Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says • Hacker News Board

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#201

Post by s73v3r_ » Fri, Mar 02, 2018, 7:08 PM UTC

hunter2_ wrote: post #193

s73v3r_ wrote: post #143

Earlier quoted context omitted.

Except Uber & Lyft will punish you if you turn down too many jobs. That doesn't sound like absolute control. And you never got the opportunity to try and negotiate with either company to start with.

Devil's advocate: Maybe it's not each fare that's a job, but each driving session. Uber offering you a particular job is them giving you the "start driving" button, and you are free to not click it.

In the same way that I'm "free" to not go into work, I suppose. But that's ignoring the reality that one is forced to work in order to survive.

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#202

Post by graeme » Fri, Mar 02, 2018, 7:10 PM UTC

CodeWriter23 wrote: post #101

graeme wrote: post #94

In my city (Montreal) there are some Uber drivers who seem very content and have driven for 3+ years. They often have very nice cars. What is going on: are these drivers just doing it as a hobby? Are they somehow earning more than others? One would assume that you can be fooled and stay in the game for 3-9 months at $3.37 an hour, but not 3+ years.

Some will earn more than the median, some less. At the Uber Black level, it is possible to earn a decent wage in a densely populated urban center.

Ah makes sense. They could have been Uber Black drivers who decided to take a regular Uber fare. That happens sometimes when there are no Uber Black requests active.

I think I'll start asking those with dingy cars how long they've been driving. And I'll ask those with nice cars if they are also Uber Black drivers.

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#203

Post by duderific » Fri, Mar 02, 2018, 7:11 PM UTC

ekianjo wrote: post #53

Liquix wrote: post #18

What is the incentive to drive for one of these services at that price point? Couldn't these people make more money (and not have to replace their car in five years) flipping burgers or the like? Are drivers misled into believing they will make more? Is the cost per mile intentionally hidden from them?

> Couldn't these people make more money (and not have to replace their car in five years) flipping burgers or the like? Yeah but would you rather flip burgers and smell like french fries the whole time? Driving people around is not completely unpleasant in comparison.

My sister had the great fortune to work at Wendy's when she was a teenager, and I remember picking her up from work and her absolutely reeking of raw onions, from having to place them on all the burgers. The smell would not dissipate for hours even with intense hand washing.

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#204

Post by rodonn » Fri, Mar 02, 2018, 7:16 PM UTC

haldean wrote: post #182

rodonn wrote: post #179

This paper has actual data on earnings from all Uber drivers in all cities in the US. They find that the average earnings are $20 per hour with a standard deviation of $5 (there is substantial variation across cities and especially across time, with late nights on weekends being especially high earning). http://www.nber.org/papers/w23296 The authors are very well respected economists from UCLA and Yale, though it sho…

I can't read the paper you link but in the abstract-ish thing you've given here, $20 is a mean. The MIT paper says $3.37 is a median. Both could simultaneously be true!

Sorry about the paywalled link. Here is one that should be freely accessible. http://www.anderson.ucla.edu/faculty_pages/keith.chen/papers...

I agree that the mean and median could in principal be this far apart, but it would require a lot of skew in the data (small number of very high value trips -- seems possible).

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#205

Post by jly » Fri, Mar 02, 2018, 7:19 PM UTC

theli0nheart wrote: post #119

jly wrote: post #105

Earlier quoted context omitted.

No. An individual who is the sole director, sole shareholder, and provides all of the services in an S-Corp will have any distributions classified as compensation subject to payroll taxes. There is a lot of established law on this subject.

This is false. Any income in an S-corp that isn't paid via wages is not subject to FICA and Medicare, regardless of number of shareholders. That's a big reason why so many LLCs choose to classify themselves as S-corps. There are (or were, at least, before the latest tax bill) significant tax benefits to doing so. It doesn't matter how many shareholders there are, since an S-corp is not a disregarded entity, like a si…

You are technically correct, the problem being that the IRS does not define what a "reasonable wage" is.

However, the intention of the law is that true income is taxed as income and not as distributions. When one individual provides 100% of the services of a business, is not reinvesting profits or paying employees, and is the sole full-time worker, they should be treated as an employee and taxed accordingly. Many people abuse the vagueness of this but that doesn't mean the IRS will agree if you choose to pay your Uber earnings as distributions not subject to employment taxes.

You can read a summary of some of the established case law on this topic here: https://www.thetaxadviser.com/issues/2011/aug/nitti-aug2011....

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#206

Post by Someone » Fri, Mar 02, 2018, 7:19 PM UTC

trsse wrote: post #187

Someone wrote: post #153

Earlier quoted context omitted.

“Uber Driver” isn’t a job (in the USA; some other countries disagree); you’re a contractor, and you’re free to find customers via other means (e.g. via Lyft, paying their margins, via word-of-mouth, via your own web site, etc.) Yes, that may be hard or effectively impossible, but a bad dry wall contractor will not be able to hold his business afloat, either.

> you’re free to find customers via other means Except you aren't. In many cities it is illegal to just start taking passengers for fees.

Either Uber runs a legal business, in which case I would expect others can start similar businesses, or they don’t, in which case this is like complaining that you can’t start a local mob legally after the one you worked for kicked you out.

Yes, that may be difficult, but Uber has shown it to be possible; ‘just’ find some investor with a few billion to spare, and you can do it, too.

Returning to the original argument: even if Uber drivers were employees, the argument “Uber can’t kick me out because I can’t get a job as an Uber driver elsewhere” doesn’t hold water, and replacing “Uber driver” by “driver” doesn’t change that.

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#207

Post by ghaff » Fri, Mar 02, 2018, 7:28 PM UTC

eddieplan9 wrote: post #199

ghaff wrote: post #183

Earlier quoted context omitted.

The paper actually uses a $0.30/mile figure. "A Median driver generates $0.59 per mile of driving, and incurs costs of $0.30 per mile." The paper actually seems to be trying to make the point that Uber drivers are gaming the tax system because their actual costs are lower than the IRS allowance. $0.30 seems like a fairly reasonable number and it also matches up well with renting a car that's intended to be driven for…

Thanks for pointing out my mistake. You are right. I edited my comment. To be fair, if the point is to compare profit, then we also need to consider that a traditional worker making minimum wage also needs to commute to work. The average commute of a worker is 30 miles round trip [1]. The cost of that will eat into their earning as well and cannot be deducted from their taxes. [1] https://www.rita.dot.gov/bts/sites/r…

It's sort of a weird point which, if it belongs anywhere at all, probably belongs in a different paper. It's a reasonable question to ask whether IRS guidelines that were mostly designed in the context of standard business deductions are really appropriate for driving services where most drivers are buying cars that are optimized for the role.

But it's also pretty much a totally orthogonal point to one about how little Uber drivers make.

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#208

Post by antisthenes » Fri, Mar 02, 2018, 7:33 PM UTC

sokoloff wrote: post #197

antisthenes wrote: post #191

Earlier quoted context omitted.

There was an interesting observation on the road a few years back. I saw a Dominos delivery driver in a high end Jaguar. I can only presume it was a young person borrowing their parents' car to do deliveries as their summer job or whatnot. It was amusing to me (having an economics background), because I couldn't figure out what the lesson was being taught here. Doing some back of napkin math, there was absolutely no…

> I couldn't figure out what the lesson was being taught here. I can easily see myself setting my kids up with something like that to teach them the value of time, structure, and work. It's no different to me than buying them a chemistry set, an Arduino, or making baking soda/vinegar volcanoes with them. I can even work through the math with them to show them that what they did was more expensive than me just handing…

> I can even work through the math with them to show them that what they did was more expensive than me just handing them $5000 and telling them to watch TV all summer to save wear and tear on the car.

Who are you to say they wouldn't have found a better use of $5000 than blow it on video games and drugs during a summer? Presumably, if they already have good work ethic, they may come up with a business or a venture with that money that they wouldn't have otherwise, because they were delivering pizza for Dominos.

I would ask them to do the math of driving for Dominos BEFORE handing them a Jaguar, not after the summer has been spent.

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#209

Post by dsfyu404ed » Fri, Mar 02, 2018, 7:56 PM UTC

s73v3r_ wrote: post #164

dsfyu404ed wrote: post #84

Earlier quoted context omitted.

They'll save more than that. They'll be registering/insuring the vehicles in a state where it's cheap to do so. Uber's geographic distribution results in the average uber driving paying significantly more baseline cost just to legally field the vehicle. Being able to choose your jurisdiction is probably a ~$1k per year savings over the current Uber driver average. TBH one of the things I'm looking forward to about se…

Every state in the union requires you to register your vehicles in the state they're in. You're not going to be able to register the cars in Deleware or South Dakota and have them driving in California.

Yes you can. What I described is incredibly common in the rental vehicle business.

Re: Uber, Lyft Drivers Earning a Median Profit of $3.37 per Hour, Study Says

#210

Post by gamblor956 » Fri, Mar 02, 2018, 7:59 PM UTC

maratd wrote: post #145

taneq wrote: post #133

Earlier quoted context omitted.

I don't know about the U.S. but in Australia there are strict rules about 'sham contracting'. To be treated as an independent contractor you can't get more than 80% of your income from any one source. If you 'contract' to just one employer you're an employee for both tax purposes and protections.

> If you 'contract' to just one employer you're an employee for both tax purposes and protections. That's not the case in the US. Our laws bar the contractor from having set hours, a set place of work, and a myriad of other rules. So if a contractor comes in 9 to 5 and has his own desk, he'll be classified as an employee. Honestly, I would prefer a similar % rule, that seems simpler and I think would accomplish the i…

US law doesn't ban any of those things. Those are simply factors in determining whether a person is an employee or contractor, which in the US is not a bright-line test but is more of a circumstances-based finding. The US also employs the % rule as a factor in that determination.