
The Hidden Costs of Being an Uber Driver - jsc123
http://www.washingtonpost.com/news/get-there/wp/2015/02/20/the-hidden-costs-of-being-an-uber-driver/
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swatow
This article struck me as illogical and out of touch.

 _...a more recent study commissioned by Uber reported that the typical Uber X
and Uber Black drivers make about $19 an hour after paying Uber’s 20 percent
commission ... yet that hasn’t diminished the appeal of driving for Uber._

Does the author really not realize that $19 an hour would be appealing to a
very large proportion of the population?

The author also doesn't show how the federal income tax is fundamentally
different to what an employee would pay, and yet the tone of the article
suggests that the amount of income tax paid is a special burden for Uber
drivers, e.g. _...there can be a big difference between the fares from driving
for Uber, say $62,000, and what’s left over after paying Uber’s commission,
your gas, car maintenance, health and car insurance expenses, and your federal
income and self-employment taxes, or about $27,600. And you may still have to
pay state and local income taxes, which might add up to another thousand
dollars or so._ I thought only the crazy libertarian right talked about
"what's left over after federal (and state and local!) taxes".

Finally the author makes a ridiculous comparison with actual employees of
Uber: _Things would be different if you worked for Uber Technologies. You
would receive a 401(k) plan, gym reimbursement, nine paid company holidays,
full medical /dental/visions package and an unlimited vacation policy. You
might even get snacks in Uber’s lunchroom._ How is this relevant? Is the
author going to get the Uber drivers jobs as professors at GWU, since the mean
tech nerds won't pay them software engineer salaries?

~~~
clogston
> The author also doesn't show how the federal income tax is fundamentally
> different to what an employee would pay

Not disagreeing. For anyone wondering what the fundamental differences are:

1) As an independent contractor you are responsible for 100% of your FICA tax
(social security and medicare tax). For most people the tax due is 15% of your
income. This is in addition to your income tax. In an employee/employer
relationship the employer pays for half of this. It can be a big shock to
people who are hit with this for the first time.

2) If you're an employee, your employer is automatically withholding your
income tax payments for you and sending them in to the IRS at a regular
interval. As an independent contractor you need to be doing this yourself. If
you wait until the end of the year and pay as one lump sum you'll likely be
penalized.

~~~
eurleif
>If you wait until the end of the year and pay as one lump sum you'll likely
be penalized.

In general, you don't have to pay estimated quarterly taxes in your first year
of earning self-employment income. And after you file taxes for your first
year, the IRS will inform you that you need to start paying estimated taxes.
So it's not super-easy to accidentally get a penalty for this.

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GuiA
I don't particularly care for Uber as a company, but reading this it seems to
me that the "bad guy" is the US government. Making things like paying taxes
more straightforward and automated, and providing a better health insurance
structure to its citizens are 2 things that would allow people to partake in
things like driving for Uber without most of the drawbacks exposed in this
post. That's the kind of stuff really needed to enable a country built on
entrepreneurship (things like a national "day of code" or White House
hackathons are cute, but rank lower on the list of priorities)

~~~
vacri
US taxes are _ridiculously_ complicated, but trying to change any of it is
basically impossible - at the slightest hint of any one sector having to
increase taxes, it's game over, as the US public gets _very_ loud when that
happens.

About 20 years ago here in Australia, the sales tax was simplified. It used to
be that you'd pay 0, 11, 22, or 33% tax on goods if they were classed as
staples, luxuries, or something in-between. They scrapped this and replaced it
with a flat 10% tax nationally, except for staple foods. My mother was a
bookseller, which was previously tax-free (so it wasn't good for her
business), but she said that other vendors were over the moon at the much
greater ease of compliance. If you ran a mixed business, it was a pain to
track which items were 11% versus one of the others.

Then I look at the US system and... shudder. Sales taxes can come from several
different levels, and then be chargeable depending on where the seller is and
also where the buyer is. It's ridiculously complex. But fixing it means that
some people will have to pay a little more (never going to happen) and some
entities will lose political power to someone further up the chain (also never
going to happen).

On the other hand, the US economy is ridiculously powerful, so perhaps they
can afford to waste money on process, keeping armies of accountants employed
:)

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droopyEyelids
This article should be another argument in favor of calling this "The 1099
economy" instead of "The Sharing Economy".

In the end, that 1099 will be much more salient to your everyday life than the
notion of 'sharing'

~~~
sukilot
Uber isn't sharing at all. It's CSR service. ZipCar, Car2Go are sharing.

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joosters
I truly despise the term 'sharing economy', as used in the article. This is
not sharing, none of these companies are sharing. It is renting, or selling,
just like any company in the boring old normal economy.

When you share something with others, you don't charge people for it.

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bdcravens
Other hidden costs:

* Driving around when you'd normally be at home, to be in a position for fares

* Driving only to have ride cancelled

* Bottled water/mints/etc (I've seen these in a few Ubers)

* Toll tags (though I've had an Uber detour when the most direct route directed them through a toll road)

* Most drivers seem to prefer dedicated GPS to one built into Uber app, so there's that cost if they choose to take it on.

* Uber drivers tend to keep car cleaner than usual driver, so time/money for that.

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peteretep

        > unlimited vacation policy
    

I could not work for a company like that, as I would feel guilty taking each
and every day. Much better to just give a generous allowance - how about the
4-5 weeks you'd get in Europe?

~~~
comrh
I have and that was the exact feeling most of the non-management employees
got. It didn't feel like a "perk" at all.

~~~
abawany
Agree as well - IME 'unlimited vacation policy' means 'policy: no vacation'.

~~~
comrh
or policy: "sure, just hold off until this _next_ launch and we'll make it
worth it!"

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Animats
Uber's driver income numbers have been wildly deceptive. They don't include
the cost of the car, or of operating it.

~~~
glenra
Uber is a pretty good option for people who _already have_ a suitable car,
especially people who already have one they've previously been using to run a
limo service.

To call ignoring the cost of the car "deceptive" seems a bit like calling it
"deceptive" to say software engineers can earn 6 figures because you haven't
factored in the cost of getting a computer science degree.

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justcommenting
this article points out several important aspects of uber's 'unfair
advantage,' which in the labor market almost completely boils down to
structural forms of tax avoidance that regulated incumbents are unable to
match, but neglects to mention some of the longer-term benefits that 'real'
employment brings.

for example, having a W-2 job in the united states typically means
contributing to social security, which helps people build up to qualifying for
certain benefits in retirement. not so with uber.

especially over a typical worker's lifetime, comments about $x/hour
dramatically oversimplify and abstract away the NPV of these endeavors for
employee-like participants. NPV for employee-like participants is considerably
lower than many reasonable-sounding discussions would have you believe because
a lot of the discounts that uber captures as profits are not as cleanly
captured in $x/hr numbers....social security is one of many.

~~~
djrogers
Wrong, as a self employed person you are absolutely required to pay in to
social security. Heck, the article even spells that out...

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marincounty
My only problem with Uber is this clause;

"Vehicle requirements are subject to change"

The list of approved cars didn't make much sense when I looked into it. I have
a feeling there's a bunch of people who went into debt buying a four door Uber
approved car--and are now saving up for bankruptcy?

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ddw
Could someone explain why Uber doesn't have an Android app for their drivers?
It looks to me like they are trying to skim a little extra from those without
iPhones. Surely they can afford the engineering costs associated with an
Android version?

~~~
jimmywanger
You underestimate how much engineering would cost for an Android port.

From my friends who have maintained both iPhone and Android versions of the
same product, the Android dev costs were roughly 4x that of the iPhone, and
that continues with QA for every single new feature released, assuming you
want feature parity.

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zobzu
The Uber claim is about the bay area/sf only.

Then the counter study is about the USA average for Uber.

Based on that, I can't say who tells the truth - but I can certainly say that
I don't believe anything from this article either.

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eloisant
The article should be called "the (not so hidden) cost of being an independent
worker".

Yes, you're making a big mistake if you compare the amount you would make as
an independent worker vs being employed.

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torgoguys
Clickbait-y article. Hidden costs? How are these hidden? You live in the US
and expect to NOT pay taxes or something? I expected to read about some
surprising cost, but insurance, gas, taxes, car maintenance, uber's cut, etc.,
are all straightforward.

~~~
torgoguys
...and downvoted why? ;-)

marincounty's comment here represents a potential hidden cost. The article's
contents don't.

