Why Uber Is A Scam – Math Explains

Ok so I was looking at this graph put on Uber’s website today and thought it looked too good to be true. How amazing that Uber drivers make more than any other type of driver.
But I knew from my own experience as a rider that Uber didn’t cost that much. In fact, Uber is pretty cheap if you’re a passenger.
Sooooo…. how can uber be so cheap, and yet the drivers make so much money???

Now Uber has cut pay to drivers in Detroit to 24cents a mile , but we’re going to stick to the 90c for now.

Uber takes 20% of the total fare from the driver for older drivers. Newer drivers get 25% taken.

So we’re down to 67.5c per mile.

Then you have to deduct tax:
In some LA County’s, sales tax is as high as 10%, and Uber doesn’t withold taxes for you. The drives are responsible for keeping this money aside to pay the tax department in April.

So with the 10% deducted, we’re down to (just over 60 cents) 60.75c

Now we need to factor in depreciation of the car. A car is an asset like anything else, and will eventually wear out and you’ll have to buy a new one. Every mile you drive decreases the value of your car and brings you that much closer to needing a new one. This is a big problem if you drive for a living, you’re going to need to buy a new car every two or three years and the cost of a new car is significant.

The IRS estimates vehicle cost to drive a vehicle for work at {videoDescription}.54 a mile .
Broken down into
Fuel costs @ an average of 12c per mile
Depreciation at {videoDescription}.24c per mile.
Repairs, tyres, & maintainence at 9c per mile
Insurance, licence, registration, finance, fees – average out to around 9c per mile

So with 54c depreciation, repairs, and fuel accounted for, we’re down to just over 6c per mile that actually goes into your hands of drivers.

Given that Uber also asks its drivers to buy things like bottles of water, gum, and chargers for it’s passengers, we can say for certain that driving for Uber pays well below minimum wage or even worse, costing drivers money (as is seen directly in this actual fare uber charged one of it’s drivers).

So given the math is so bad, why does anyone drive for Uber?
Here’s an example of a post an Uber driver posted – he was 0 behind on the rent, and needed to make up some quick cash. In a way, uber is kind of like a loans scheme.

Now for some people in desperate circumstances, what Uber’s offering might be an acceptable deal. But for most people, driving for Uber is a waste of time. I wish Uber would be more honest with people. By our calculations, the amount you’re making as an uber driver is nowhere near per hour. If you drive 30 miles per hour at 6.75c per hour, you’re only making .00 per mile – by far the worst choice of any transportation job.

This number is supported by Not Cool Uber, who have tracked hourly earnings to be around .89 and, after vehicle fees are taken into account, {videoDescription}.

Now – I’m not against car pooling. We all need transport, and I know I am a frequent user of Uber & Lyft. But I think that Uber is going about it in an unethical way, which makes me unethical for supporting them as a customer.

Uber could easily fix this situation : by reducing their commission, by making rates more reasonable, by giving riders the option to Tip their drivers, or just by being transparent. But that would mean admitting that they’ve generated significant revenue from effectively exploiting their drivers. So the truth is, Uber benefits from maintaining this status quo. Uber is currently reported to be making billion in revenue per year – and that money has to come from someone.

Just don’t let that someone be you.

SOURCES

http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation

http://observer.com/2016/01/uber-drivers-plan-boycott-after-fare-cuts-slash-their-earnings-to-below-minimum-wage/

This video is presented by Jayde Lovell, produced and edited by Janina Soriano, at Youtube Space NYC.

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