https://www.yahoo.com/news/mit-study-shows-much-driving-154538176.html 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. 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. 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.
Most people only see the income and don't think much about the overheads. Same with most new people getting into trading, they only think about the profit potential, they don't really consider the effects of losing trades on net PnL, and if day trading then the cost of commissions need to be factored in as well. Prop traders also have to pay large desk and software fees. And as a full time trader you have pay for your cost of living out of your trading profits as well. The thinking always seems to be: im going to make so much money that those overheads will be insignificant.
As well as opportunity cost and effect on psychology. Regarding the original article, I'll never use taxi when I can use Uber or Lyft. Uber and Lyft drivers have been much more professional in my experience and take care of their vehicles.
I do uber close to year now in Calgary (1 million plus) population . 45-50 hours a week. Dangerous and 0$ profit , but kind of addictive. Good as a hobby for rich bored guy who likes driving or a part time gik to cover some car expenses if you willing to trade your time. Certanly not for making money. At least in trading you have some chance.
And they forget the biggest loss of all -- how much they could be making using the time do some other profession.
First the income is effectively tax free. (As you spend 30cents a mile but get to deduct 59 cents per mile). Second a lot of the fixed cost is socialized with the drivers personal life (they were already going to own and insure the car). The alternative: taxis are far worse. Fees are also high (for medallions) and you can’t use your business asset for personal use.
I think it'd be interesting to see how this plays out in countries where car ownership isn't taken for granted, and costs more accurately reflected. In the US, if you tell someone that car ownership costs around $1k per month, most would laugh at you. But that's as true of a new Ford focus or 1987 Honda accord (less true of high end sports or luxury cars). You pay in maintenance, insurance, car payments...but all drivers pay it. There's costs above that defrayed on a societal level too. That $0.14 per gallon (about $0.005 per mile) doesn't come close to covering the street maintenance that it could pay for unsupported. So, all that copious road infrastructure is basically given to you for free by the tax payer. But here's the thing, as car owners become a minority and the "sharing" economy advances, who pays that share of the roads that are no longer the non-driver's to pay for? I really think this is one of the great things that millennials have to leave this world...car costs borne by the people who use them, not the people who suffer them.
Even more so for EVs. They get a total free ride when it comes to infrastructure. It's actually the poorer people who tend to pay for more of the roads because they tend to drive older cars with poor fuel economy. So the rich guy gets his Tesla partially paid for (in tax credits) by the tax payer and pays no infrastructure (from driving it) and the poor guy driving an early 90s SUV that he purchased from an Indian reservation gets stuck with the fuel taxes. Sounds progressive.
Uber and Lyft are the Amazon of personal transportation. It is good for the customers, but screws everyone (their own workers and the competition) else in the business. Eventually the business model has to suffer.