Not a very good one, it would seem.
Last year, Uber claimed its full-time New York City UberX drivers were making a median wage of about $90,000 a year.
Drivers responded by telling Business Insider’s Maya Kosoff that they were often making less than minimum wage, with yearly earnings in the range of $10,000 to $41,000.
When UberX arrived in Philadelphia, Emily Guendelsberger, a senior staff writer at the Philadelphia City Paper, became curious about how much drivers would make.
So in January, she went undercover.
In an article in the Philadelphia City Paper, she explains that on her first trip as a driver, the money looked good:
As I let him off at 30th Street Station, he waves goodbye and thanks me, and says he’s rating me five stars. The fare pops up on my phone: $10.85. The price of almost two beers for 15 minutes of driving! And if my neighbor had taken a cab, with tip, it would have been an even $20.
But in the long run, Guendelsberger found that the numbers didn’t add up. One reason was Uber’s massive fare cut, which took place just before she started driving. And since UberX drivers aren’t licensed with the company and use their own cars, expenses such as insurance and gas add up, while the car’s value depreciates.
Over the course of 100 rides, her hourly rate averaged out to $17. But after subtracting the 28% cut that Uber takes and 19% for car-related expenses, her actual pay ended up being $9.34 an hour.
I drafted this a few days ago, and since then Wonkblog has noted another data point for this discussion.
Yesterday, a group called Requests for Startups released results from a survey of 897 people who’ve worked with 78 different companies that fall into the “on-demand economy” bucket. It’s a rough and imperfect sample, but a time when there’s still precious little data on the characteristics of this new workforce, it gives us some idea of what they’re going through.
The topline finding: These workers’ biggest problem is making enough money. That was the most common reason for these people to drop the job they had, with 42.9 percent saying it didn’t generate enough income. And part of that has to do with the fact that they just couldn’t get enough work, with 49.2 percent of respondents saying lack of hours was their biggest “pain point.”
This has always seemed to me to be a potential Achilles heel for so-called “rideshare” services like Uber and Lyft. They are dependent on there being a steady supply of willing drivers, with new ones coming in to replace those who drop out or cut back. What happens if people stop finding them to be an attractive gig? I presume the answer to that is “Uber offers more pay to its drivers”. What effect that would have on their business model is a question I’m not qualified to answer. I know that the financier types that are busy throwing billions of dollars at Uber are never wrong about anything, but I see this as a reason to be skeptical. Your mileage may vary.
“So what?” you may say. Isn’t Uber’s future a driverless car future anyway? Well, someday, I suppose. How far out that someday is matters – five to ten years is a lot better for Uber’s long term plan than fifteen to twenty years would be. There’s also the fact that someone has to own those driverless cars. A huge part of Uber’s appeal to investors is that they basically have no capital costs, and they assume very little risk. All of that is on their drivers. But if our future is one of people owning fewer cars, then doesn’t that suggest Uber will have to own more of its fleet? That in turn would mean they’d need to have employees who manage inventory and maintenance and whatnot. Again, I’m hardly the expert on this, but it seems to me that sooner or later Uber is going to have to change how it does business, and once that happens, who knows? Check back in a decade or so and we’ll see.