before that happens."
The trouble is, taxi companies are easy to set up: just buy a few cars. So you cannot make anything other than normal profit (technical term) this way.
Oh how wrong you are. In many cities (especially big ones) there is a lot of regulation around taxis. You can't just "buy a few cars" and set up shop. In NYC you have to get an official medallion. The numbers the city issued were limited, so you have to buy one from someone who has them. Uber may have driven down the value, but last I heard five years ago they were going for about $1 million each!
What is easy is setting up a "ride sharing" competitor to Uber. Setting one up worldwide would be very difficult/expensive of course, but if you just wanted to set one up that serves your metro area only it would be pretty easy. Cities are placing some regulations on them as well (like drivers having to prove they have licenses, insurance, passing criminal background checks - all the usual stuff you'd hope for anyone being allowed to operate as a commercial business driving strangers around) but they can't effectively limit the size of the market like NYC does with its medallions, or London does with "the knowledge".
"Oh how wrong you are. In many cities (especially big ones) there is a lot of regulation around taxis. You can't just "buy a few cars" and set up shop. In NYC you have to get an official medallion. The numbers the city issued were limited, so you have to buy one from someone who has them. Uber may have driven down the value, but last I heard five years ago they were going for about $1 million each!"
OK, sorry, I should be more specific. I meant 'in the event of Uber destroying all other taxi businesses', in which case for example the medallion system of New York would probably have disappeared. In the UK there are regulations but no quotas, and it's trivial to set up a firm (as long as you comply with the regulations, which Uber sometimes does).
Tim Worstall's conclusion is interesting:
"It prevents large numbers of people doing what they’d like to do, sell their labour for less than $7.25 an hour. We’ve the proof of this, large numbers of them are doing exactly that when they’re able to, as self-employed Uber drivers."
I am pretty sure they don't want to sell their labour for less than $7.25/h but are doing so either because (a) they have not worked out just how little they are earning, or (b) there is not enough local work (they are qualified for?) to get a minimum wage job.
Either way is sounds a lot like VC-funded "illegal dumping" on the taxi job market.
A typical Guardian-esque assumption that people are too stupid to run around loose and need the state to take all their decisions for them (because, historically, that has worked so much better). The MIT study assumes full depreciation, servicing, insurance costs etc etc for the motors being used - which is what you need to factor in if you're a private hire business buying or leasing your own vehicles. But many of these drivers will be using a family car they already have, so their marginal costs are mainly fuel. That paints a rather different picture.
People (in general) are pretty canny when it comes to their own money., They may make a mistake and try out a gig for a week, but as soon as they identify it as a losing proposition, they'll stop,
“They may make a mistake and try out a gig for a week, but as soon as they identify it as a losing proposition, they'll stop”
The difficulty is it’s not necessarily obvious you’re losing money. I’ve got a car already. I’ll need to buy extra fuel. That’s about as far as most people driving for Uber etc tend to get.
They don’t consider the additional depreciation over and above their normal family use of the car. They’ve got extra mileage, tyre and engine wear etc. The resale value is therefore lower, and their MOT and service is going to cost more overall.
They also (hopefully) paid for additional insurance.
If they do quit after a week they’ve got the Job Centre asking why they quit their job. Your choice to quit means no JSA. Good luck living on thin air. This kind of business traps some of the most vulnerable in what is pretty close to modern slavery. The only way to make money is to cut corners, which is bad for everyone.
Taxi drivers are hardly rolling in cash to begin with. Throw in someone like Uber spending VC money to kill off the competition and their quality of life isn’t about to improve. The whole “flexible working” argument is a fig. It’s not about flexibility. It’s about avoiding responsibility. The last thing Uber etc want is actual employees on the books. Employees means rights. Can’t be having that.
I've seen reported that only about 4% of drivers are still at it after a year. So it appears that you're correct that they'll stop, and Uber/Lyft are highly dependent on their marketing campaigns to recruit new drivers who don't yet realize what a cr*p gig it is.
"People (in general) are pretty canny when it comes to their own money., They may make a mistake and try out a gig for a week, but as soon as they identify it as a losing proposition, they'll stop,"
Fantastic parody of a libertarian.
Wait. It was a parody, wasn't it?
@AC - obviously, when I wrote "People (in general) are pretty canny", I wasn't thinking about brain-dead trolls, such as you. Equally obviously, all those people making money through Airbnb are morons, because they should really be factoring in the wear and tear on their home.
This site is rapidly becoming a parody of "Comment is free", populated by Momentum trolls.
I think you miss the sleight of hand in this. As a driver you will, most of the time be earning what seems to be a good wage. Then for most once a year your insurance and road tax and MOT and large repair bills come in and take away any saving you made. But people are optimists and when you are in profit for 99% of the year you can convince yourself you are far better off than you really are. Its not that people think they are happy on less than minimum wage - they think they are earning far more than it.
Worstall, as usual misses the point - which is picked up by commenters.
Uber and Lyft work on the basis that "driving" for them is _NOT_ a fulltime job. The gig economy of this model is predicated on people already heading in the right directions for other reasons and picking up fares to offset those costs.
That's not what actually happens, but that's the model they use.
The other point is simply that Uber/Lyft/etc long-term goal of market dominance is that having meatsacks at the wheel is only a temporary measure.
They lose sight of the issue that once autonomous hire vehicles become the norm they're going to be going up against private operators doing the same thing and bus companies downsizing their vehicles to around 8 seats. (the latter with encouragement from local authorities, as heavy passenger vehicles inflict amazingly high levels of damage on the road for their carrying capacity vs one car per passenger. The only gain is in congestion reduction and autonomous vehicles can entrain themselves in peak periods which solves that problem nicely, whilst eliminating the massive expense of running a 45 seat vehicle on offpeak schedules where it may average 4-6 passengers.
> The other point is simply that Uber/Lyft/etc long-term goal of market dominance is that having meatsacks at the wheel is only a temporary measure.
And at that point a bunch of others, starting with the manufacturers of autonomous vehicles will be in a much better position than Udder to control the market. Udder is the Enron of the 2010s.
"They lose sight of the issue that once autonomous hire vehicles become the norm they're going to be going up against private operators doing the same thing"
I suspect that fully autonomous vehicles are further away than Uber, Lyft et al imagine. Can they last that long? Maybe, maybe not. I suspect not, but there may be a glimmer of hope for them. Autonomous cars "good enough" for city streets, especially if ICE vehicles get banned in city centres on pollution grounds. We're already seeing congestions charge zones and similar, some becoming more restrictive and/or expanding in size. Maybe this is the scenario they see for the near(ish) future and the current plan is to get rid of the competition in preparation for this.
The usual neoliberal crap about the free market being knowall, so that frippery like minimum wages aren't necessary.
The reason taxis have medallions is because when the biz model was first conceived in the 1920s, there were so many taxis in New York (more than 12000 at peak, or double what the numbers are today) that taxi driver became synonymous with thief, rapist, etc.
Uber has done nothing more than turn back the clock, and equally it is unsurprising that Uber (and other ride share drivers) don't actually make enough to live on, as a class.
The more things change, the more they stay the same?
"..., there were so many taxis in New York (more than 12000 at peak, or double what the numbers are today) that taxi driver became synonymous with thief, rapist, etc"
Yup and that's happened all over the world. Regulation to control numbers and make sure drivers aren't crooks always ends up becoming a way of maintainkng a cartel or monopoly. The pendulum swings the other way for a while and then back.
And libertarians are fantasists. They don't like it when you point out that Ayn Rand was welfare dependent. Nor would they consider living in a real existing "libertarian paradise"
Given that (in London) approximately 90% of Uber drivers are from ethnic minority backgrounds, what we see emerging here is a form of modern slavery. The outrage caused by his Uber ban reminds me of darker, colonial days. See how the millenials moan because their entitlement to cheap "foreign" labour has been blocked by a mayor who sees the bigger picture. F**k Uber. They are rotten to the core. I bet their "real" employees are still making very handsome wages out of this fiscal loss.
"This is their country, they're not immigrants, they just aren't white."
They might be entitled to live here and in some cases been born here but they are not indigenous British is I think what was meant by the above. And from my experience of Uber, the vast majority of them are immigrants.
Uber are a classic disruption business, they're not making any money as yet.
Normal taxis cannot compete with their low prices. When they have finally put normal cabs/taxis out of business they will have a monopoly, that's when the prices will go up and they will start to generate some real revenue. They're playing the long game.
"Normal taxis cannot compete with their low prices. When they have finally put normal cabs/taxis out of business they will have a monopoly, that's when the prices will go up and they will start to generate some real revenue. They're playing the long game."
If it was profitable, how long do you think would it take Google and Apple to form a partnership, install the Goople taxi app on every single smart phone, pay the drivers $1 more than Uber does, and clean out the market? 99% of users would either trust Google a lot more than Uber, or trust Apple a lot more than Uber.
So MIT produces a detailed, in depth report that Uber doesnt like the look of, and its response is to slam MIT on Twitter......
Bro Culture at Uber continues to drives the companies reputation into the ground. Someone needs to hire a Social Media Manager at Uber to take charge of all the senior management & directors Twitter accounts.
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