Uber drivers ignore the hidden costs

The math doesn’t add up. Click here to watch this video to see the true cost of driving for Uber.

So who drives for Uber?

Uber’s free and discounted price promotions combat its bad image of surge pricing and has made it an obvious choice for their customers. What is not so obvious is the other reason their market prefers Uber. Uber’s slogan—“Everyone’s private driver”—speaks volumes. Uber’s drivers are more similar to the general workforce, in three key areas, than to taxi drivers. According to “An Analysis of the Labor Market for Uber’s Driver-Partners in the United States”, by Uber’s own Dr. Jonathan V. Hall, head of policy research, and Professor Alan B. Krueger, they are younger, more educated, and more white. Uber customers muse over getting into a car with an Uber driver whose “real” job is a teacher or musician, drives a nice car, and could be their kid or brother. Uber drivers freely and naturally provide them with “emotional labor”, according to “The Social Costs of Uber” by Brishen Rogers. Emotional labor is when workers ape middle-class norms of sociability.

One could then assume that Uber drivers are smarter than taxi drivers since taxi drivers represent a diverse group that are older and are more dependent on the “low-skilled” occupation as a full-time profession. Yet “Towards a Cost Estimate” by Lawrence Meyers reveals Uber drivers lose 49% of their earnings to operational expenses, before taxes. As the Los Angeles Times’s article, “Has Uber already peaked?” puts it, it takes time and experience for them to figure out that what’s left may be about minimum wage.

Only 8% of Uber drivers were unemployed just before they started working with Uber and half drive for less than 15 hours a week. Given that Forbes reports taxi driving is the 8th worst job in America and earns below poverty levels earnings, one could conclude that Uber drivers would be on welfare if they didn’t already have a “real” job. So why do these young, white, educated Uber drivers do it? Well, they don’t do it for long since a huge percentage, perhaps nearly half, bail out within a year of starting. But, since there is a sucker born every day, who cares.

Who drives taxis?

The taxi industry has generational roots with full-time and over-time professionals. They are able to control their own schedule. Full-time drivers working a regular workweek can make just below poverty level earnings. If they work overtime they can do better. It is a good job for drivers that have low expenses or have a second income. Because taxi driving is a low-skilled profession, it also attracts drivers that are not able to find employment elsewhere due to low-educational achievement, being a non-American, and those looking for a second-chance in society. Taxi driving is a way to make an honest living or otherwise be on social services.

IDBeing a driver may be a low-skilled profession, but it requires a high-degree of sensitivity in responding in a professional manner to a variety of passenger attitudes. Some passengers are hostile and they use the posted passenger rights as their ammunition. Drivers are questioned about their traffic decisions, going too slow, going too fast, and any confusion about the meter rate, even though flat rates are clearly posted.  Many non-American drivers get ridiculed for not being from here. Although a lot of public emphasis has been placed on passenger safety, the public is more dangerous to the driver. This is evident in the fact that the state of Louisiana passed a law making the killing of a taxi driver a possible death penalty offense. Taxi driving in Louisiana has been the most murdered occupation, above police.

Unlike Uber drivers, taxi drivers can quickly calculate the trip’s operational costs. Their margin is so close, driving could cause them inability to feed their family, or pay for their car or compliance that week, so they turn down those fares. This is why the market turned to Uber in the first place. It would return to the taxi industry if regulators backed off, and an efficient method of distributing orders to drivers unites them with the ordering public.

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