In an effort to overcome $170,000 of non-dischargeable student loan debt , I got a side hustle. In this case, I drove for uber. The reality is that we all knew uber and rideshare drivers in general get paid sh*t, but I could never quantify the actual ‘cash in my pocket’ i’d receive after a day of driving. Uber & lyft advertise as high as $27, but is that really the case? Keep dreaming. I made $10.29 an hour driving for uber.
My conclusion?Your uber driver is broke. He or she (most likely he). makes around $10/hour, less than minimum wage. You should definitely tip them, and be nice while you’re at it.
$10.29 an hour was cool when i was 16 years old making sandwiches at Togo’s, but as a 31 year old MBA graduate from a top 10 university, $10.29 seemed like an appropriate mix of getting kicked in the nuts and called an idiot at the same time. On April 2nd, 2018 in Los Angeles, CA I decided to pull back the secret curtain of rideshare economics and sign up to be an uber driver. Over a 3 hour period I completed the 5 trips, depicted below. I made on average ~$10 per trip, with trips lasting up to one hour.
Problem 1 — Uber Takes 28% to 52% of your trip earnings
This isn’t a problem for uber, it’s a great business model. It’s a terrible problem for the driver. The amount you pay your driver is not the amount the driver receives. We extrapolate the hourly earnings by calculating the dollar amount earned per minute both before and after Uber’s commission. This will give us the hourly/earnings per ride if the ride were exactly 60 minutes. Over the 3 hours and 6 minutes, I drove approximately 11.85 miles/hour. Next we use these parameters to estimate our annualized earnings, as seen below. We assume a basic 40 hour work week, 8 hours a day, 5 days a week.
Problem 2 — Driver earnings are grossly over-inflated
If we completely ignore the fact that in this scenario uber takes 43% or $26,933 of the driver’s earnings, and somehow rationalize to ourselves that this is OK — the driver earns about $34,829. This is $16.74 or slightly above the $15/hour minimum wage requirement. There are 2 problems to this metric:
1. The driver has yet to pay for any expenses related to vehicle maintenance. 2.The driver doesn’t have health insurance.
You should be alarmed by problem #2. This is problematic because Uber does not recognize a driver as an employee. This
Let’s update our annualized earnings estimate table to include:
1. Maintenance costs (forget about health insurance for now) 2. Time driving but not earning
Uber only pays the driver when they physically have a passenger in the car. Uber does not pay the driver for any time spent driving to the passenger’s pick up location. In our model, I will drive approximately 18,976 miles in 52 weeks. Using the IRS standard deduction for car expenses, I will pay around $10,246.85 in vehicle maintenance which includes gas, repairs, oil changes, anything to keep my car on the road.
Furthermore, assume 1%
Conclusion: Your uber driver makes less than minimum wage
This is unacceptable and we should collectively be embarrassed. My only advice if you do decide to drive for uber or lyft. Under no circumstances should you EVER use your own car. There’s a market place of not so smart people that are willing to let you rent their car (and depreciate it into the ground) for as little as $25 a day, they’ll even cover insurance and maintenance. The most popular platform is called getaround. If you must drive for uber or lyft (which my rich mentor recommends against) — this is the ONLY scenario in which you are aloud to do so!
If I live at home with no food, housing or car expense…or I declare myself homeless and live in my car, and if i’m willing to work 100 hours a week, my $170,000 of student loans could be paid off in about 4.5 years!