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What DoorDash pays, after expenses, and what’s happening with tips

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Re: What DoorDash pays, after expenses, and what’s happening with tips

#461

Post by ezzzzz »

PanosJee wrote: post #236
sombremesa wrote: post #170

Earlier quoted context omitted.

Because these companies are still finding enough labor after lowering what they pay out drastically. It's the market in action. You're right that as a society we have a duty to step in with policy here, as we do with minimum wage, but this isn't a violation of "first principles".

That's when I thought the economy was doing really great and unemployment was all time low. But wait people want to work for below minimum wage? Something is broken

People are being mislead. It appears that DoorDash has preemptively scrubbed anything from their website stating that drivers can make n dollars per hour, but at one point, I remember seeing the claim, somewhere between $15/$25 per hour.

I'm not trying to disparage people, but without some level understanding of economics, it's not obvious that whatever rate you receive is not your 'wage'. These gig jobs don't pay wages, they pay something closer to a fee. Maybe it's more like rent. Somebody else can comment on the pedantic differences. Point is, the relationship is skewed in favor of the party doing business, not the party providing the service.

So what? This is capitalism, you have the freedom to seek other opportunities elsewhere. Hold up. If this is your business model, you are dependent upon the current wave of de-regulation. What are you going to do if/once the pendulum swings the other direction? What happens if minimum wage ever becomes something reflective of a living wage?

These gig jobs posit themselves, subtly, as a 'side-hustle'. Something which shouldn't have to exist, but does, simply due to the lack of well-paying jobs for those without advanced education.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#462

Post by boh »

scarface74 wrote: post #444
boh wrote: post #429

Earlier quoted context omitted.

Uber does not pay drivers. Passengers pay drivers who pay Uber to use their platform (otherwise they'd be employees which Uber is fighting to avoid).

Uber paying drivers does not make the drivers employees. When I have worked as a software developer as a 1099 contractor and someone bought the resulting software, does that mean that the customer who bought the software was paying me? Would the payment for the software be counted as revenue for the company? When I was a part time fitness instructor, I taught at corporate gyms where the employees had free memberships…

Currently the prevailing legal arguments against Uber attempt to categorize drivers as employees, not contractors.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#463

Post by Balgair »

boh wrote: post #341

It's becoming abundantly clear the real innovation from on-demand services (including ride-sharing companies), is their ability to transfer more money from labor to capital with complex pay structures. For many if not most of these companies, its their only means towards profitability. For instance, any rise in revenue Uber experienced in the last 3 years was exclusively due to cuts in pay for drivers. Tech has long…

I recently got into EconTalk and burned through a few of their podcasts [0]. Roberts mentions his 'distain' for the minimum wage a fair bit during the shows. Many economists do not like the minimum wage at all for many reasons.

However, with these gig economy jobs, there effectively is no minimum wage. Yes, things are murky here about the definitions of wage, employee, boss, etc. But the effective hourly rates are all well under the minimum wage. So, these companies can uncover the 'real' minimum wage that the market will deal with (again, suuuuuper murky definitions).

It turns out, that number is very low, so low that most people aren't rationally taking those jobs. Factoring in depreciation, I often hear that they loose money to work (not always, but damn close).

I wonder what Roberts has to say on how the minimum wage and the 'wage' that these gig-econ companies pay relate.

It seems to me that having run the experiments now, the theories that the economists that Roberts is like, well, maybe they should update those ideas.

[0] Excellent deep dives with interviewees, highly recommended: https://www.econtalk.org/

Re: What DoorDash pays, after expenses, and what’s happening with tips

#464

Post by beatgammit »

Dylan16807 wrote: post #346
foepys wrote: post #158

Earlier quoted context omitted.

Which is the means to make money in this case. I don't get how you think you are contradicting me here.

The problem is how to turn car-value into cash. You have a car worth $10003 and your current needs can be filled by converting $3 per hour. chii is suggesting you sell the car. That converts the entire car at once. Then you don't have to spend any hours! As an optimization on top of that, they suggest you store the value in a bond, and pull $3 per hour out of the bond instead. The real problem with this idea is that…

What do you need a car for? If it's just to go shopping, consider paying for delivery services instead of being the delivery service. If it's to get to a day job, compare car ownership to mass transit or bike committing. All of these cases can be estimated fairly easily (IRS allows deducting ~$0.50/mile, which is a good first estimate for total cost of ownership per mile).

Unless a car is a certain model, it's a liability instead of an asset, so it should be treated like any other expense. If you only use the car for local trips and commuting and taking the bus/biking is doable (perhaps less convenient), then buying a cheap car, keeping a few weeks of food on hand, and taking the bus to work whenever the car breaks down is likely way cheaper than buying a newer, more reliable car.

I used to have two cars (married with kids, so one car for each parent), and then decided to start biking to work to improve my health. I noticed that I can bike most days, and the insurance alone was enough to convince me to deal with the occasional inconveniences (e.g. when it snows, I bike to the bus stop).

The problem is that most people don't actually do the math and just assume that owning a car is better, when it's not most of the time.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#465

Post by ravenstine »

Reedx wrote: post #242
ravenstine wrote: post #150

Earlier quoted context omitted.

Not all orders are like that, but a lot can be, and it depends on the region. I worked GrubHub back in 2018 when I was between jobs(took some time off to do side projects and did deliveries to make ends meet). These apps play this psychological game on you where you have to accept something like 95% of orders in order to get more quantity and quality(supposedly), so some people are desperate to take all the shitty no…

> the shitty no-tip orders just so they have a shot at getting better ones. Wait a second... Are people not giving a cash tip in these cases? I do no-tip and give cash instead (which I thought was preferred). Is that a bad strategy?

Most no-tip orders don't result in a cash tip, but some do. I'd say 1 in 5 no-tippers end up tipping in cash. People who use these apps aren't exactly the greatest customers in the world.

It's only a bad strategy if most or all drivers pass on your orders. Some drivers take these offers in hope for cash. I chose to stop taking those offers because I found most people don't end up tipping me in cash. It was more profitable to drive 20 - 30 minutes to a hot spot or a rich neighborhood where I knew I would get worthwhile offers. (and also not end up in the hood!)

Re: What DoorDash pays, after expenses, and what’s happening with tips

#466

Post by cuchoi »

Balgair wrote: post #463
boh wrote: post #341

It's becoming abundantly clear the real innovation from on-demand services (including ride-sharing companies), is their ability to transfer more money from labor to capital with complex pay structures. For many if not most of these companies, its their only means towards profitability. For instance, any rise in revenue Uber experienced in the last 3 years was exclusively due to cuts in pay for drivers. Tech has long…

I recently got into EconTalk and burned through a few of their podcasts [0]. Roberts mentions his 'distain' for the minimum wage a fair bit during the shows. Many economists do not like the minimum wage at all for many reasons. However, with these gig economy jobs, there effectively is no minimum wage. Yes, things are murky here about the definitions of wage, employee, boss, etc. But the effective hourly rates are al…

If you change slightly the economic assumption and go from a completely competitive labor market (where workers get paid the marginal revenue productivity) to a monopsony labor market (there is only one employer), then the minimum wage can increase employment and wages. https://open.lib.umn.edu/principleseconomics/chapter/14-2-mo...

A monopsony labor market is highly unlikely to happen, but something similar can be said of a highly competitive labor market.

Re: What DoorDash pays, after expenses, and what’s happening with tips

#468

Post by beatgammit »

egypturnash wrote: post #46
marcell wrote: post #30

> “These orders don’t pay for our expenses or our time. We actually lose money when we take those orders. If I pick up an order that is 10 miles away and deliver it 6 miles I’m traveling 16 miles for a $3 order — so I have lost money. I’m in the negative when I account for gas, wear and tear, and other expenses. Not to mention my time.” This begs an obvious question: why are people choosing to do this if it pays $0/h…

Elsewhere in the article: "The only reason I do it at all is because the few orders where customers tip high enough to make it worth it keep me going on some of them." - Lee, DoorDash worker in Hendersonville, TN Also of course they may have not done the math yet, or they may be doing this to try and fill in the gaps between their other two shitty minimum-wage jobs that never give them enough hours to be an actual fu…

It feels more like gambling than "filling in the gaps". Casinos, video game loot boxes, mobile games, etc are all based on the idea that an occasional dopamine hit will keep people interested. A good tip now and then seems like the same thing.

It's quite likely that someone working multiple jobs will be worse off doing something like Uber and Doordash part time, but they feel like they're better off because they occasionally get that dopamine hit.

I think everyone should record everything about these types of side hustles. It's quite likely that the extra miles on your car completely erodes the money you make. The IRS allows deducting $0.50/mile, which is a pretty reasonable estimate for vehicle costs. I drive an older hybrid, which I paid cash for, and my cost is still ~$0.25/mile for repairs, insurance, depreciation, and gas (gas is <$0.10/mile if you get better than 26mpg, so it's very misleading).

Re: What DoorDash pays, after expenses, and what’s happening with tips

#470

Post by dragonwriter »

devmunchies wrote: post #127
bobloblaw45 wrote: post #2

I drove for DoorDash for about a month. What killed me was the wait between deliveries. I think it was like 45 minutes on average and when I did get a delivery it was like a tiny $7 delivery. There would be 2 hour stretches of times pretty often. But then once in awhile I'd get a string of maybe 3 or 4 runs that paid like $12. over 2 or 3 hours.It was too inconsistent. Had no idea if I ever got tips, from my understa…

>There's just too many drivers I think. interesting, I'm desperate for more drivers. I run a side business that delivers cookies, drivers do just under 30 deliveries a day (about 3-4 every hour) and make minimum wage plus 100% of tips are split at the end of pay period. it ends up being about $3/delivery in tips, which is an extra $9/hr for a total of $21/hr (minimum wage is $12). A driver could theoretically make ov…

> I run a side business that delivers cookies, drivers do just under 30 deliveries a day (about 3-4 every hour) and make minimum wage plus 100% of tips are split at the end of pay period.

That sucks (EDIT: that is, the pay you are offering.) Back when I was driving delivery (pizza, but it doesn't matter) with a personal vehicle, we got minimum wage, plus $1/delivery (and this was in the early 1990s), plus kept 100% of tips at the end of the night. The only drivers I knew of not getting a per-delivery reimbursement were driving employer-provided vehicles. If there isn't a per-delivery or mileage reimbursement, you are effectively paying below minimum wage before tips, because cars cost money to operate.

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