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[Uber]: Disrupting Livery Service (And Ethics)

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    mcdermottmcdermott Registered User regular
    mcdermott wrote: »
    Honestly the overhead argument falls flat to me. The IRS already gives us a decent framework for estimating the cost of operating a motor vehicle (which the driver retains whether they drive or not, and presumably uses personally). It's approximately $0.56 per mile. And that's fairly legit, including costs of maintenance, gas, additional insurance, etc.

    Uber drivers /are/ compensated for mileage driven. Last I checked the per-mile fare is like $1.35, and the driver keeps...80%? That's in addition to the per-minute fare (unlike most licensed taxis Uber charges both for the whole trip, though the combined fare is often still cheaper).

    The main concern I have is benefits...particularly when drivers are working full time or more. But reimbursement for expenses, I'd expect, would simply lead to a (justified) reduction in the driver cut of per-mile expenses.

    Things like bridge tolls (which were also at issue) are tricky. I'd think that the documentation burden wouldn't be worth it, and maintaining that as part of the per-mile rate makes more sense, unless a driver is doing a much greater number of tolled runs.

    First, it's worth pointing out that the IRS figure is for personal operation of a car. Commercial operation is higher (more wear and tear).

    Second, Uber has monkeyed with the per-mile rate in two ways. One, in areas where they are in competition with other online livery services, they have cut rates as part of a price war. Two, theyvethey've out and out cut the percentage to the driver (I believe it's 70% now.) Both have serious impact on the bottom line for drivers.

    The IRS rate is for business use. That can include many uses of cars, trucks, or panel vans (per the irs). And the mileage rate definitely accounts for the wear and tear of those miles. The wear on interiors carrying passengers will be slightly more, but i doubt it's as much as you're thinking (it's going to scale up with mileage). It's sufficient to cover wear, maintenance, and depreciation.

    And I doubt there is any U.S. market where the per-mile rate, or rather the drivers cut, is below that standard rate. But perhaps, I'll look later. Then remember that IIRC the driver can still claim that deduction to further reduce the overhead burden.

    I'm not saying that Uber compensation overall is sufficient. It's not. I'm saying that the particular arrangement of having the driver shoulder that overhead is not necessarily a problem, given the compensation scheme. It's entirely possible for it to be run in an equitable manner.

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    mcdermottmcdermott Registered User regular
    On the mileage:

    A brand new Prius runs less than $30K. Which means you only need to get 60K miles out of it as an Uber driver to break-even at $0.46 a mile (subtracting for gas). And that's assuming you drive it off the dock at 60K, rather than resell it.

    More like 75K if we assume Uber driving voids the manufacturers warranty, to cover the 7K or so (or less...probably less) of maintenance you'd expect from that car in its first 60K miles.

    Registration and insurance will eat into that too, obviously. But that's a lot of money to eat into. I don't see it going below break-even.

    Unless you have some data to suggest otherwise, I think that the standard IRS rate is a more than reasonable estimate of the overhead cost.

    Note: accepting this does not mean accepting Uber's business practices overall as reasonable.

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    Jebus314Jebus314 Registered User regular
    edited June 2015
    mcdermott wrote: »
    Honestly the overhead argument falls flat to me. The IRS already gives us a decent framework for estimating the cost of operating a motor vehicle (which the driver retains whether they drive or not, and presumably uses personally). It's approximately $0.56 per mile. And that's fairly legit, including costs of maintenance, gas, additional insurance, etc.

    Uber drivers /are/ compensated for mileage driven. Last I checked the per-mile fare is like $1.35, and the driver keeps...80%? That's in addition to the per-minute fare (unlike most licensed taxis Uber charges both for the whole trip, though the combined fare is often still cheaper).

    The main concern I have is benefits...particularly when drivers are working full time or more. But reimbursement for expenses, I'd expect, would simply lead to a (justified) reduction in the driver cut of per-mile expenses.

    Things like bridge tolls (which were also at issue) are tricky. I'd think that the documentation burden wouldn't be worth it, and maintaining that as part of the per-mile rate makes more sense, unless a driver is doing a much greater number of tolled runs.

    Uber's problem is that it heavily utilizes obfuscation and shifted blame. I would agree with you that it isn't inherently bad to include tool maintenance costs in with regular payment, but in uber's case I think they are banking on the incomplete understanding of the "contractors". Suppose Uber had to pay maintenance costs separate from income. They could in practice pay you the exact same amount per mile (I.e. previous single income is equal to new income plus maintenance costs), but what happens if 80% of your payment is the maintenance costs? I'd wager that a great deal of the drivers would become less likely to join if they fully understood how much of their income would be going right back into keeping their car running. Instead uber can pretend like your income is all gravy and lots of people will never really consider anything else.

    The obfuscation, however, isn't really the biggest problem for uber or state's fighting uber. The problem is shifting the blame for regulation violations. Being a commercial driver usually has some additional costs associated with regulations requiring more knowledge (like requiring a different drivers license) and higher insurance premiums to compensate the higher accident rates and higher associated costs of an accident (like a higher rate of passenger injury since most personal vehicles have less passengers in general). If uber is on the hook for it's drivers violations than it is much easier for states to enforce them, and in turn it is much more likely that the drivers wont ignore them. If uber isn't on the hook then finding and prosecuting each individual driver for each violation becomes almost impossible.

    My guess is that part of the reason uber has been so successful is because of this ability to ignore regulations, cut end user costs, and still maintain a decent profit. The right way to do it probably would have involved uber operating on razor thin or even negative profits while it grew it's market share, and then slowly raised prices to reflect the actual costs.

    Jebus314 on
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    mcdermottmcdermott Registered User regular
    Jebus314 wrote: »
    mcdermott wrote: »
    Honestly the overhead argument falls flat to me. The IRS already gives us a decent framework for estimating the cost of operating a motor vehicle (which the driver retains whether they drive or not, and presumably uses personally). It's approximately $0.56 per mile. And that's fairly legit, including costs of maintenance, gas, additional insurance, etc.

    Uber drivers /are/ compensated for mileage driven. Last I checked the per-mile fare is like $1.35, and the driver keeps...80%? That's in addition to the per-minute fare (unlike most licensed taxis Uber charges both for the whole trip, though the combined fare is often still cheaper).

    The main concern I have is benefits...particularly when drivers are working full time or more. But reimbursement for expenses, I'd expect, would simply lead to a (justified) reduction in the driver cut of per-mile expenses.

    Things like bridge tolls (which were also at issue) are tricky. I'd think that the documentation burden wouldn't be worth it, and maintaining that as part of the per-mile rate makes more sense, unless a driver is doing a much greater number of tolled runs.

    Uber's problem is that it heavily utilizes obfuscation and shifted blame. I would agree with you that it isn't inherently bad to include tool maintenance costs in with regular payment, but in uber's case I think they are banking on the incomplete understanding of the "contractors". Suppose Uber had to pay maintenance costs separate from income. They could in practice pay you the exact same amount per mile (I.e. previous single income is equal to new income plus maintenance costs), but what happens if 80% of your payment is the maintenance costs? I'd wager that a great deal of the drivers would become less likely to join if they fully understood how much of their income would be going right back into keeping their car running. Instead uber can pretend like your income is all gravy and lots of people will never really consider anything else.

    The obfuscation, however, isn't really the biggest problem for uber or state's fighting uber. The problem is shifting the blame for regulation violations. Being a commercial driver usually has some additional costs associated with regulations requiring more knowledge (like requiring a different drivers license) and higher insurance premiums to compensate the higher accident rates and higher associated costs of an accident (like a higher rate of passenger injury since most personal vehicles have less passengers in general). If uber is on the hook for it's drivers violations than it is much easier for states to enforce them, and in turn it is much more likely that the drivers wont ignore them. If uber isn't on the hook then finding and prosecuting each individual driver for each violation becomes almost impossible.

    My guess is that part of the reason uber has been so successful is because of this ability to ignore regulations, cut end user costs, and still maintain a decent profit. The right way to do it probably would have involved uber operating on razor thin or even negative profits while it grew it's market share, and then slowly raised prices to reflect the actual costs.

    Agreed on pretty much all counts.

    Though ignoring regulations in markets that strictly limit supply (to consumer detriment) was absolutely necessary to disrupt the status quo. It wasn't happening through law.

    But yeah, like 99% agreed.

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    Captain MarcusCaptain Marcus now arrives the hour of actionRegistered User regular
    French taxi drivers smashed up livery cars, set tires ablaze and blocked traffic across the country on Thursday in a nationwide strike aimed at Uber after weeks of rising, sometimes violent tensions over the U.S. ride-hailing company.

    Go France! So it turns out France told Uber to stop offering one of its services, Uber said "screw you" and offered it anyways, and now taxi drivers are enacting some street justice in their strike. Here's hoping they win.

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    MortiousMortious The Nightmare Begins Move to New ZealandRegistered User regular
    edited June 2015
    um, wow.

    That seems completely over the line.

    Is France's enforcement so ineffective that their ruling against Uber had zero effect, and that they can't stop the violent response that followed?
    One irritated taxi passenger was left with a broken face and black eye after he praised Uber.

    This is a more important problem than the one they had previously.

    Mortious on
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    QuidQuid Definitely not a banana Registered User regular
    I can't imagine attacking passengers is going to garner much support from passengers.

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    zakkielzakkiel Registered User regular
    mcdermott wrote: »
    On the mileage:

    A brand new Prius runs less than $30K. Which means you only need to get 60K miles out of it as an Uber driver to break-even at $0.46 a mile (subtracting for gas). And that's assuming you drive it off the dock at 60K, rather than resell it.

    More like 75K if we assume Uber driving voids the manufacturers warranty, to cover the 7K or so (or less...probably less) of maintenance you'd expect from that car in its first 60K miles.

    Registration and insurance will eat into that too, obviously. But that's a lot of money to eat into. I don't see it going below break-even.

    Unless you have some data to suggest otherwise, I think that the standard IRS rate is a more than reasonable estimate of the overhead cost.

    Note: accepting this does not mean accepting Uber's business practices overall as reasonable.


    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    Account not recoverable. So long.
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    AstaleAstale Registered User regular
    Quid wrote: »
    I can't imagine attacking passengers is going to garner much support from passengers.

    The general aim in trying to drive competition away through regulation is "leave them no other option".

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    PaladinPaladin Registered User regular
    Yet another chapter in France's epic crusade to cleanse its stereotype as a tourist country

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    Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
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    Irond WillIrond Will WARNING: NO HURTFUL COMMENTS, PLEASE!!!!! Cambridge. MAModerator Mod Emeritus
    zakkiel wrote: »
    mcdermott wrote: »
    On the mileage:

    A brand new Prius runs less than $30K. Which means you only need to get 60K miles out of it as an Uber driver to break-even at $0.46 a mile (subtracting for gas). And that's assuming you drive it off the dock at 60K, rather than resell it.

    More like 75K if we assume Uber driving voids the manufacturers warranty, to cover the 7K or so (or less...probably less) of maintenance you'd expect from that car in its first 60K miles.

    Registration and insurance will eat into that too, obviously. But that's a lot of money to eat into. I don't see it going below break-even.

    Unless you have some data to suggest otherwise, I think that the standard IRS rate is a more than reasonable estimate of the overhead cost.

    Note: accepting this does not mean accepting Uber's business practices overall as reasonable.


    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    taxi drivers in most metro areas are paid incredibly poorly and pretty broadly exploited. in boston, they're almost entirely immigrants and nearly all (if not all all) of the medallions are owned by three people.

    driving for uber may not be a particularly great livelihood, but it's worth comparing to the industry it's displacing (and is being defended by critics)

    Wqdwp8l.png
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    Captain MarcusCaptain Marcus now arrives the hour of actionRegistered User regular
    Irond Will wrote: »
    taxi drivers in most metro areas are paid incredibly poorly and pretty broadly exploited. in boston, they're almost entirely immigrants and nearly all (if not all all) of the medallions are owned by three people.

    driving for uber may not be a particularly great livelihood, but it's worth comparing to the industry it's displacing (and is being defended by critics)
    That may be true but I'd say that's an argument for better regulation, not getting rid of taxi drivers entirely.

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    zakkielzakkiel Registered User regular
    Irond Will wrote: »
    zakkiel wrote: »
    mcdermott wrote: »
    On the mileage:

    A brand new Prius runs less than $30K. Which means you only need to get 60K miles out of it as an Uber driver to break-even at $0.46 a mile (subtracting for gas). And that's assuming you drive it off the dock at 60K, rather than resell it.

    More like 75K if we assume Uber driving voids the manufacturers warranty, to cover the 7K or so (or less...probably less) of maintenance you'd expect from that car in its first 60K miles.

    Registration and insurance will eat into that too, obviously. But that's a lot of money to eat into. I don't see it going below break-even.

    Unless you have some data to suggest otherwise, I think that the standard IRS rate is a more than reasonable estimate of the overhead cost.

    Note: accepting this does not mean accepting Uber's business practices overall as reasonable.


    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    taxi drivers in most metro areas are paid incredibly poorly and pretty broadly exploited. in boston, they're almost entirely immigrants and nearly all (if not all all) of the medallions are owned by three people.

    driving for uber may not be a particularly great livelihood, but it's worth comparing to the industry it's displacing (and is being defended by critics)

    The people best positioned to make that comparison are the cab drivers themselves. Given that they haven't deserted en masse for Uber, I think it's pretty clear they're getting a better shake with traditional cab services.

    Account not recoverable. So long.
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    SchrodingerSchrodinger Registered User regular
    zakkiel wrote: »
    Irond Will wrote: »
    zakkiel wrote: »
    mcdermott wrote: »
    On the mileage:

    A brand new Prius runs less than $30K. Which means you only need to get 60K miles out of it as an Uber driver to break-even at $0.46 a mile (subtracting for gas). And that's assuming you drive it off the dock at 60K, rather than resell it.

    More like 75K if we assume Uber driving voids the manufacturers warranty, to cover the 7K or so (or less...probably less) of maintenance you'd expect from that car in its first 60K miles.

    Registration and insurance will eat into that too, obviously. But that's a lot of money to eat into. I don't see it going below break-even.

    Unless you have some data to suggest otherwise, I think that the standard IRS rate is a more than reasonable estimate of the overhead cost.

    Note: accepting this does not mean accepting Uber's business practices overall as reasonable.


    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    taxi drivers in most metro areas are paid incredibly poorly and pretty broadly exploited. in boston, they're almost entirely immigrants and nearly all (if not all all) of the medallions are owned by three people.

    driving for uber may not be a particularly great livelihood, but it's worth comparing to the industry it's displacing (and is being defended by critics)

    The people best positioned to make that comparison are the cab drivers themselves. Given that they haven't deserted en masse for Uber, I think it's pretty clear they're getting a better shake with traditional cab services.

    A lot of that might have to do with not being able to afford cars that qualify.

    OTOH, a lot of Uber drivers dodge the commercial insurance requirement and don't realize they're in a world of shit until after they get into an accident.

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    MortiousMortious The Nightmare Begins Move to New ZealandRegistered User regular
    From all accounts, a lot of places have serious issues with their taxi policies. And if this Uber thing brings those to light, that's great.

    I don't like how Uber is going about their business, and from what I gather about their business model, it's also quite skeevy. And their owners seem like a bunch of silly geese.

    Taxi regulations need to be reformed, they shouldn't replaced by Uber, and France needs to do something because holy shit.

    Move to New Zealand
    It’s not a very important country most of the time
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    mcdermottmcdermott Registered User regular
    zakkiel wrote: »
    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    Of course not. I know they put on miles between fares. But at the same time, they are actually collecting more like 80 cents, or upwards of a dollar, depending on area while on the meter. So I'm sure that balances out. They also get to deduct the $0.56 per mile (actually think it dropped to $0.52 this year?) from revenue...

    Simple fact: drivers are compensated on a per-mile basis for fares driven, and that per-mile compensation greatly exceeds wear on the vehicle for that fare.

    As contractors, they are compensated in proportion to miles driven for wear on their vehicle. Now, whether their overall compensation (including for hours worked) is sufficient is an entirely different matter.

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    If they are making a living on par with workers in other unskilled, uneducated fields then arguably they are being paid "fairly." That we as a nation are compensate such workers abysmally is a separate matter.

    OTOH, a lot of Uber drivers dodge the commercial insurance requirement and don't realize they're in a world of shit until after they get into an accident.

    Uber provides insurance while carrying a fare. Yes, those that dodge the insurance for the gaps between fares are taking a huge risk.

    That doesn't mean the independent contractor model is completely flawed here. Just that Uber needs to keep better records on its contractors to ensure they have the proper insurance. Or Uber needs to expand coverage for the entire time they are signed into the app.

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    mcdermottmcdermott Registered User regular
    Put another way, I have concerns about the overall compensation of Uber drivers. I would happily pay another buck or two per ride if it would improve that compensation.

    I am not happy to go back to having only licensed taxis available, because in my experience in many metro areas they were uniformly terrible, due to having no real competition (by law). At worst, we are looking at two extreme sides of the same terrible coin.

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    GoumindongGoumindong Registered User regular
    mcdermott wrote: »
    zakkiel wrote: »
    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    Of course not. I know they put on miles between fares. But at the same time, they are actually collecting more like 80 cents, or upwards of a dollar, depending on area while on the meter. So I'm sure that balances out. They also get to deduct the $0.56 per mile (actually think it dropped to $0.52 this year?) from revenue...

    Simple fact: drivers are compensated on a per-mile basis for fares driven, and that per-mile compensation greatly exceeds wear on the vehicle for that fare.

    As contractors, they are compensated in proportion to miles driven for wear on their vehicle. Now, whether their overall compensation (including for hours worked) is sufficient is an entirely different matter.

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    If they are making a living on par with workers in other unskilled, uneducated fields then arguably they are being paid "fairly." That we as a nation are compensate such workers abysmally is a separate matter.

    OTOH, a lot of Uber drivers dodge the commercial insurance requirement and don't realize they're in a world of shit until after they get into an accident.

    Uber provides insurance while carrying a fare. Yes, those that dodge the insurance for the gaps between fares are taking a huge risk.

    That doesn't mean the independent contractor model is completely flawed here. Just that Uber needs to keep better records on its contractors to ensure they have the proper insurance. Or Uber needs to expand coverage for the entire time they are signed into the app.

    Wait were you comparing total compensation to depreciation on the vehicle (minus maintenance!) without considering capital costs of the fact that drivers have to eat?

    wbBv3fj.png
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    AngelHedgieAngelHedgie Registered User regular
    zakkiel wrote: »
    Irond Will wrote: »
    zakkiel wrote: »
    mcdermott wrote: »
    On the mileage:

    A brand new Prius runs less than $30K. Which means you only need to get 60K miles out of it as an Uber driver to break-even at $0.46 a mile (subtracting for gas). And that's assuming you drive it off the dock at 60K, rather than resell it.

    More like 75K if we assume Uber driving voids the manufacturers warranty, to cover the 7K or so (or less...probably less) of maintenance you'd expect from that car in its first 60K miles.

    Registration and insurance will eat into that too, obviously. But that's a lot of money to eat into. I don't see it going below break-even.

    Unless you have some data to suggest otherwise, I think that the standard IRS rate is a more than reasonable estimate of the overhead cost.

    Note: accepting this does not mean accepting Uber's business practices overall as reasonable.


    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    taxi drivers in most metro areas are paid incredibly poorly and pretty broadly exploited. in boston, they're almost entirely immigrants and nearly all (if not all all) of the medallions are owned by three people.

    driving for uber may not be a particularly great livelihood, but it's worth comparing to the industry it's displacing (and is being defended by critics)

    The people best positioned to make that comparison are the cab drivers themselves. Given that they haven't deserted en masse for Uber, I think it's pretty clear they're getting a better shake with traditional cab services.

    A lot of that might have to do with not being able to afford cars that qualify.

    OTOH, a lot of Uber drivers dodge the commercial insurance requirement and don't realize they're in a world of shit until after they get into an accident.

    Uber and Lyft "help" potential drivers who can't afford a new car by offering them subprime car loans. There was actually a pretty big scandal with Lyft in this regard, when they wound up saddling people with custom Lyft Ford SUVs when they abandoned their plans to compete with UberX.

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    Mr RayMr Ray Sarcasm sphereRegistered User regular
    Not to worry, the Taxi drivers are working day and night to improve the quality of the service they offer in order to better compete with uber.

    By which I mean throwing cinder-blocks at cars:

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    zagdrobzagdrob Registered User regular
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

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    mcdermottmcdermott Registered User regular
    edited June 2015
    Goumindong wrote: »
    mcdermott wrote: »
    zakkiel wrote: »
    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    Of course not. I know they put on miles between fares. But at the same time, they are actually collecting more like 80 cents, or upwards of a dollar, depending on area while on the meter. So I'm sure that balances out. They also get to deduct the $0.56 per mile (actually think it dropped to $0.52 this year?) from revenue...

    Simple fact: drivers are compensated on a per-mile basis for fares driven, and that per-mile compensation greatly exceeds wear on the vehicle for that fare.

    As contractors, they are compensated in proportion to miles driven for wear on their vehicle. Now, whether their overall compensation (including for hours worked) is sufficient is an entirely different matter.

    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    If they are making a living on par with workers in other unskilled, uneducated fields then arguably they are being paid "fairly." That we as a nation are compensate such workers abysmally is a separate matter.

    OTOH, a lot of Uber drivers dodge the commercial insurance requirement and don't realize they're in a world of shit until after they get into an accident.

    Uber provides insurance while carrying a fare. Yes, those that dodge the insurance for the gaps between fares are taking a huge risk.

    That doesn't mean the independent contractor model is completely flawed here. Just that Uber needs to keep better records on its contractors to ensure they have the proper insurance. Or Uber needs to expand coverage for the entire time they are signed into the app.

    Wait were you comparing total compensation to depreciation on the vehicle (minus maintenance!) without considering capital costs of the fact that drivers have to eat?

    Of course not. I'm not an idiot.

    First, per-mile compensation exceeds the cost of operating the vehicle, at least for fare-miles driven. The excess is, in theory, profit for the driver. The standard $0.56 per mile deduction rate is a fair estimate of gas, maintenance, and depreciation of the vehicle. I'm not sure what other capital costs you're referring to, I'd assume the vehicle is the primary one.

    But per-mile compensation is not the only compensation. There is also per-minute compensation and the flat base fare. In some markets there is also an hourly guarantee from what I understand. So they are compensated for their time as well, so that they may eat.

    At no point did I intend to claim uber compensation is sufficient overall. Merely that they are compensated sufficiently on a per mile basis to account for the cost of the vehicle (including maintenance and fuel). Which, to me, makes shifting those costs onto the contractor reasonable.

    Whether they clear enough to eat (from per minute rate, base fare, and mileage excess) is another matter.

    mcdermott on
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    mcdermottmcdermott Registered User regular
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    That race to the bottom is already happening. As was mentioned, Uber has slashed fares to compete with Lyft, up to 50% in some markets. Which is why I've been very careful not to defend overall driver compensation. It's pretty abysmal. Which is to say on par with unskilled labor in our country in general, but that's pretty bad.

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    zakkielzakkiel Registered User regular
    edited June 2015
    mcdermott wrote: »
    zakkiel wrote: »
    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    Of course not. I know they put on miles between fares. But at the same time, they are actually collecting more like 80 cents, or upwards of a dollar, depending on area while on the meter. So I'm sure that balances out. They also get to deduct the $0.56 per mile (actually think it dropped to $0.52 this year?) from revenue...

    Simple fact: drivers are compensated on a per-mile basis for fares driven, and that per-mile compensation greatly exceeds wear on the vehicle for that fare.

    As contractors, they are compensated in proportion to miles driven for wear on their vehicle. Now, whether their overall compensation (including for hours worked) is sufficient is an entirely different matter.

    Their overhead per mile is constant whether they're taking a fare or not. If their overhead is 52 cents a mile, and they're paid 80 cents a mile, then if they have a fare for 65% of miles driven they make 0 dollars. I mean, it's nice that they won't pay taxes on that 0 dollars, but neither will they eat. Suppose instead they get 80% of their miles as fare, which is probably about the best one can hope for. Then they actually make 12 cents a mile. Yes, that exceeds vehicle wear and tear, but it's hard to see that keeping anyone in food, clothing, and shelter.
    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    If they are making a living on par with workers in other unskilled, uneducated fields then arguably they are being paid "fairly." That we as a nation are compensate such workers abysmally is a separate matter.

    I don't think they are, unless you're comparing them to undocumented workers. Other workers are protected by an entire suite of laws that simply don't apply to "independent contractors." I highly doubt Uber drivers make even our ridiculous federal minimum wage once the cost of using their own vehicles is taken into account.

    zakkiel on
    Account not recoverable. So long.
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    zakkielzakkiel Registered User regular
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    Account not recoverable. So long.
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    AngelHedgieAngelHedgie Registered User regular
    zakkiel wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    For who, exactly? Because it's looking more and more like the reason their business model is so "efficient" is simply because they shift so much of their operating costs onto the backs of individual drivers.

    XBL: Nox Aeternum / PSN: NoxAeternum / NN:NoxAeternum / Steam: noxaeternum
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    mcdermottmcdermott Registered User regular
    zakkiel wrote: »
    mcdermott wrote: »
    zakkiel wrote: »
    You aren't by any chance assuming that 100% of miles driven are collecting that 46 cents?

    Of course not. I know they put on miles between fares. But at the same time, they are actually collecting more like 80 cents, or upwards of a dollar, depending on area while on the meter. So I'm sure that balances out. They also get to deduct the $0.56 per mile (actually think it dropped to $0.52 this year?) from revenue...

    Simple fact: drivers are compensated on a per-mile basis for fares driven, and that per-mile compensation greatly exceeds wear on the vehicle for that fare.

    As contractors, they are compensated in proportion to miles driven for wear on their vehicle. Now, whether their overall compensation (including for hours worked) is sufficient is an entirely different matter.

    Their overhead per mile is constant whether they're taking a fare or not. If their overhead is 52 cents a mile, and they're paid 80 cents a mile, then if they have a fare for 65% of miles driven they make 0 dollars. I mean, it's nice that they won't pay taxes on that 0 dollars, but neither will they eat. Suppose instead they get 80% of their miles as fare, which is probably about the best one can hope for. Then they actually make 12 cents a mile. Yes, that exceeds vehicle wear and tear, but it's hard to see that keeping anyone in food, clothing, and shelter.

    Which would be a sensible post, if the per-mile compensation were the only compensation.

    Is it?
    But per-mile compensation is not the only compensation. There is also per-minute compensation and the flat base fare. In some markets there is also an hourly guarantee from what I understand. So they are compensated for their time as well, so that they may eat.

    Well shiiiiiiiiiit.

    Next time read my post?
    I'm basically suspicious of the idea that Uber drivers are fairly compensated. The reason I'm suspicious is that Uber is only going to pay them whatever the market makes it pay. The market for unskilled, high-school-or-less men is abysmal and has been abysmal for a long time now. Consequently I would be amazed if they got a decent living out of it without putting in 80+ hours a week.

    If they are making a living on par with workers in other unskilled, uneducated fields then arguably they are being paid "fairly." That we as a nation are compensate such workers abysmally is a separate matter.

    I don't think they are, unless you're comparing them to undocumented workers. Other workers are protected by an entire suite of laws that simply don't apply to "independent contractors." I highly doubt Uber drivers make even our ridiculous federal minimum wage once the cost of using their own vehicles is taken into account.

    I don't think I've ever gotten out of an Uber for less than $7-$9. And there is a minimum fare as well (though it's dropped significantly...used to be like $8, now it's like $4). Assuming a driver is picking up three of those per hour, they're bringing in like $20-$30 in revenue. They'd have to drive over 40 (combined) miles for the cost of vehicle overhead to bring them below the federal minimum. I don't see that. At least I don't see that if all they racked up was three $8 fares in that time...for instance, a fare from downtown San Diego to Hillcrest was like $13 or more. That is like a 2 mile drive.

    I don't think Uber drivers are 'well' compensated per se, but everything I've seen has them making well over the federal minimum, even after expenses are deducted.

    Now, are they making the $15/hr Seattle minimum, especially after Uber slashed fares in Seattle? Color me skeptical. But maybe. This might give us some guide as to what they actually make (in Boston), at least as of a year ago.

    http://bostinno.streetwise.co/2014/06/09/how-much-do-uberx-drivers-actually-make-per-hour/

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    cloudeaglecloudeagle Registered User regular
    edited June 2015
    cloudeagle on
    Switch: 3947-4890-9293
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    mcdermottmcdermott Registered User regular
    zakkiel wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    For who, exactly? Because it's looking more and more like the reason their business model is so "efficient" is simply because they shift so much of their operating costs onto the backs of individual drivers.

    For the customer. Remember them?

    And we've spent like walls of text explaining that drivers are compensated for those costs, so...........

    Would you prefer Uber vastly reduce or eliminate the per-mile rate, and reimburse drivers for their maintenance, gas, detailing, and depreciation? Do you think that would be a better, worse, or neutral deal?

  • Options
    AngelHedgieAngelHedgie Registered User regular
    mcdermott wrote: »
    zakkiel wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    For who, exactly? Because it's looking more and more like the reason their business model is so "efficient" is simply because they shift so much of their operating costs onto the backs of individual drivers.

    For the customer. Remember them?

    And we've spent like walls of text explaining that drivers are compensated for those costs, so...........

    Would you prefer Uber vastly reduce or eliminate the per-mile rate, and reimburse drivers for their maintenance, gas, detailing, and depreciation? Do you think that would be a better, worse, or neutral deal?

    Sorry, but the modern attitude of customers uber alles is really problematic - hell, it's one of the longstanding criticisms of Walmart. A lot of our long term labor issues stem from the fact that we are really short sighted as consumers, and don't look at the underlying systems that our buying supports.

    XBL: Nox Aeternum / PSN: NoxAeternum / NN:NoxAeternum / Steam: noxaeternum
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    zakkielzakkiel Registered User regular
    zakkiel wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    For who, exactly? Because it's looking more and more like the reason their business model is so "efficient" is simply because they shift so much of their operating costs onto the backs of individual drivers.

    It's efficient because they don't have to staff an office with people calling cabs and telling them where to be. What "economies of scale" do cab companies benefit from? The only thing I can think of is a discount on cars, and maybe insurance.
    mcdermott wrote: »

    Which would be a sensible post, if the per-mile compensation were the only compensation.

    Is it?
    But per-mile compensation is not the only compensation. There is also per-minute compensation and the flat base fare. In some markets there is also an hourly guarantee from what I understand. So they are compensated for their time as well, so that they may eat.

    Well shiiiiiiiiiit.

    Next time read my post?

    Hmm...
    Uber has cut UberX fares nearly in half: to $1.10 per mile, plus 21¢ a minute.
    Again, that's per minute with a fare. There is no way 80% of that gets to minimum wage unless close to 100% of miles/minutes are collecting fares.

    I don't think I've ever gotten out of an Uber for less than $7-$9. And there is a minimum fare as well (though it's dropped significantly...used to be like $8, now it's like $4). Assuming a driver is picking up three of those per hour, they're bringing in like $20-$30 in revenue. They'd have to drive over 40 (combined) miles for the cost of vehicle overhead to bring them below the federal minimum. I don't see that. At least I don't see that if all they racked up was three $8 fares in that time...for instance, a fare from downtown San Diego to Hillcrest was like $13 or more. That is like a 2 mile drive.

    I don't think Uber drivers are 'well' compensated per se, but everything I've seen has them making well over the federal minimum, even after expenses are deducted.

    Now, are they making the $15/hr Seattle minimum, especially after Uber slashed fares in Seattle? Color me skeptical. But maybe. This might give us some guide as to what they actually make (in Boston), at least as of a year ago.

    http://bostinno.streetwise.co/2014/06/09/how-much-do-uberx-drivers-actually-make-per-hour/

    The fares you are paying are much, much higher than what I have been. To get to Midway, about 30 miles and 40 minutes, was something like $25 last time I did it. And the BostInno estimate doesn't track with what Uber drivers themselves say.
    On April 24, Uber quadrupled the fees that the drivers pay to Uber for each ride, from 5 percent to 20 percent — while keeping the same reduced driver fares. That’s right, the “small” fee that Uber takes is 20 percent of the fare. Net result: a ride that was worth $50 to the driver in December 2013 is now worth $28.

    Before the latest compensation cut, I was making about $8 per hour. Now, I expect that will be closer to $6.40 per hour. Six months from now, who knows?

    If you work the surge pricing, I'm sure you can do better on average. But there's only so many surge hours in a week.

    Account not recoverable. So long.
  • Options
    mcdermottmcdermott Registered User regular
    edited June 2015
    mcdermott wrote: »
    zakkiel wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    For who, exactly? Because it's looking more and more like the reason their business model is so "efficient" is simply because they shift so much of their operating costs onto the backs of individual drivers.

    For the customer. Remember them?

    And we've spent like walls of text explaining that drivers are compensated for those costs, so...........

    Would you prefer Uber vastly reduce or eliminate the per-mile rate, and reimburse drivers for their maintenance, gas, detailing, and depreciation? Do you think that would be a better, worse, or neutral deal?

    Sorry, but the modern attitude of customers uber alles is really problematic - hell, it's one of the longstanding criticisms of Walmart. A lot of our long term labor issues stem from the fact that we are really short sighted as consumers, and don't look at the underlying systems that our buying supports.

    I agree. Whose posts have you been reading? I have serious concerns about driver compensation and the race to the bottom. I'd happily pay more in fares.

    The ONLY point I am making is that pushing overhead to drivers is acceptable if the compensation structure accounts for that. And it does.

    Whether the overall compensation for their time (rather than vehicle overhead) is fair is a separate matter, and one Id wager we'd find common ground on.

    I am baffled that this is so hard to understand.

    Here, I'll try this.



    I believe uber drivers are underpaid, and that this is problematic.


    Do I need to caps lock it?

    mcdermott on
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    mcdermottmcdermott Registered User regular
    zakkiel wrote: »
    zakkiel wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    For who, exactly? Because it's looking more and more like the reason their business model is so "efficient" is simply because they shift so much of their operating costs onto the backs of individual drivers.

    It's efficient because they don't have to staff an office with people calling cabs and telling them where to be. What "economies of scale" do cab companies benefit from? The only thing I can think of is a discount on cars, and maybe insurance.
    mcdermott wrote: »

    Which would be a sensible post, if the per-mile compensation were the only compensation.

    Is it?
    But per-mile compensation is not the only compensation. There is also per-minute compensation and the flat base fare. In some markets there is also an hourly guarantee from what I understand. So they are compensated for their time as well, so that they may eat.

    Well shiiiiiiiiiit.

    Next time read my post?

    Hmm...
    Uber has cut UberX fares nearly in half: to $1.10 per mile, plus 21¢ a minute.
    Again, that's per minute with a fare. There is no way 80% of that gets to minimum wage unless close to 100% of miles/minutes are collecting fares.

    I don't think I've ever gotten out of an Uber for less than $7-$9. And there is a minimum fare as well (though it's dropped significantly...used to be like $8, now it's like $4). Assuming a driver is picking up three of those per hour, they're bringing in like $20-$30 in revenue. They'd have to drive over 40 (combined) miles for the cost of vehicle overhead to bring them below the federal minimum. I don't see that. At least I don't see that if all they racked up was three $8 fares in that time...for instance, a fare from downtown San Diego to Hillcrest was like $13 or more. That is like a 2 mile drive.

    I don't think Uber drivers are 'well' compensated per se, but everything I've seen has them making well over the federal minimum, even after expenses are deducted.

    Now, are they making the $15/hr Seattle minimum, especially after Uber slashed fares in Seattle? Color me skeptical. But maybe. This might give us some guide as to what they actually make (in Boston), at least as of a year ago.

    http://bostinno.streetwise.co/2014/06/09/how-much-do-uberx-drivers-actually-make-per-hour/

    The fares you are paying are much, much higher than what I have been. To get to Midway, about 30 miles and 40 minutes, was something like $25 last time I did it. And the BostInno estimate doesn't track with what Uber drivers themselves say.
    On April 24, Uber quadrupled the fees that the drivers pay to Uber for each ride, from 5 percent to 20 percent — while keeping the same reduced driver fares. That’s right, the “small” fee that Uber takes is 20 percent of the fare. Net result: a ride that was worth $50 to the driver in December 2013 is now worth $28.

    Before the latest compensation cut, I was making about $8 per hour. Now, I expect that will be closer to $6.40 per hour. Six months from now, who knows?

    If you work the surge pricing, I'm sure you can do better on average. But there's only so many surge hours in a week.


    Yes. Uber pay sucks.

    But my point with "read my post" is that they are compensated beyond mileage. There is per-minute fare, base fare, and minimum fare.

    With all that they are still likely underpaid.

    But they ARE compensated beyond mileage.

    We have to read each other's posts or we will talk in circles, or past each other.

  • Options
    mcdermottmcdermott Registered User regular
    edited June 2015
    The fares you are paying are much, much higher than what I have been. To get to Midway, about 30 miles and 40 minutes, was something like $25 last time I did it. And the BostInno estimate doesn't track with what Uber drivers themselves say.

    I'd be happy if you were to give me two addresses near your stop and start so I could get an estimate of the fare you claim. Did you split the fare? Because given the current $1.10 per mile rate for San Diego (plus $0.20 per minute, plus base fare) that doesn't sound right at all. It sounds at least $10 off.

    I did just pull an estimate for Little Italy to Hillcrest (we don't need to theorize, I have the app), and it's $7-$9. In my experience it came to the high end, and I think rates dropped since last year. But keep in mind that's a 2-mile trip. So I was a couple bucks off.

    mcdermott on
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    Eat it You Nasty Pig.Eat it You Nasty Pig. tell homeland security 'we are the bomb'Registered User regular
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think this jives with what's actually happening

    In Portland for example, a handful of taxi companies dictate the number of cabs on the road (vis a vis de facto control of the licensing board) and have operated essentially as a cartel; the number of cabs on the road hasn't increased for like fifteen years and before uber it could easily take half an hour or more to get a cab downtown on a busy evening.

    Cab companies (and unions/drivers) lots of places seem to operate in more or less this way, using licensing requirements as a way to seek rents. That's not to say Uber is really on the side of angels but if they manage to break up the current bullshit situation here I'm in favor of them coming in.

    hold your head high soldier, it ain't over yet
    that's why we call it the struggle, you're supposed to sweat
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    syndalissyndalis Getting Classy On the WallRegistered User, Loves Apple Products regular
    I use uber. A lot.

    A 20-30 minute uberX ride home from midtown that is about 10 miles away costs me 35-40 bucks.

    In this instance, the driver earned well above minimum wage. Well above most wages for unskilled labor.

    Also, each fare in NYC is a minimum of 8 dollars regardless of distance. If someone drives you 2 blocks or less than a mile, you are still paying 8 bucks.

    Not defending uber, just giving some real world numbers here.

    There are more uber drivers in NYC than there are yellow cabs now, and the only thing that seems to be suffering for it is the value of the medallions, and seriously fuck that racket - it is worse than anything uber has done in this city.

    SW-4158-3990-6116
    Let's play Mario Kart or something...
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    AngelHedgieAngelHedgie Registered User regular
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think this jives with what's actually happening

    In Portland for example, a handful of taxi companies dictate the number of cabs on the road (vis a vis de facto control of the licensing board) and have operated essentially as a cartel; the number of cabs on the road hasn't increased for like fifteen years and before uber it could easily take half an hour or more to get a cab downtown on a busy evening.

    Cab companies (and unions/drivers) lots of places seem to operate in more or less this way, using licensing requirements as a way to seek rents. That's not to say Uber is really on the side of angels but if they manage to break up the current bullshit situation here I'm in favor of them coming in.

    The problem is that their system is pretty problematic as well. In order for Uber to be able to get you a taxi immediately, they need to incorporate a significant amount of slack into their supply, so that they are running at a surplus. (Surge pricing is a mechanism to reintroduce slack via pricing.) The issue is that for individual drivers, this slack appears as dead time - which they are not compensated for. The result is that the system underutilizes and thus undercompensates drivers.

    XBL: Nox Aeternum / PSN: NoxAeternum / NN:NoxAeternum / Steam: noxaeternum
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    jothkijothki Registered User regular
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think this jives with what's actually happening

    In Portland for example, a handful of taxi companies dictate the number of cabs on the road (vis a vis de facto control of the licensing board) and have operated essentially as a cartel; the number of cabs on the road hasn't increased for like fifteen years and before uber it could easily take half an hour or more to get a cab downtown on a busy evening.

    Cab companies (and unions/drivers) lots of places seem to operate in more or less this way, using licensing requirements as a way to seek rents. That's not to say Uber is really on the side of angels but if they manage to break up the current bullshit situation here I'm in favor of them coming in.

    The problem is that their system is pretty problematic as well. In order for Uber to be able to get you a taxi immediately, they need to incorporate a significant amount of slack into their supply, so that they are running at a surplus. (Surge pricing is a mechanism to reintroduce slack via pricing.) The issue is that for individual drivers, this slack appears as dead time - which they are not compensated for. The result is that the system underutilizes and thus undercompensates drivers.

    That's not necessarily an issue, assuming that the immediate availability is matched with a corresponding increase in pricing.

  • Options
    AngelHedgieAngelHedgie Registered User regular
    jothki wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think this jives with what's actually happening

    In Portland for example, a handful of taxi companies dictate the number of cabs on the road (vis a vis de facto control of the licensing board) and have operated essentially as a cartel; the number of cabs on the road hasn't increased for like fifteen years and before uber it could easily take half an hour or more to get a cab downtown on a busy evening.

    Cab companies (and unions/drivers) lots of places seem to operate in more or less this way, using licensing requirements as a way to seek rents. That's not to say Uber is really on the side of angels but if they manage to break up the current bullshit situation here I'm in favor of them coming in.

    The problem is that their system is pretty problematic as well. In order for Uber to be able to get you a taxi immediately, they need to incorporate a significant amount of slack into their supply, so that they are running at a surplus. (Surge pricing is a mechanism to reintroduce slack via pricing.) The issue is that for individual drivers, this slack appears as dead time - which they are not compensated for. The result is that the system underutilizes and thus undercompensates drivers.

    That's not necessarily an issue, assuming that the immediate availability is matched with a corresponding increase in pricing.

    Except that it's not - it's what the company was built on, and has been pointed out several times, they've been cutting back on driver compensation in order to fuel their price war.

    XBL: Nox Aeternum / PSN: NoxAeternum / NN:NoxAeternum / Steam: noxaeternum
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    zagdrobzagdrob Registered User regular
    zakkiel wrote: »
    zagdrob wrote: »
    Let's keep in mind that Uber benefits strongly from the artificial scarcity that regulations and limits on the number of cabs in a city. This artificial scarcity keeps the price of livery service high enough that it can remain profitable, and - theoretically - it can remain high enough that an independent contractor can remain in business even when competing against larger corporate cab services.

    If everyone were to simply ignore regulations and laws on commercial livery services the way that Uber does, or those regulations and laws were lifted, you would have a race to the bottom, and the independent drivers aren't the ones that would benefit. The people that would benefit would be the large cab owning corporations that benefit from economies of scale, and can afford to take a very slim margin across their fleet.

    I don't think large cab companies benefit from economies of scale. Quite the opposite: the Uber app is vastly, vastly more efficient than traditional dispatch.

    The Uber app is more efficient than traditional dispatch, but there's no reason that the livery corporations couldn't make an app as well.

    A large cab company has a huge number of advantage over small independent cab companies or individuals (either running cabs or working for Uber). Fleet purchases and maintenance benefit massively from the economies of scale. As does wholesale fuel purchases. Insurance is another area where a large corporation has an advantage.

    In a race to the bottom, independent contractors won't be able to compete at the slim margins a larger corporation can compete at, and for obvious reasons a larger company is going to be less susceptible to market volatility. Having a car being repaired for a week isn't a big deal to Yellow, but for a five car garage it could easily put them in the red for a month or more.

    Now, if you remove the regulations on cab companies that go along with the market restrictions (those same regulations Uber loves to ignore) there's no reason cab companies can't imitate the 'surge pricing' model of Uber themselves and bump their profit margin up. After all, if you don't need a medallion, it becomes much easier to adjust your capacity and charge accordingly. And I guarantee you that the large corporations will have better models and analysis than independent drivers and small companies.

    Basically, the Uber business model is on borrowed time, and is currently successful on the backs of their drivers and restrictions on their competition. If the playing field were leveled, the established livery services would eat them for lunch - the Uber app is an easily imitated gimmick, not some groundbreaking disruptive technology.

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