Uber’s subprime leases put drivers on road, but leave some shackled

What about gas? What about fees from traffic infractions? What about accidents? While accidents may be low probability, they present a very high expected cost and the areas in which ride-sharing is popular probably have higher rates of accidents.

I'm just saying that this is probably not the full arithmetic for arriving at an ~$16/hr wage.

It's not, and the rest of this thread dives into it a bunch.

Gas and tire wear implies a ~$2/hour hit, roughly.

Tickets are presumably negligible for long-term drivers? Most people get Accidents are hard to call - their 'cost' is basically whatever you pay in insurance (plus some adjustment for future insurance hikes if you file a claim). I don't know how the Uber-insurance thing shook out, so I can't speak to that at all.

The $16/hour wage is now at something like $12/hour (very roughly), but that's neglecting the benefits of having a car (I'm assuming most drivers with Xchange wouldn't have cars if they worked elsewhere, otherwise raise the effective wage by $5/hour).

But of course, that's part-time work. It's voluntarily part-time, but you can't scale up Uber driving arbitrarily - presumably you're already working the highest cash-flow hours and will see decreased hourly wages as you add less-profitable driving time.

So I'll stand by a claim that the money is pretty good, at least in <$10/hour minimum wage markets, but it's locked into a no-benefits, part-time status that prevents it from being an especially good living.

You capture my feelings, too.

I don't think all rates should be the same; the risks of default should be priced in to the finance or lease rate.

I agree "predatory == bad", so perhaps we could devise a system to (try to) ensure that the hit that subprime borrowers are taking is commensurate with the risk the lenders take. But arguably this is already done through competition (in lending in general, not specifically with this one-lease-company-only arrangement via Uber).

Maybe you can say we as a society should 'protect' subprime borrowers by banning lease/finance rates that are more than x% more than the best rate, and you tell sub-prime borrowers who don't meet the criteria, "too bad". But then lenders would game it by not lending to the best credit folks in order to extend down to the truly sub-prime.

Or it might flatten the rate spread between prime and subprime. Maybe this isn't an entirely bad thing; well-qualified buyers take a slight hit in order to subsidize those who are down on their luck. But then another lender comes along with better prime rates, and everyone who can swing it goes there.

Personally, I'm not really a fan of telling people they can't make their own financial decisions because "it's bad for you". Isn't this the opposite of what basic income proponents say? That we should let people be free to make their own decisions? We hear over and over that poor people make bad financial decisions (with the anecdata to support it... and some ACTUAL data and scientific research).. but there's also lots of data showing that people are best left to make their own decisions rather than some 'helpful' government scheme/program/regulation.

Great comment. I went back and checked the article because I thought you were wrong and it said "within the first 30 days". But you're correct, any time AFTER 30 days, they can leave the program.

No mileage penalties and no contractual obligation to the lease are huge benefits.

I wonder if Uber allows multiple drivers to use the same vehicle? I'm sure the lease company wouldn't like it...