“Which is frankly what’s clearly illustrated by this study.
Driving for uber in dallas driver#
“You have to buy a car, you have to get insurance, you have to pay for gas… And if you as an intermediary, which those platforms are, are taking an increasing amount of commission - 10%, 15%, now 20 in most of their markets - and then you’re using the price of the trip as a way of beating your competitor… then you as a driver are sitting there with basically all of your fixed costs and your income is going down and frankly the only way to cover your costs is to spend more hours in the car. “At the end of the day there are a certain amount of fixed costs ,” says Tluszcz.
The exploitative asymmetry of ride-hailing platforms comes because workers have a certain amount of fixed costs but the platform intermediary can just hike its commission at will and lower the service cost to the end user whenever it wants to increase competitiveness vs a rival business. It’s really a poor place to be an employee or be a worker.” “It tells you that it’s a great place if you’re a company. So what does the study tell us about the ride-hailing business model? “It tells us that it’s a shitty place to work,” says Mark Tluszcz, co-founder and CEO of Mangrove Capital Partners who has described the gig economy model as the modern day sweatshop, and says his VC firm made a conscious decision not to invest in gig economy companies because the model is exploitative.
Driving for uber in dallas drivers#
The authors add that if their $661/month mean profit is representative then the US’ Standard Mileage Deduction facilitates “several billion in untaxed income for hundreds of thousands of ride-hailing drivers nationwide”. These numbers suggest that approximately 74% of driver profit is untaxed. Mean drivers who use a Standard Mileage Deduction would declare taxable profit of $175 rather than the $661 earned. Because of this deduction, most ridehailing drivers are able to declare profits that are substantially lower. Drivers are eligible to use a Standard Mileage Deduction for tax purposes ($0.54/mile in 2016) which far exceeds median costs per mile of $0.30/mile. On a monthly basis, mean profit is $661/month (median $310). The research also looked at how ride-hailing profits are taxed, and suggests that in the US a majority of driver profits are going untaxed owing to how mileage deduction is handled for tax purposes - suggesting Uber and Lyft’s business are denuding the public purse too. They also found a median driver generates $0.59 per mile of driving but incurs costs of $0.30 per mile and almost a third (30 per cent) of drivers were found to incur expenses exceeding their revenue or to be losing money for every mile they drive. On an hourly basis, the median profit was $3.37 per hour, with 74% of drivers earning less than the minimum wage in the state where they operate. The upshot? The researchers found profit from ride-hail driving to be “very low”. The study, entitled The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes, and which was carried out by the MIT Center for Energy and Environmental Policy Research, surveyed more than 1,100 Uber and Lyft ride-hailing drivers combined with detailed vehicle cost information - factoring in costs such as fuel, insurance, maintenance and repairs - to come up with a median profit per hour worked. The report catalyses the debate about conditions for workers on gig economy platforms, and raises serious questions about the wider societal impacts of tax avoiding, VC-funded tech giants. Ride-hailing giants Uber and Lyft are delivering pitiful levels of take-home pay to the hundreds of thousands of US independent contractors providing their own vehicles and driving skills to deliver the core service, according to an MIT CEEPR study examining the economics of the two app platforms.
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