Are there any 'gig'-type jobs that don't rely on the worker having a car? That's the math that most people don't seem to factor, that once you include wear-and-tear, gas, and sometimes insurance, you're probably, at best, at minimum wage. Those clever tech companies providing these 'gig' jobs, seem to be relying on workers not making these calculations.
I think that there should be regulation requiring a minimum level of compensation that includes the drivers time and vehicle depreciation as a result of mileage. Drivers generally lack the sophistication to do financial modelling for depreciation of their vehicles. Large corporations like target know this and shamelessly take advantage of it to the benefit of their own shareholders. Just because someone is willing to let themselves be exploited doesn't make it okay. It's pretty despicable IMO.
>Drivers generally lack the sophistication to do financial modelling for depreciation of their vehicles.
Those poor dim-witted drivers. Seriously though, it only take a couple of seconds of Googling to calculate the depreciation of a vehicle. "Financial modelling" is a pretty grandiose word for "subtract $0.50 for every mile you drive".
Don't assume everyone who takes a lower-paying job is stupid.
I would have agreed with you before, but then I worked at a car dealership for two years. A lot of people can't calculate a monthly payment. I was surprised at the time, but since then I've learned to be a lot more understanding.
Also, what a lot of arm-chair-from-the ivory-tower-quarterbacks don't understand is that most people that don't buy brand new vehicles or even certified pre-owned vehicles is that depreciation isn't really that critical.
Because if you are using your already well used car or a newly purchased well used car, the vast majority of the depreciation has already happened. The main reason you keep it is for tax reasons, not to calculate profit.
My 10 year old car is in great shape but has 175k miles on it. It would work fine to drive for Uber with. The resale value is $3500 at best. Putting another $100k driving for Uber would not affect that resale value very much and even if it did, it can only go to zero.
And no, maintenance doesn't become significantly more expensive on a higher mileage car. In fact, as a 10 year old vehicle, it is significantly less difficult and expensive to have it repaired and the replacement parts are significantly less expensive as well due to the availability of aftermarket and salvage options.
I think drivers know wear and tear and fuel and insurance costs $0.50+ per mile.
They just don’t have an option for better pay:quality of life at work ratio. Which generally applies to the work of 95% of the people in the world, they simply don’t have a better option.
A lot of people seem to equate people without great financial options with "stupid." I'm sure a lot of gig economy workers are pretty aware they're borrowing from their future selves or at least they're choosing just not to think about it.
I'm sure some don't understand the real costs. But most are doing what they think they need to do in the here and now and, to be honest, if people are really trying to minimize car costs, they're probably at least a bit less than IRS allowances.
Many if not most just see Uber driving as a stop gap. So they are basically just trading equity in the vehicle they already have for money to get by right now and they know it.
>They just don’t have an option for better pay:quality of life at work ratio.
In some sense that's a tautology. Everything that anybody is doing is because they've made the decision that that is the best thing for them at that time given their current circumstances. Outside of that I wouldn't label it this way. Driving Uber is not the only option in America.
For many people though, it may be one of the few options that pays as well (even after depreciation) and has the flexibility that many people that are juggling multiple jobs and children.
Because remember that most jobs require you to show up daily at your own expense during off-the-clock time causing vehicle depreciation all the same.
Asymmetry of information is seriously at play here. It’s hard to believe that with access to better/timely information, many workers wouldn’t be able to find a better opportunity than their current gig.
>I think drivers know wear and tear and fuel and insurance costs $0.50+ per mile.
It doesn't cost that. That number is what the IRS accepts for deducting mileage expenses. That doesn't mean that's what it costs everyone. An older model and fuel efficient car will be less than half that on a per mile basis.
Thats only certain cities and doesn't change the calculation much. You need to spend 7-8k for something ~7 years old. Your cost per mile doesn't go up much because they have fewer miles.
Minimum wage limits "options". If we assume that minimum wage makes sense, then a higher minimum wage for people using their personal automobiles also seems to make sense.
>I think that there should be regulation requiring a minimum level of compensation that includes the drivers time and vehicle depreciation as a result of mileage.
That's not going to fix it. If you artificially raise the compensation rates, you're going to increase supply (i.e. incentivize more people to be Uber drivers), leading to more downtime for Uber drivers because the supply of drivers outstrips demand for them. So the per-hour salary isn't going to go up for the drivers. Uber would have to limit supply or create some sort of tiered system - but those aren't perfect solutions either.
I wonder if the bigger distortion is actually the rental market. At least in the US, taxis are pretty rare anywhere outside of NYC and a few other metro areas.
I know for me, pre-uber I probably rode in taxis once a year. I would usually have rented a car at the airport in most cases.
Companies aren't required to employ people. More people want to work for Google than Google current needs to hire.
The inability of drivers to calculate depreciation prevents them from being able to assess whether or not the contract they're agreeing to is fair. If they actually knew how little they were being paid after depreciation they would probably sit at home and try to find a better job.
This is a market inefficiency in that the actual cost of delivery is not properly reflected in the primary market (between Target & customer) price and instead offloaded on another party. The delivery costs are being artificially lowered by Target taking advantage of workers with low financial acumen. If the cost of delivery as paid by Target to their delivery drivers was closer to the cost + wages it would most likely result in higher prices paid by the consumer. This would end up as less people using the service and getting off the couch and into Target. Or they wouldn't buy stuff.
If a product or service is only sustainable by exploiting people's ignorance and paying them below minimum wage then I don't think that product or service should exist.
>More people want to work for Google than Google current needs to hire.
That's just a factually wrong statement. But it also don't apply here. Google restricts the number of people it hires, Uber/Target do not restrict the number of people that register to drive for them ... yet.
>The delivery costs are being artificially lowered by Target taking advantage of workers with low financial acumen.
Yes. I agree with that, but fixing this is harder than you think. Let's say Target (or Government) decides to raise the rates from, equivalent of $10/hr to $15/hr, to properly account for delivery costs (and let's assume this has no impact on demand, which it will to the detriment of the drivers). At that point, you're going to attract the delivery drivers who weren't willing to drive for $10/hr but are willing to drive for $11/hr or $12/hr or..etc. Meanwhile demand hasn't changed, which means there is less work for individual drivers, and their wages do not go up, or go up much less than you would expect.
The only way to mitigate this is for Uber/Target to become a gatekeeper, and control the supply of drivers. This means that this gig-economy business goes out the door. Not everybody would be able to just start driving for Uber.
"At that point, you're going to attract the delivery drivers who weren't willing to drive for $10/hr but are willing to drive for $11/hr or $12/hr or..etc."
But are there enough people who are willing to drive for $11/hr but not for $10/hr to balance out the ones already driving for $10/hr?
We don't know.
It's possible that all or most of those willing to be delivery drivers for $15/hr are already driving for $10/hr, and raising the wage to $15/hr won't have an appreciable impact on the supply of drivers.
Do you know any Uber drivers or are you just being paternalistic? I have friends who do Uber, Lyft, Postmates and they are definitely aware of the costs and take steps to optimize them where possible. They need to calculate mileage to do their taxes. They aren’t idiots. There’s a community of drivers and they talk about this stuff.
No need to get defensive here — the point is still valid that risks are being placed on workers that would otherwise be on the company. For example accidents, sickness, etc.
I drove for uber BRIEFLY (horrible company for other reasons).
This whole it costs 60 cents per mile to drive a car in the US is total garbage. Seriously, these are rich folks driving new mercedes I think. Folks driving for shipt are not driving late model mercedes.
1) A car get's old sitting in your driveway, if you have an unused asset and put it to use your variable depreciation is actually lower.
2) You should be able to get a car cost (excluding gas) per mile down to 10-25 cents.
3) Fuel is $2.2/gallon. Assuming 30mpg (no prius etc) that is 220 cents / 30 miles = 7 cents per mile.
4) You get a tax break as a result as well.
5) You need to reduce business net costs by costs you'd incur just in general for car ownership (ie, you might still need plates, registration etc).
For folks doing 50,000 miles per year, 60 cents per mile less 7 cents per mile for gas is 53 cents a mile to own the car. On a new car with a 3 year life that is $80k for a new car every 3 years? Let's say $20K repairs and overhead still is a $60K car.
You'll still come out better than minimum wage. People seem under the impression that most people make minimum wage, but it's not true. A very small fraction of people make minimum wage, with most menial labor jobs probably paying like $10-$15/hr. After subtracting expenses from driving, Uber drivers probably make somewhere around that.
In regards to your question about cars, there's tons of gig workers in NYC that either bike or walk. It's pretty rare to get your food or shopping order by car, at least in Manhattan.
Which is why minimum wage jobs are ideal for them. Unfortunately, there aren't enough jobs available farther up the chain. So older people with families are taking the low wage jobs.
Not to take away from your broader point, but since these services insist on trying to treat the workers as contractors, the workers should be able to get a full 58 cent per mile deduction in their taxes. With an inexpensive, reliable, well-maintained, fuel-efficient vehicle, you can end up money ahead just on the tax deduction.
if there are any marketplaces for loaning your car out to 'gig' type workers to use as though it's theirs, then you could subtract the price of the car from the pay for the gig to arrive at the net pay to the worker. Are there any marketplaces like that?
There are interesting replies to your comment, when I posted I didn't directly think of insurance. I did think of theft (like are you really going to let a stranger drive off with your car?) but that is possible to address in many ways. The replies are focusing on insurance, but that is a numbers game so a startup could solve the insurance problem by being an insurance company as well. (or partnering with one, paying for the privilege by burning through VC money.)
it seems from the reply thread that there is no marketplace for lending your car out to the gig economy. (Which is a shame, because if there were, gig workers could calculate their hourly more easily.)
of course, even if there were such a market, it could be mispriced - maybe all the people who are lending their cars out on that economy are either losing money, or they're getting money but the market is artificially inflated by VC dollars the way uber was.
It's interesting that there is no such market - seems like a pretty natural niche. according namecheap, as of this moment lendmycar.com is available and $8.88/yr ... hmmmm.... https://ibb.co/2ZQ9q3Z
Car insurance distorts so many uses of cars that, IMO, its time for government to step in.
Simple things like "oh, I'll drive my daughter's car to work today because she doesn't need it and it's more economical" end up not happening because insurance is too prescriptive on who can drive.
Instead insurance should either be for a car (and anyone with a license can drive) or for a driver (who can then drive any street legal car).
In the case of the car, they should provide a window sticker saying 'Insured for all drivers' so everyone is aware that the car can be borrowed (with the owners permission obviously).
Seems like insurance couples the driver with the vehicle for risk management though.
For example, an expensive vehicle will have a higher insurance premium than a cheaper vehicle because repairs will be more expensive. But a better driver behind the wheel of that expensive vehicle will minimize the chance of a payout. There could be instances where a bad driver of a cheap vehicle is paying close to what a good driver in an expensive vehicle pays.
i.e. [Higher payout but lower risk === lower payout but higher risk]. So it's not just enough to put insurance on the vehicle or just the driver. Both must be used to calculate the premium.
Still, what you're saying sounds interesting and would be an interesting experiment if insurance companies could offer that as an option.
Elsewhere thoraway1010 indicates that (n=1) a quoted wage by deliverer is $22-28/hour for driving ~13 miles/hour. Even if you allocate a whole dollar per mile as driving cost, that's still waaaaay above the federal minimum wage. IME, people who don't work minimum wage don't realize how low minimum wage is.
