
Uber and Lyft push back on Seattle mayor’s plan to pay drivers more money - donsupreme
https://www.geekwire.com/2020/uber-lyft-push-back-seattle-mayors-plan-pay-drivers-money/
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shay_ker
> Uber and Lyft commissioned their own study from Cornell University showing
> that the typical driver earned $23 per hour in Seattle after expenses.

> Kevin Schofield of SCC Insight analyzed both studies last month and found
> that they “skew their analysis and recommendations in the direction that
> favors the one who commissioned their study.”

This is such a blatantly bad framing of the article they cite:

[https://sccinsight.com/2020/07/21/the-war-heats-up-over-
seat...](https://sccinsight.com/2020/07/21/the-war-heats-up-over-seattles-
attempts-to-regulate-uber-and-lyft-drivers-pay/)

The skew in question is around Parrot & Reich's study, which prioritizes full-
time drivers (and doesn't include tips, if I read correctly), vs. the Cornell
study with Uber/Lyft which includes all drivers and includes tips.

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908B64B197
If drivers are losing money on rideshares then why are so many signing-up?

I'm legitimately curious to understand. Shouldn't we, at some point, reach an
equilibrium in these markets?

~~~
seibelj
I'm happy there is some way that someone a little short on cash can earn some
extra money by providing a useful service to people without a lot of strings
attached. Better than a payday loan. But it seems that many on the left
disagree.

~~~
bdcravens
There are very real costs associated with ridesharing. Many states require
specific insurance coverage; for example, in Texas that's an increased cost of
15-30%. Your car will depreciate faster with miles; I ballparked it at around
$2000/year. I also ballpark an additional $500 or so year for increased
standard maintenance costs. Someone may still come out ahead of course, and
this will vary based on how much someone does it, but these costs are very
real, regardless of whether you are on the left or the right.

~~~
908B64B197
At least there's no payments (at an outrageous interest rate typically) for a
loan to get a medallion on top of these expenses!

~~~
bdcravens
It's definitely a better business model if you approach it with both eyes open
about what you're getting into.

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AlexTWithBeard
So... Please help me to understand the math here.

My latest Uber trip was 10 minutes, 3 miles long and 10 bucks.

Assuming it's a typical trip and also assuming the driver spends half of the
time getting to the customer, we have, $30 and 18 miles per hour.

18 miles is one gallon of fuel at $2.00 and, say, another $3.00 in car
amortization.

Subtract fees, add tips and incentives and we end up with, give or take, $25.

That seems like a reasonable salary?

~~~
ideals
Gas in Seattle is definitely not $2/gal

Also your next ride is probably not on the same block as your last.

~~~
manfredo
It's also tax deductible from the drivers earnings, so it's effectively
cheaper.

~~~
hansvm
If the driver has enough potential deductions for that to be better than the
standard deduction (or with that low of income is sufficiently aware of
alternative filing options) -- and even then quite a few miles are
"effectively" not deducted since you're trading the standard deduction for
those.

~~~
votepaunchy
Business or self employment expenses are subtracted from revenue before
computing income, so there is no relation here with itemizing or the standard
deduction.

~~~
hansvm
Yep, I messed up on that one -- forgot uber drivers aren't employees (in which
case the standard deduction would ordinarily come into play unless the driver
did something more exotic with their taxes). That was my own background
slipping through in my answer.

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dfilppi
Uber and Lyft drivers don't get paid wages, so the premise is silly.

~~~
zmarty
don't get paid wages ...yet

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DINKDINK
"The first thing that happens, for example, when a law is passed that no one
shall be paid less than $106 for a forty-hour week is that no one who is not
worth $106 a week to an employer will be employed at all. You cannot make a
man worth a given amount by making it illegal for anyone to offer him anything
less. You merely deprive him of the right to earn the amount that his
abilities and situation would permit him to earn, while you deprive the
community even of the moderate services that he is capable of rendering. In
brief, for a low wage you substitute unemployment. You do harm all around,
with no comparable compensation.

The only exception to this occurs when a group of workers is receiving a wage
actually below its market worth. This is likely to happen only in rare and
special circumstances or localities where competitive forces do not operate
freely or adequately; but nearly all these special cases could be remedied
just as effectively, more flexibly and with far less potential harm, by
unionization.

It may be thought that if the law forces the payment of a higher wage in a
given industry, that industry can then charge higher prices for its product,
so that the burden of paying the higher wage is merely shifted to consumers.
Such shifts, however, are not easily made, nor are the consequences of
artificial wage-raising so easily escaped. A higher price for the product may
not be possible: it may merely drive consumers to the equivalent imported
products or to some substitute. Or, if consumers continue to buy the product
of the industry in which wages have been raised, the higher price will cause
them to buy less of it. While some workers in the industry may be benefited
from the higher wage, therefore, others will be thrown out of employment
altogether. On the other hand, if the price of the product is not raised,
marginal producers in the industry will be driven out of business; so that
reduced production and consequent unemployment will merely be brought about in
another way.

When such consequences are pointed out, there are those who reply: “Very well;
if it is true that the X industry cannot exist except by paying starvation
wages, then it will be just as well if the minimum wage puts it out of
existence altogether.” But this brave pronouncement overlooks the realities.
It overlooks, first of all, that consumers will suffer the loss of that
product. It forgets, in the second place, that it is merely condemning the
people who worked in that industry to unemployment. And it ignores, finally,
that bad as were the wages paid in the X industry, they were the best among
all the alternatives that seemed open to the workers in that industry;
otherwise the workers would have gone into another. If, therefore, the X
industry is driven out of existence by a minimum wage law, then the workers
previously employed in that industry will be forced to turn to alternative
courses that seemed less attractive to them in the first place. Their
competition for jobs will drive down the pay offered even in these alternative
occupations. There is no escape from the conclusion that the minimum wage will
increase unemployment."

[...]

"As to the prices, wages and profits that should determine the distribution of
that product, the best prices are not the highest prices, but the prices that
encourage the largest volume of production and the largest volume of sales.
The best wage rates for labor are not the highest wage rates, but the wage
rates that permit full production, full employment and the largest sustained
payrolls. The best profits, from the standpoint not only of industry but of
labor, are not the lowest profits, but the profits that encourage most people
to become employers or to provide more employment than before."

Henry Hazlitt “Economics in One Lesson.”

