Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

If Lyft can't keep its drivers as contractors, it may never be profitable

latimes.com

Post reply on HN
Print view View original

121–130 of 131 posts

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#121

Post by aaomidi »

dexen wrote: post #113
aaomidi wrote: post #107

Earlier quoted context omitted.

This is actually one of the cases where supply side economics breaks down. People refuse to pay more for this and if you've invested so much for truck, car insurance, etc...

I am sorry, this doesn't make any sense to me. If "people refuse to pay more for this", it means there's either over-supply of service at the current price-point, or there are easily accessible, low-cost alternative services. There is no third way, barring country-wide air-tight collusion of all transportation buyers, which is an unrealistic scenario.

You don't understand this do you? When you've spent a ton of capital, have loans to pay, paying insurance, etc. You are not in a position to negotiate.

It doesn't make sense because we keep getting fed a simplistic view of "supply vs demand." That is a general trend, but not a rule.

If you know you have to work to keep your means of survival, you don't negotiate. We've seen salaries/bonuses/rates slowly go up, but there's always some other sucker who has to be able to pay their bills. Even if this means stuff getting to their destination later than usual.

A lot of truck businesses are owner operated, they simply don't have the means to say "no."

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#122

Post by mercutio2 »

nradov wrote: post #117
FakeComments wrote: post #110

Earlier quoted context omitted.

Are retirement plans coupled to employment? Neither social security nor 401Ks are, in that you can often keep and almost always rollover (to a personal) 401K when departing. Pensions were, but as I understand it, those basically don’t exist anymore.

You can't really contribute to a 401(k) plan unless your employer sponsors one. When you leave the job you can roll it over to an IRA. Some independent contractors can contribute to an IRA, but it's inferior because the annual contribution limit is only $6000, and the income limits are lower. And of course employer matching contributions aren't available to independent contractors.

Independent contractors can contribute up to $43k to a solo-401k.

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#123

Post by Nasrudith »

subroutine wrote: post #74
temp1928384 wrote: post #20

Lyft can be profitable today if they wanted to. The only reason they aren't is because they are fueling growth by propping up the supply of drivers through driver signup bonuses. Ride sharing is generally supply constrained (meaning there's plenty of demand but drivers are in limited supply). If they stopped paying driver bonuses to expand in new markets or maintain share of drivers in mature markets, then the number…

I took a look at some of Lyft's metrics [1,2,3], but would be interested in seeing a more nuanced breakdown of their expenditures. You mention driver signup bonuses are a major expense, and is "The only reason they aren't" profitable today . Is this a fact? [1] https://craft.co/lyft/metrics [2] https://dashboards.trefis.com/no-login-required/zrRBRShU [3] https://www.forbes.com/sites/greatspeculations/2018/10/10/a-...

Wouldn't it be far more sustainable to just boost base rate with the money instead to reduce churn? It sounds like a perverse incentive of metrics to reward new drivers instead of total ones.

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#124

Post by relaunched »

ohaideredevs wrote: post #62
relaunched wrote: post #35

Earlier quoted context omitted.

The supply side dynamics of trucking is crazy. There has been a driver shortage for 10+ years, easy. About 2/3 of the trucks on the road are owned by fleets of 5 or less, with most trucks being a 1 unit, owner operator. The entire industry, small and large fleets, use owner operators as perverse cost savings. In some cases, you lease the truck from the large fleet, they charge you for gas and maintenance, insurance,…

I would be very interested in the details. I keep hearing about friends of friends who pull $80,000 driving a truck, $120,000 when they own one and half a mil once they own a couple. Too lazy to actually do the research, but curious how close these claims are to the truth. Obviously you are seeing a very different picture, and yours actually comes from experience.

Many ethnic enclaves have programs that get people their licenses and they get hired by trucking companies owned by folks from those enclaves. In my experience, thise types of drivers get between $500-$800 per week, cash.

The owner of the truck's pay varies based on how they acquired their shipments, direct to shipper or via a broker. Their is a huge spot shipment market for small companies, which fluxuates wildly, at times. Ultimately, the rates vary greatly.

Now, you can drive for a big outfit and make upwards of 70-80k gross, depending on experience, specialization, endorsements, etc.

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#125

Post by relaunched »

michaelmrose wrote: post #103
TylerE wrote: post #88

Earlier quoted context omitted.

Actually, time is pretty strictly regulated by the DOT. No more than 60 hours duty hours a week, no more than 14 duty hours in a row, of which no more than 11 hours can be actually driving, and must go off duty for at least 10 hours to reset the clock. Sounds more complicated than it is... once the duty period begins, any stops (fuel, breaks, meals, etc) do NOT stop the clock. This is why most long-haul operations us…

By most jobs definitions how much of an individuals waking life is consumed by work in this scenario over the course of a year?

Trucking is a little different. I'm not sure the current regs, but driving time is logged differently than "on duty not driving" different than off duty. Typically, drivers are paid by the mile, so on duty not driving is unpaid, while doing tasks like DOT inspections, vehicle walk around, fixing stuff, tire pressure, break adjustments, shifting trailer pins, etc.

Long haul teams can drive as much as 300+k miles per year. This typically consumes 50 weeks of being in the truck at least 6 days a week, simplifying at little.

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#126

Post by dexen »

aaomidi wrote: post #121
dexen wrote: post #113

Earlier quoted context omitted.

I am sorry, this doesn't make any sense to me. If "people refuse to pay more for this", it means there's either over-supply of service at the current price-point, or there are easily accessible, low-cost alternative services. There is no third way, barring country-wide air-tight collusion of all transportation buyers, which is an unrealistic scenario.

You don't understand this do you? When you've spent a ton of capital, have loans to pay, paying insurance, etc. You are not in a position to negotiate. It doesn't make sense because we keep getting fed a simplistic view of "supply vs demand." That is a general trend, but not a rule. If you know you have to work to keep your means of survival, you don't negotiate. We've seen salaries/bonuses/rates slowly go up, but th…

Every concern you mention is true for both sides of the market - seller and buyer. The buyer has spent a ton of capital on infrastructure and marketing, has loans and other bills to pay, and also has to provide service to their customers at good conditions - and timely - lest the customers go to their competitors. The buyer can't simply wait out indefinitely.

Unless there's a significant over-supply of the sellers. In which case the buyer can wait out any given seller, and get better deal from the next seller that comes around.

>If you know you have to work to keep your means of survival, you don't negotiate.

The very same concern goes for the buyers. They are just as well under the pressure of contractual deadlines and bills to pay.

I am sorry, but your post strikes me as example of "magical thinking" - "there must be something special about the owner-operated transport businesses". Yet nobody has provided any serious arguments towards that.

Just for the sake of contrast - you could imagine brain surgeons in the very same predicament. Suppose there were plenty of brain surgeons on the market - their prices (wages) would be very low, sometimes even below the costs incurred. No matter how pressed a patient would be for a life-saving operation, if there were multiple surgeons fiercely competing for this work, the price would be low.

The only reasons the brain surgeons are earning well is that the demand for service is higher than the supply - and there's little to no alternatives to a life-saving surgery.

You may balk at the example of highly skilled specialist surgeon, but it's true story of the eastern block [i.e., communist] countries, where supply of doctors was high, and the demand - which was only the state-funded healthcare - was fixed[1]. The surgeons earned rather low wages, and many supported themselves with bribes for access and expedited treatment.

Please don't tell us there's been "driver shortage for 10+ years". It's just fantasy.

--

[1] from the layman's POV "demand" for surgeries was high and nearly insatiable, but from the economics POV, demand with willingness to pay was fixed by the centralized healthcare planners.

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#128

Post by TomMarius »

baby wrote: post #116
TomMarius wrote: post #99

Earlier quoted context omitted.

That is absolutely not true. You're generalising too much. There are many people that are trying to democratise healthcare the private way.

Look at how it's doing

It's doing very well, just not in the USA (if you mean healthcare in general). The attempts I've been talking about are doing well as well.

Re: If Lyft can't keep its drivers as contractors, it may never be profitable

#130

Post by vetrom »

ams6110 wrote: post #43
seanmcdirmid wrote: post #11

This is really one of the bad problems with the gig economy in the USA. Even Switzerland, which requires private insurance, disallows group plans to detach insurance from employment, making labor markets more liquid and flexible (as well as preventing huge distortions in the individual healthcare market). Your dad does have one social net: even 1099's must opt into SS and Medicare (paying both employer and employee s…

They can deduct the employer share though? Or is that just self-employment taxes?

SE tax is the employer share, and its a bit complicated. As a 1099, you are required to pay the full SE tax generally minus (a couple?) deductions. But then, you are allowed to deduct half of what you pay in SE tax from your income for regular income tax. The SE tax is also paid I believe only up to some income limit. Then, there's the Medicare tax on top of that, which is not income-limited.
Post reply on HN