Uber and Lyft don't cover their cost of capital and rely on desperate workers

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I recently talked to an Uber driver about this very thing. He confirmed that is a real issue.


And there is the real crux of the “sharing economy.” Driving for Uber isn’t the sharing economy, it’s a part-time job that requires the use of your car. The only “sharing” that’s going on is Uber is sharing your capital and getting a cut.


So at some level, this is a way of saddling the drivers with debt to enrich the founders? Yet another case of the excess money that the fed is pumping into the economy being put to non-productive uses…


A user here a few weeks ago mentioned ‘uber and lyft becoming worker owned co-operatives’ as an example of a longshot scenario, but ever since I read it I can’t help shake the feeling like it’s actually an inevitability that will likely occur within 10-15 years.


It is a bit serendipity that this rant on capital and the pizza bong are side-by-side today. Pizza delivery works on exactly the same model.
Young person gets starter car subsidized to them, gets pizza delivery gig, drives car into the ground (cashing in the car’s equity one tip at a time). Two paths open at this point, they either smarten up and get on with school and a better job, or they go inside the store and start baking the pies.
Meanwhile, an exciting new job opening is available in the local pizza delivery market!
To be fair, I have some younger friends using the Uber gig as a second job. They work occasionally on weekend/event nights when the rate multiplier hits 3 and up. Not a super reliable income, but reasonable work on your own schedule. When demand consistently outweighs supply the rates adjust, so perhaps the market will level out.


The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the driver fed, housed and healthy.

I thought the idea was that the drivers are paying those costs anyway.

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That’s the enticing myth. That may work for a room you’re not using, but it doesn’t work for a car. The operating costs and depreciation on a car is highly dependent upon how many miles you put on it. Driving the car for the sole purpose of picking up passengers is not the sharing economy - it’s not something that you’re going to be doing anyway. It’s a part-time job that requires the use of your car, just like pizza delivery. It’s the pizza delivery economy, a economic step backwards, not forwards.


Why not? If it’s just an app?

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Right? I can see patent laws trying to be used to stop this, but how proprietary can you get about community based jitney services?

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ISTR that there are fairly stringent rules about the kind of car that you can use…So you can’t drive a 15 year old cr@pbox that you might be able to easily afford. Most drivers have to buy a car when they decide to drive for Uber…

So, worse than the pizza delivery economy, and not even remotely anything to do with “sharing”.


Uber and Lyft have no intention of using drivers at all in 10-15 years. The ride-sharing companies are all just positioning themselves for the coming of self-driving cars.


But if they can’t sucker the drivers into buying the cars, their business model doesn’t work. That’s kind of the point of the article.


They just aren’t playing it right.

Steal the car, then be an Uber Driver.

Problem Solved!


What they’re doing is really no different than many (most?) delivery services. My dad was in deliveries for decades, and I think every job he had worked on this model.

Newspaper delivery: Same deal, except you’re allowed to drive a terrible junk car. The interior would be immediately trashed by the newsprint, so whenever anyone showed up with a nicer car they ruined it instantly.

FedEx Ground: Same deal, except you’re required to actually buy the route contract and a truck, plus buy insurance from the company store. If you’re injured on the job, you have to pay someone to do your deliveries for you or you’re fired.

Courier service: Same deal, you provide the car, they provide the address.

I don’t see how Uber and Lyft are any different at all, except maybe that if anything, the insurance situation is a little bit better. The problem with all these jobs is that they’re deceptively low paying and appeal to people with the promise of easy up front cash in exchange for harder to understand asset depreciation.


The market will not miraculously produce a capital replacing living wage. If it does so in any particular market it is happenstance; luck, not social physics.

No, it’s Big Government. The Invisible Hand has never produced a prosperous working class, and it never will.


I remember reading Ian Welsh’s “It’s Not Your Money” several years ago. It really changed how I think about money and wealth. http://www.ianwelsh.net/it’s-not-your-money/


Did not know this. No wonder FedEx drivers are so business-like. It’s hard to even say “thanks” before they’re gone…like a phantom.


Why does this feel a bit like the relationship between NFL players, the inherit dangers of playing the sport, and the toll it takes in the future on their bodies? That is many players are now balking at the idea they are going to be in an 80 year old body when they are 40 and they now want coverage of expenses for the toll the sport takes on them by the NFL itself. Most fans look and say “You knew the risks and you took them on willingly to make the money you made (and not always but sometimes obscene amounts).”

Isn’t this a similar endeavor for the driver? They know doing this will potentially if not assuredly put excess wear and tear on their vehicle with no additional compensation for it. I do not know the economics of what an Uber driver can make, but is it say more than what you can make working at Home Depot, Barnes & Noble, or Starbucks? Are those jobs any less desirable for some reason?