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Uber update, parts 2 and 3

Driving for Uber is a tough way to make a living.

Uber

One hundred job applications and still nothing. Jennifer Cantrell, 34, partway through a master’s degree in social work, had depleted her savings and needed a new plan. Through Facebook, she found out about someone subleasing cars to prospective drivers for Uber, the smartphone-based ride service.

It seemed promising: She had a license and was willing to learn the road. Uber offered freedom and flexibility, she’d heard, and an annual full-time income of $90,000. So Cantrell leased a car and signed up.

Yet after several months of working as much as 70 hours a week, she found herself in the red, not only with the owner of her new Toyota but with her landlord as well. Her weekly earnings statements looked decent on their face – after Uber’s cut, around $400 for 35 hours – but she’d somehow be left with just $100 a week once she figured in gas and the lease.

Uber likes to boast that its casual, affordable service is powered by part-time drivers seeking work “outside the 9 to 5.” That sounds like a convenient sideline for people like Cantrell: a cooler, more middle-class population than is usually drawn to taxi driving. For Cantrell, though, Uber became a full-time job that paid less than the minimum wage.

Other Uber drivers interviewed in Houston and elsewhere, speaking on condition of anonymity because they feared retribution from Uber, cited problems including pressure to provide costly amenities or to accept too many passengers in order to get good customer ratings. One driver said immigrants who drive for Uber tend to draw lower ratings.

Others, mostly part-time drivers with other sources of income, said their Uber experience had been positive. Uber maintains most of its drivers are part-time.

“You have to find what works for you,” said Lateefah Eburuche, who lives and drives part-time from the Third Ward, near the University of Houston.

Eburuche said Uber gives her flexibility so she can go out of town for trips related to her clothing design business.

“To me, Uber was the perfect answer for the convenience,” she said.

[…]

Uber requires drivers to get a license and to use their personal cars, so long as they meet certain minimum standards: a 2008 model or newer, four doors and under 150,000 miles.

Drivers like Cantrell can’t afford to buy an Uber-compliant vehicle and thus resort to formal or informal leases. Uber itself offers vehicle discounts and financing options. Last year, Uber was criticized for partnering with Santander Consumer USA, a leasing giant investigated by the Department of Justice for illegally repossessing vehicles from military personnel.

“I have seen [Uber] try to finance cars for other people, and I’m like, ‘That’s a disaster. Don’t do it,’‚ÄČ” Cantrell said. “They offer new drivers these subprime auto loans, to pay over $200 a week on their car note while the car depreciates like crazy.”

[…]

On each ride, a passenger chooses a rating between one and five stars, with five being the best. But, drivers say, anything less than a high four average can undermine their ability to get rides.

Such basics as the cost of a fare are similarly unpredictable, Uber drivers say. One Houston driver recalls starting with the company at a rate of $2.50 per mile in 2013, “but eight months later, it was $1.89 and last November, $1.10 a mile,” said the driver, speaking on condition of anonymity for fear of retribution. “Now, to make $200, I need to stay on the app for 15 hours.”

Houston’s current base Uber fare of $1.10 per mile can “surge” to as much as 10 times the regular amount in certain locations during periods of high demand. By offering this boost in fares through driver alert emails and text messages, Uber nudges workers to meet the increased passenger load of the Houston Livestock Show and Rodeo, large conventions and sporting events.

There’s another incentive: “guarantees,” or minimum hourly rates paid to drivers who meet certain conditions.

In general, these surges and guarantees pull drivers into downtown and central Houston, the eight neighborhoods identified by Uber’s technology as having consistently high demand. But when Uber vehicles crowd into these zones in search of higher pay, supply sometimes exceeds demand. A driver may “chase a surge” only to find, upon his arrival, that the area is no longer hot. And those trying to meet the requirements of guarantees may find it difficult to snag the requisite rides-per-hour.

It’s been rough on cabbies, too.

Houston and other big cities have long debated how best to manage vehicles-for-hire. Are taxis private or public transportation, free-market animals or creatures of the state?

Cabs were first licensed during the Great Depression, when thousands of unemployed men flooded the industry, spurring violent competition. City by city, regulators set qualifications, normalized rates and issued permits or medallions to limit the number of cars on the road. Some drivers became owner-operators, while others were company employees paid wages per shift.

Since the 1960s, waves of deregulation and re-regulation have buffeted the industry. Deregulation in the late 1970s and ’80s created real competition, variable fees and new services. On the other hand, deregulation meant that drivers were converted from employees to independent contractors, depriving them of the rights to a minimum wage, overtime and collective bargaining.

Many U.S.-born drivers sold their permits and quit the industry. New immigrants have since taken their place – but mostly as leaseholders. They pay rents to garages that in turn funnel money to permit-owners with hundreds to their name. A study of the Houston taxi market found that “a driver working long hours could be expected to average $210 to $240 per day driving his cab.” Nationwide, the average, full-time taxi driver earns just $23,000 per year.

[…]

In cities such as Houston, Austin, Philadelphia, San Francisco, Los Angeles, San Diego, Chicago, Washington, D.C., New York and Boston, taxi drivers and worker organizers are playing defense. For decades, they’ve wrangled with medallion- and garage-owners; now, all eyes are on Uber.

“Oversupply – Uber’s economic model depends on that,” said Bhairavai Desai, leader of the National Taxi Workers Alliance, an informal union.

Ebrahim Ulu, president of the United Houstonian Taxi Drivers Association, understands a driver’s desire to go with Uber and escape the clutch of traditional taxi companies.

“But what did Uber do in every city?” he said. “They didn’t improve permits or driver conditions.”

In 2013, the association sent Houston a 22-page document listing grievances – lack of time off, abuse by lease owners, poverty-level income – that it says reveals the “slavery” of the lease-to-drive structure. It proposed that the city grant new permits to individual drivers for the purpose of forming a worker cooperative that would offer protections and benefits to owner-employees.

Nothing ever came of this proposal. In taxi-industry time, 2013 is ancient history. Back then, neither the city nor the UHTDA foresaw the effect Uber would have on Houston and beyond.

See here for part one. Both stories are basically anecdotal evidence, so one should be hesitant to draw broad conclusions. The complaints about oversupply are understandable given Uber’s intent to recruit more drivers here, but if it really is the case that its drivers can’t make decent money, that’s going to be hard for them to do. As for Uber’s drivers, the best thing that could happen to them may be for Lyft to be lured back to town, as this would provide competition for their services and a catalyst for their per-mile rates to increase. What might be done to help out cabbies that are having a hard time paying their leases is a harder question, and I have no ideas offhand. Again, this is a subject that maybe the Mayoral candidates should be asked about.

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