This comment was left on the thread ‘Driving in L.A. since the latest pay cut’. We thought it was so informative we made it into a feature article! Thanks for the submission..
What’s appalling is that Uber is allowed to continue to advertise on Craigslist/Facebook and make earnings claims to potential drivers that are deceptive. For example, you will often hear Uber use the term “a fully utilized automobile in NYC can earn $90,000 per year”.
The way that “fully utilized” earning number is calculated is based on the amount you earn while you have a passenger in the car prorated over an hour X 40 hours per week X 52 weeks in a year. So for example, I take on a 15 minute fare that comes out to be $12. After Uber’s cut (20%), I effectively earned $9.60 for the trip. If I make 4 such trips in an hour, I am ‘fully utilized’ and earned $38.40 that hour.
$38.40 per hour X 40 hours in a week = $1536
$1536 X 52 weeks in a year = $79872
That is the hypothetical “fully utilized” scenario and that is how they advertise on Craigslist and Facebook to potential drivers regarding the earning potential of driving for Uber. Sounds wonderful right?
Well in reality, this is logistically impossible to achieve because this assumes that demand for rides is universally so high that you will get one request after another back to back without having to drive any ‘dead miles’ to reach the next customer. In reality, it would be an exceptional hour of driving or Uber if you have a paying customer in your car for 40 minutes out of an hour in a city such as Los Angeles where you are oftentimes going 3-5 miles from one location to another. Remember that is the best case scenario. That happens once every week maybe.
In reality, you’d be lucky to average about 40% utilization (when a paying customer is actually in your car) over the long haul, which immediately cuts your realistic take home in the above scenario to a little under $32K per year. Now granted that’s still a pretty good salary, but that doesn’t take into account the cost of doing business:
a. the miles you out on your car doing this full time approaches 35K miles per year, if not more
b. the amount of money you spend on your car’s maintenance immediately increases
c. the lifespan of your car decreases
d. your gas expenses will increase dramatically
As such, Uber’s claims of making $1500 per week in a market such as LA are completely misleading, but that’s what the average person responding to the ad will see because that sounds like a can’t miss opportunity.
In such desperate economic times that we are in, these bait and switch driver recruitment tactics are sure to attract a large number of applicants. That keeps each market flooded with new drivers and forces out the ones that have been driving once they realize the economics don’t make sense.
It’s a pretty shameful way to keep a steady supply of drivers.
There are a ton of other issues of course once you become a driver. They’ve been highlighted across the internet:
a. Drivers have no say when Uber decides to cut it’s rates (which are typically 20% each time).
b. Uber isn’t upfront about additional fees such as the $10 per week charge for using their phone to access their driver app. This is supposed to be a technology company. In today’s environment when everyone has smartphones, you mean to tell me they can’t create an app that will work on those phones? Lyft and Sidecar have always had this.
c. Uber’s support for it’s driver “partners” is downright useless. There is ONLY email support and every question is keyword matched to an auto-reply. So you are constantly getting partial answers to your emails based on which keywords they match.
d. To add insult to injury, those replies insult your intelligence (i.e. their reply regarding questions about the most recent rate cuts is basically “because prices are lower, you will have more rides and make more money”). That really doesn’t make sense because you can physically only make so many rides per hour so you will have to drive more hours to make the same amount you made before the rate cuts. That’s why you have drivers that now have to drive 12+ hours a day to make the same money they made driving 8 hours a day. Is that safe?
e. The lack of a tipping option for providing a great ride experience isn’t there. The bigger issue is that when riders sign up for Uber, they are told that they don’t need to tip because the tip is included in the fare already. They have effectively brainwashed riders into believing that they never need to tip. Don’t most of us tip our taxi drivers? As the rates have gotten lower and lower, this has caused increased tension between drivers and riders that don’t tip (which in LA is almost 95% of the ridership) because the take home pay has decreased so drastically. As a comparison, Lyft does have a tip option in their app and I’ve found that I typically make back about 10% of my fares through tips.
These are just some of the issues but there are others. There are just too many to list. It’s a vicious cycle.
It’ll be interesting to see how things shake out, but as it stands right now, Uber is quite a bait and switch scam. I just feel bad for folks that have signed up thinking they could do this full time to earn a decent living.