Uber’s subprime leases put drivers on road, but leave some shackled • Hacker News Board

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

#61

Post by Bartweiss » Thu, Jun 02, 2016, 5:56 PM UTC

ob wrote: post #55

Bartweiss wrote: post #29

> She drives about 25 hours a week. In one week in May, she earned $604 for 28 hours of work, she said — a slightly better-than-average week. Uber took $160 for the car directly out of her paycheck, leaving her with $444. So, for 28 hours of work, the driver got a car (with maintenance covered) and a ~$16/hour salary on top. Without the car payment, it's a $21/hour salary. That's apparently a near-average week. I see…

> In one week in May, she earned $604 for 28 hours of work I wonder if they count "hours of work" as hours with a passenger or as total hours driven. If the latter then she actually "worked" longer hours.

From the text of the article, I believe its hours driven. The whole thing was a bit fast and loose with definitions, but I don't think that one is wrong.

So this is an actual hourly wage, but that doesn't mean that a move up to full time at the same wage is possible.

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

#62

Post by Bartweiss » Thu, Jun 02, 2016, 5:59 PM UTC

russell_h wrote: post #52

Bartweiss wrote: post #43

Earlier quoted context omitted.

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 a…

I get the sense that Uber drivers are often incentivized to do things that increase their chances of getting a ticket. Then a full time driver spends a lot more time driving than your average person.

I agree that they are. If you're about to miss your exit with a passenger, you might take a risky swerve across a lane to avoid getting a bad rating. Having said that, I still don't think there are lots of Uber drivers racking up tickets, because that gets you fired from your job. So it's a problem for employment, but not a salary factor - by luck or skill, any given Uber driver will still have ~0 tickets.

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

#63

Post by ebbv » Thu, Jun 02, 2016, 6:03 PM UTC

Bartweiss wrote: post #29

> She drives about 25 hours a week. In one week in May, she earned $604 for 28 hours of work, she said — a slightly better-than-average week. Uber took $160 for the car directly out of her paycheck, leaving her with $444. So, for 28 hours of work, the driver got a car (with maintenance covered) and a ~$16/hour salary on top. Without the car payment, it's a $21/hour salary. That's apparently a near-average week. I see…

$160 for a week of using a car is insane especially when Uber is already making money off the work she is doing with the car.

$16/hr with no insurance, no benefits, no nothing is NOT good pay. Yeah it's more than minimum wage but so what? Need I remind you she's driving, literally putting her life at risk at this job?

You really believe $16/hr for driving people around is good/reasonable/generous pay? Even $21/hr? Give me a break.

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

#64

Post by MrFoof » Thu, Jun 02, 2016, 6:07 PM UTC

dsfyu404ed wrote: post #48

MrFoof wrote: post #42

>After dropping $250 up front for her lease of a 2015 Honda Civic, she pays $160 a week to Xchange. If she keeps the car for the full three-year term, she’ll end up paying Uber $25,210. The Kelley Blue Book fair purchase price for a new 2015 Honda Civic SE in Los Angeles is $18,142. Schmitt said she’ll need to pay Uber $5,000 or so more to buy the car if she wants to keep it at the end of her lease. This is kind of p…

Congratulations on figuring out how a BHPH dealer works. Buy cheap economy cars that aren't upscale enough for a "real" used car dealer to have on the lot. Have your mechanic fix anything imminently wrong and put a GPS tracker in it. Require huge down payment (usually close to enough to break even) and/or absurd monthly payments. Hopefully you screw the customer out of a few months of payments before they can't pay,…

>Congratulations on figuring out how a BHPH dealer works.

In the case of my sister it was a franchised Toyota dealer selling new inventory. Not BHPH. She signed a 3-year lease on a Toyota Corolla with a ridiculous money factor component because they got her to simply focus on the monthly payment, then financed it for 6 years afterwards (again, by getting her to focus on the monthly payment) at a ridiculous interest rate despite a FICO over 720 by simply not shopping around (she agreed to 9.5% when 3% was easily available from many retail banks and CUs).

When I showed her what she could've paid instead if she had any patience and simply run the numbers, she was incredibly upset. Not with the dealer, but with herself for not doing the due diligence. That's ignoring the fact that she could've just bought a 5-year old one, because a Corolla is literally a dime a dozen (350-400K units sold per year in the US at the time).

This is my point. If you simple appear ignorant and lazy (not in a bad situation), there are plenty of businesses that will use that to their advantage. If you are in a bad situation, it's just more potential leverage for them.

Yes, some franchised dealers do this with new inventory, even to people with good credit. If they think they can make an easy buck off of you on account of your ignorance, some will take the short-sighted approach (not trying to earn a repeat customer) and try to do it. If you throw up your hands they'll come back around and try to close the sale on amenable terms and offer it however they do, to make the sale.

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

#65

Post by evilduck » Thu, Jun 02, 2016, 6:29 PM UTC

pc86 wrote: post #60

warfangle wrote: post #51

Earlier quoted context omitted.

I don't think it matters if the car payments can be counted or not. But, according to [0] (I'm not sure how accurate/reputable it is; again, IANAA), the deductible portion of $604 52=$31,408 is only $2,218.90. Gas at $57 52=$2,964 already extends past that cap. Assuming her income is taxed before the lease payments are made, and hits her full deductible, she's paying total taxes of $4,437.81 So, net after-tax, after-…

In most of the country $13/hr is indeed lower middle class.

In places where $13/hr is a viable lower middle class wage, Uber is also generally not available as a job.

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

#66

Post by askldfhjkasfhd » Thu, Jun 02, 2016, 6:38 PM UTC

ebbv wrote: post #63

Bartweiss wrote: post #29

> She drives about 25 hours a week. In one week in May, she earned $604 for 28 hours of work, she said — a slightly better-than-average week. Uber took $160 for the car directly out of her paycheck, leaving her with $444. So, for 28 hours of work, the driver got a car (with maintenance covered) and a ~$16/hour salary on top. Without the car payment, it's a $21/hour salary. That's apparently a near-average week. I see…

$160 for a week of using a car is insane especially when Uber is already making money off the work she is doing with the car. $16/hr with no insurance, no benefits, no nothing is NOT good pay. Yeah it's more than minimum wage but so what? Need I remind you she's driving, literally putting her life at risk at this job? You really believe $16/hr for driving people around is good/reasonable/generous pay? Even $21/hr? Gi…

While I don't think the actual number is $16/hr per the calculations in the rest of this thread, I do feel strongly that $16-21 / hr for a largely unskilled labor force is perfectly reasonable. (Not for SF, but SF isn't the majority of the country.)

Add in the flexibility of the hours (most drivers I query list that as their #1 thing they like most), and the lifestyle provided seems very reasonable.

It's worth remembering that a lot of these folks are generally service workers. In their other work, they get paid shit (usually close to min. wage), they get treated like shit, and they are at the mercy of the schedule maker. That last point cannot be underemphasized: little fiefs of power bestowed upon the scheduler make for really ugly fast food office politics.

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

#67

Post by dragonwriter » Thu, Jun 02, 2016, 6:52 PM UTC

warfangle wrote: post #37

tyingq wrote: post #32

Earlier quoted context omitted.

I agree with most of this, but it should be noted that $16/hour as 1099 income is not at all the same thing as $16/hour as a regular W2 employee. A rough equivalent would be about $11/hour. I think that's high still, as there are costs other than maintenance...like gasoline.

Average city driving speed for LA is 26.8 MPH [0], which means she's driving around 750 miles per week. She leased a 2015 Honda Civic, which has a rated fuel economy of 31 MPG. Assuming she gets the rated gas mileage from her civic, she's buying 24 gallons of gasoline per week for 2.39 [1] per, costing her $57. AAA gives an estimated 5.51 cents per mile for maintenance and tires [2], costing her $41. So, take home pa…

You'd also need to subtract half of the self-employment taxes (equivalent to the employer share of payroll taxes) to get an employee-wage-equivalent figure. Assuming that the $12.3/hr is the net before SE taxes, SE taxes are about $1.74/hr and the employer-share-equivalent is $0.87/hr, leaving a wage-equivalent of $10.43/hr.

Which is just barely above California's minimum wage ($10.00) today, and not (as suggested upthread) better than the most generous minimum wage proposals.

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

#68

Post by justinv » Thu, Jun 02, 2016, 7:01 PM UTC

Bartweiss wrote: post #43

mslate wrote: post #41

Earlier quoted context omitted.

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 a…

I'd also posit that the majority of Uber drivers do not work in <$10/hour minimum wage markets (NYC, LA, SF, Boston, DC, Portland, Seattle) - or rather, the cost of living that they work in would not allow for that to be a sustainable wage.

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

#69

Post by dragonwriter » Thu, Jun 02, 2016, 7:02 PM UTC

pfarnsworth wrote: post #59

tyingq wrote: post #53

Earlier quoted context omitted.

Great breakdown. Again, though, that's $12.30/hr as 1099 income, subject to self employment taxes,...and no sick days, paid holidays, vacation, unemployment coverage, insurance, etc.

You realize that the people that demographics of people who like to drive for Uber are those coming from minimum wage jobs, who have none of the above either. Most drivers I talk with love Uber because their pay almost instantly doubles and they have freedom to work as much as they want.

> > no sick days, paid holidays, vacation, unemployment coverage, insurance, etc.

> You realize that the people that demographics of people who like to drive for Uber are those coming from minimum wage jobs, who have none of the above either.

After deducting the portion of SE taxes equivalent to the employer share of payroll taxes (which isn't counted in employee wages), the wage is equivalent to $10.43/hr, which is only a hair above minimum wage in CA.

And, in CA, minimum wage earners are covered by mandates for unemployment coverage and, depending on employer, paid family leave and (since July 2015) paid sick leave.

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

#70

Post by cpncrunch » Thu, Jun 02, 2016, 7:05 PM UTC

tyingq wrote: post #32

Bartweiss wrote: post #29

> She drives about 25 hours a week. In one week in May, she earned $604 for 28 hours of work, she said — a slightly better-than-average week. Uber took $160 for the car directly out of her paycheck, leaving her with $444. So, for 28 hours of work, the driver got a car (with maintenance covered) and a ~$16/hour salary on top. Without the car payment, it's a $21/hour salary. That's apparently a near-average week. I see…

I agree with most of this, but it should be noted that $16/hour as 1099 income is not at all the same thing as $16/hour as a regular W2 employee. A rough equivalent would be about $11/hour. I think that's high still, as there are costs other than maintenance...like gasoline.

>it should be noted that $16/hour as 1099 income is not at all the same thing as $16/hour as a regular W2 employee. A rough equivalent would be about $11/hour.

Not quite. You only take off some of the employment taxes, not the income taxes (which you would still have to pay as a regular W2 employee). It will likely only be about a dollar an hour or so.

However the advantage of being self-employed is that you can deduct expenses such as fuel. (Which brings up another point...fuel will need to be considered when calculating net income).