The real magic of Uber is that it allows drivers to convert the depreciation of their car into cash at a time and schedule of their own choosing. For the reasons discussed in the story, this may still technically be a net negative in the long term compared to driving a regular cab fulltime, but a) drivers find it far preferable to/cheaper than alternatives like payday loans, and b) many Uber drivers have multiple jobs and are not in a position to drive regular cab shifts.
There are people who want to make a positive return on their time + vehicle depreciation. But they are on the open market competing against people who are in a cash crunch and happy to have a net negative return on the same, as long as it temporarily allows them to convert depreciation into cash.
This is why drivers will always lose in the long term. They are racing against each other to the bottom.
I've also had Uber drivers who don't need the money at all - they just like talking to new people and are bored on a Saturday night. This of course drives the price down further. These are often the ones with a very nice car.
As other sibling comments have mentioned, many Uber drivers have no idea that this is what their gig is doing - converting depreciation into cash flow in a net-negative way. Maybe Uber's marketing style to drivers needs to be amended by law?
That's because depreciation is a paper loss. If you're an average person you're not selling your car for a new one for at least 7-8 years after you buy it. By that time it's worth very little of its original cost anyways. The only actual cost incurred by the driver is repairs and maintenance, which is nowhere near the cost of depreciation on the car. In effect, the depreciation schedule changes, but on the time scales of your average person the net result after 7-8 years of ownership is the same total depreciation. For corporate owners who have to report depreciation as a loss this schedule is not great, but for individuals it's not a real loss.
Mileage driven depreciation is a real loss until the car is fairly old: More miles directly reduces the price you can get selling the used car. Uber won't accept drivers driving old beaters where that curve has flatted out.
According to KBB a 2010 Toyota Prius (just selected as an example) only has a price estimate differential of $3000 between 100k miles and 400k miles. Even if you bump that up to 5k for a newer car, it's still insubstantial compared to the overall depreciation on the car from its new value of ~$25k to a 8-year used value of 3-6k. That 20k extra depreciation is not recognized by individuals but is by corporate owners.
I suspect that few Uber drivers have the time or ability to fully plot out depreciation costs, and instead do a simple “tank of gas + X hours = cash”. After all you end up with the same car afterwards, right?
Taking advantage of people who don’t work it out for themselves is despicable at best, highly immoral at worst.
Maybe Uber could be forced to display Total Cost of Ownership numbers for the car (per mile driven), and contrast with the revenue the drivers obtain. Make it fancy and throw in average and marginal cost. The data should be readily available for most cars, from sites such as Edmunds etc.
The missing part of this jigsaw is that not everyone is _simultaneously_ seeking to _temporarily_ convert depreciation into cash. with enough market players, such a microsystem can sustain itself
There could be an equilibrium where players are net positive.
But given the housing shortage, how expensive everything is, and how many people are raising children paycheck to paycheck, I just don't see how we'd be arriving at such an equilibrium in the US.
Perhaps the society just should make it easier for the destitute to find appropriate means to support themselves?
People act as if the fact that some people who are bored on a Saturday night are ready to give a cheap ride is a problem. It seems like it an absolute good and totally not a problem and should not be “fixed”.
But while there are poorer people driving for Uber, etc., the existence of dilettante drivers is very much a problem for those poorer drivers.
It's like special offers in shops; for someone like me who has spare money and plenty of storage space they are great, but for someone genuinely poor they are often unusable either because they don't have the cash at that moment or because they have nowhere to store it.
This line of argument reminds me of the news stories encouraging retirees to come back to work during the "labour shortage". The problem isn't that bored people are helping out, it's that by doing so they negatively affect the people that are reliant on carrying out that labour to keep themselves fed and sheltered.
For perspective, try imagining that some well off retired ex-$your_job walks up to your boss and offers to replace you for free, working the same hours because they're bored.
I’m not at all saying bored people should not be allowed to drive for Uber for fun.
I’m saying the marketing to drivers needs to change. Uber pretend it’s some great paying gig and markets hard like this. It deceives people who have no idea how to do depreciation calculations
Have you driven a cab before? Do you know for north america at least, the standard model is drivers are independent contractors and rent out the cars or the medallion license from medallion owners? Many medallion owners are not drivers themselves. Taxi companies are generally a collection of licenses, car rental, some branding and advertising and dispatch services. The angry taxi people you see protesting Uber or equivalents are more like the Canadian trucker convoy people who own their trucks than the actual typical poor long haul truck driver who doesn't own their truck.
Also whats worse about the taxi model is you often are paying on a monthly basis to rent the car, so every month you are something like $3000 in the hole and you have to keep on grinding hard before you could break even and then start making money for yourself. It's hard to take a vacation unless you want to take a month long one with no pay, which for most people who are doing the taxi gig, is not financially tenable.
Being a taxi driver SUCKS. At least Uber is an improvement because the fee system is done as you make money and you have way more flexibility as a result.
Everyone is upset that low end relatively unskilled labor pay & life sucks in general, and being upset with Uber is just one facet of it. Amazon warehouse workers & some restaurant workers are another group. In the past the media obsession was walmart workers and immigrant farm workers, which you don't hear about that much anymore but life still sucks for them.
Activists try to shove the responsibility of making the low-end labor life better onto the company that hires them, while ignoring what the real problem is the low-end labor life sucks in general, and if you made amazon and walmart and everyone else that is visible disappear, it's still gonna suck, because the problem isn't those companies per say, it's the entire global situation of being a low end laborer, and it's a situation that is properly covered by government than any specific company.
Governments don't want to pay for it although, especially in America, which is why you see this kind of focus especially in the USA, where they make employers create something approximating universal healthcare, benefits, etc vs collecting it through an equivalent tax and making it a universally provided benefit set. If it was truly a government responsibility, it could go multiple ways, such as reducing the cost of living by not making housing an investment asset and more a consumer good / capital business cost like in Japan and changing food regulations to heavily tax obesogenic & carcinogenic products, so the total national healthcare expenditure of the nation goes down and so on.
> Being a taxi driver SUCKS. At least Uber is an improvement
I would be curious to hear stories of former cab drivers who chose to drive for Uber instead because they found it an improvement. I don't feel like I've heard any stories like that, but it must be a thing a lot of people have done if you are right it's an improvement, right? I feel like I've only heard stories of cab drivers complaining that Uber has destroyed their business, which is nevertheless still preferable to driving for uber.
Yes, I know some people are locked into driving a cab because of previous locked in investment etc. But some people aren't, if uber is really an improvement we should be able to find lots of people who chose to move from driving a cab to driving for uber?
Yes, I think we're actually on the same side of the argument here. TL;DR of what I was trying to say is that Uber may be exploiting drivers, but it's still meaningfully better for them than the alternatives.
It’s more than converting depreciation to cash, it’s borrowing against deferred maintenance. It’s the $800 tires and the $500 tie rod that they will need in a year that they aren’t even thinking about today. I guess they will just have to drive a lot that month to cover it.
I think people drastically overestimate the depreciation from mileage. When you go to sell your car in 15 years the difference between 150k and 300k miles is maybe a couple grand. You're taking about a few cents per hour.
I have several friends and aquaintances who drive for uber (and lyft, etc), who are barely scraping by, and are doing it out of desperation, not because they prefer it to other available jobs that are more "normal".
They are driving for Uber because they can't find/get/keep such a job. Of course everyone driving for uber is doing so because it's the best thing they can find, they wouldn't prefer a job that pays them even less. But the people I know doing it don't love it or prefer it to a "normal" job, they just do it cause it's available and they need to pay the rent.
I have a good friend, ex-Navy submariner, and highly competent industrial technician. He's been driving for Doordash since 2019 now, because he just can't ever make it work with any kind of management in a typical corporate or small-business environment. I'm sure he'd be much more productive as a consultant, in his field of expertise if there were an app for that, but for him, the gig-econonmy, accepting all its down sides, is the preferable way to earn money. I've found it really interesting, that he would accept 2-4x pay reduction, just to be relieved of certain areas of responsibility and accountability.
So non-uber drivers don't want to be uber drivers and uber drivers want to be uber drivers? Or what? There was practically nothing else in common between each driver other than their desire to continue working with Uber as they do now. Where's the bias? 500+ rides (probably significantly more bcs I have two accounts) are large enough sample.
The selection consists solely of current Uber drivers, excluding all drivers who chose to stop and take an alternative job. As well, drivers in the act of driving are less likely to admit that they do not want to be doing what they are currently doing, due to cognitive dissonance.
Additionally, there likely exists a framing bias along with a false dichotomy, if they were asked whether they’d rather Uber or take a “normal job”. There are of course plenty of alternatives that are not “normal jobs” (whatever that is exactly).
Anyways, anecdotally, I’ve had drivers who were not happy with Uber and continued only out of lack of current options or plain inertia.
As someone whose virtual in-game company has grown so much that I lost track how much things cost and how much money I am actually making. I would argue it is very common. This is in a game where there are already turn key spreadsheets that tell you how much profit you are theoretically getting per day. The problem is that your "pipelines" are long and you may end up stock piling stuff for two weeks buying at one price and selling another.
I doubt most Uber drivers are whipping out a spreadsheet and pondering for 3 hours before they commit to the job. That is how much time I spend before I build a new base and lots of those were canceled before they got build.
Sounds like it could. The logistical pipeline for advanced industries used to be... Intricate.
And usually depended on exploiting "gig economy" miners at the bottom, come to think of it.
