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Philadelphia

Can you make a living as an Uber driver?

Not a very good one, it would seem.

Uber

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.

Another data point on Uber and Republicans

From Josh Barro.

Uber

Republicans have hailed Uber, the smartphone-based car service, as a symbol of entrepreneurial innovation that could be strangled by misplaced government regulation. In August, the Republican National Committee urged supporters to sign a petition in support of the company, warning that “government officials are trying to block Uber from providing services simply because it’s cutting into the taxi unions’ profits.”

But for Republicans, being the party of open and competitive markets is not always easy in practice. Just look at what happened two weeks ago, when UberX, one of Uber’s various ride-sharing options, began in Philadelphia. The local taxi regulator called UberX an illegal taxi service, so several drivers were fined and had their cars impounded.

Mayor Michael Nutter sent a clear message: Don’t blame me.

“I strongly support having Uber/Lyft services in Philly,” the mayor, a Democrat, wrote on Twitter on Oct. 27. “The #PPA, a STATE authority not run by the City, opposes them.” As Mr. Nutter correctly notes, Uber’s fight in Philadelphia is with the Philadelphia Parking Authority, a state agency that regulates taxis and whose board is appointed by the governor. Five of six parking authority board members are Republican appointees.

Anticompetitive business regulations are mostly imposed at the state and local level, and they usually have a strong built-in lobby: the owners of the businesses that are being shielded from competition.

The R.N.C. chairman, Reince Priebus, probably doesn’t get a lot of phone calls from taxi medallion owners, or car dealers, or other businesspeople who want to be insulated from competition.

But local politicians do; Republicans may be especially likely to hear from them because small business owners are a constituency that skews Republican.

As a result, in practice, it’s not clear Republicans are any more pro-market than Democrats when it comes to business regulation.

Andrew Moylan, a senior fellow at the R Street Institute think tank, has examined ride-sharing regulations around the country and doesn’t see a clear partisan divide. On Monday, R Street and Engine, a group advocating policies that support start-ups, [released] a report card rating the 50 largest cities on their friendliness to ride sharing. The eight cities receiving failing grades include ones in blue areas (Philadelphia and Portland, Ore.) and red ones (Omaha, Phoenix and San Antonio).

“There didn’t seem to be any obvious ideological trends,” Mr. Moylan said. “It may have something more to do with population density and consumer demand.”

In the case of Uber, the cities with the most to gain from innovation tend to be large and dense, and often Democratic. So at the local level, the leaders in welcoming Uber are often Democrats. Conservatives like to mock California as anti-business, but the state is one of just two to have enacted a comprehensive, statewide regulatory framework that is friendly to ride sharing. The other is Colorado, also run by Democrats.

But it’s not just about Uber and taxis. Consider state laws that prohibit auto manufacturers like Tesla from selling directly to consumers. Car dealers favor these laws, which interfere with Tesla’s direct sales model. Of 22 states that permit direct sales, 14 voted for President Obama. New York, California and Illinois all have freer markets in auto retailing than Texas. Did I mention that car dealers are a strongly Republican constituency? In 2009, the statistician Nate Silver found that 88 percent of car dealers’ political donations went to Republicans.

See here and here for previous musings on the subject of Uber and partisanship, and see here for the report. Note how California cities scored much better overall than Texas cities. R Street previously put out this press release that expressed their disappointment in Houston’s “onerous” regulations on ride sharing. We did score better than San Anotnio, for what that’s worth, and now you’ll be able to call Uber from the airports. As for Tesla, we all know about Tesla and Texas, right? Funny how that subject never came up during any of Rick Perry’s job-stealing trips. Anyway, I don’t have a lot to add to this, but as I’ve been tracking this sort of thing I thought it was worth mentioning.

Mayors against climate change

From the Think Globally, Act Locally department.

Mayor Annise Parker

Mayor Annise Parker

Mayor Annise Parker briefly took center stage Monday in the campaign against climate change by pledging to make America’s energy capital a laboratory for experimentation and action.

Frustrated with the congressional response to global warming, Parker and the mayors of Los Angeles and Philadelphia vowed to set more aggressive targets for reducing their cities’ heat-trapping pollution while challenging others to do the same.

“Mayors are uniquely compelled and equipped to lead on the fight to stem climate change, as well as to adapt to it and prepare for the impacts of global warming,” Parker said after the mayors unveiled their agenda in New York, where world leaders were gathering for a United Nations summit meeting on climate change.

The mayors, all Democrats, stepped forward as the Obama administration faces Republican opposition to its efforts to tackle climate change, notably new rules that would slash emissions from coal-fired power plants, the largest source of greenhouse gas pollution.

[…]

As part of the plan, Parker said Houston would lower emissions 80 percent by 2050 from 2005 levels. New York Mayor Bill de Blasio made the same pledge Friday, two days before more than 300,000 people marched through the city in what was possibly the largest climate-related rally ever held.

Houston already has made significant cuts by reducing energy use in its public buildings, adding hybrid and electric-powered vehicles to its fleet and replacing 165,000 streetlights with more efficient light emitting diodes, or LEDs – a project city officials call the largest of its kind nationwide.

Houston also is the nation’s leading municipal purchaser of renewable energy, with 50 percent of its power coming from wind and solar sources. And it’s likely that the city will buy even more before Parker’s term ends in 2016, said Laura Spanjian, the city’s sustainability director.

Mayor Parker’s press release for this is here. I couldn’t find a website for the Mayors’ National Climate Action Agenda, but a Google News search shows they’ve been busy. Some of the Houston initiatves, like the ones for LED streetlights and electric cars, are things we have discussed here before. Some of them are things the city can do on its own – and remember, anything that saves energy also saves money, meaning it’s a painless way to cut costs – and some of them are things the city helps provide to enable its residents to use less energy, like improving the bike infrastructure. There’s no one silver bullet here, just a lot of big and small ideas that will add up to a lot in the long run.