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Uber Alles
Working for Uber Could Supersize Your Salary

Your eyes will pop when you see how much Uber drivers are earning. The WaPo reports:

According to Uber, the median wage for an UberX driver working at least 40 hours a week in New York City is $90,766 a year. In San Francisco, the median wage for an UberX driver working at least 40 hours a week is $74,191.

Uber has received a lot of criticism from cab companies, with several European countries stepping in to ban or limit the popular taxi-service app. But maybe the protesting cab drivers (who in the U.S. earn an estimated $30,000 a year on average) should think again.

Why is Uber so successful?

Unlike traditional cab companies, Uber capitalized on the rise of smartphones to better serve customers. It has created a more efficient marketplace for connecting those who want to get a ride, and those offering rides. Uber drivers don’t need to waste time circling blocks, hoping to be in the same place as someone who wants a ride. Less downtime means more fares and more money.

The company is growing rapidly and even luring cabbies away from traditional companies:

[…] Since being founded in 2009, Uber has expanded to 60 cities in the United States and says it can deliver a ride to 43 percent of Americans within five minutes. An ECONorthwest study Uber commissioned found that the company has a $2.8 billion a year impact on the U.S. economy, through direct, indirect and induced means.

To grow so significantly, the company has brought hundreds of thousands of drivers on board. According to the San Francisco Cab Drivers Association, one third of its drivers ditched their registered cabs in a 12-month span to drive for services such as Uber, Lyft and Sidecar.

We’d say the astonishing profitability of Uber, both for itself and its employees, is one of the best signs that the future service economy might not be the step backward that many fear. That’s in line with this essay from Walter Russell Mead, in which he argues that the disruptions of old industries by web-based upstarts should be welcomed, no matter how bad the short-term upheaval looks to the established stakeholders. On top of that, the new service jobs won’t necessarily be as demeaning or unimaginative as you might think.

Uber’s surprisingly prosperous drivers surely have nothing to complain about.

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  • Corlyss

    I wonder how much money regular cab drivers would make if they didn’t have to pay the freight for the rent-seekers’ regulations of their trade?

  • wigwag

    I love Uber; I use the service several times a week. Who ever wrote this post obviously didn’t take the time to speak with any Uber drivers; after all, that would be real journalism, not just shallow bloviating.
    If you actually talk to the independent contractors who drive Uber customers you get a completely different story than the company’s propaganda. According to the drivers, those who limit themselves to six, twelve hour shifts a week gross about $60,000 a year not close to $100,000. Because they are independent contractors, the drivers pay their own insurance (typically about $1,000 per month), they pay for their own gas (about $50 per day) and they have to pay for upkeep on their cars (the cars face a lot of repair bills being driven on New York’s pot-hole laden streets). The driver’s own their own cars which can cost anywhere from $30,000 for a Toyota to $70,000 for a Lincoln MX or Town Car though most drivers purchase their cars used. Either way, the purchase costs need to be amortized.
    If drivers want health insurance, they have to purchase it; if they get sick, their are no sick days nor do they get paid vacation time. Of course, the greatest expense that drivers face is the fact that Uber takes 20 percent of every fare they refer to the drivers and Uber threatens to raise that fee all the time.
    Most drivers will tell you that if they can clear $4,000 per month they are happy; it’s a living, but its nothing like the living that Professor Mead would have his readers believe. In New York City, $4,000 a month is livable, but not by a lot. Most of the drivers I talk to are marginally content with Uber but none have told me that they think its a great company or that if offers them a ticket to prosperity.
    For the customer, Uber is terrific; for the driver its tolerable.
    But I suspect that Professor Mead is correct; Uber represents the wave of the future. It’s a future when American will no longer be able to receive sick or vacation pay, when they pay 100 percent of their own health insurance costs, and where a good part of the profits from their hard work are skimmed off by people sitting in air conditioned offices writing computer code.
    To Professor Mead, that future sounds bright. To a lot of Americans its more of the same; downward mobility as far as they eye can see.

    • Anthony

      “It’s a future where Americans will no longer be able to receive sick or vacation pay….” Poignant WigWag as well as cautionary.

    • Andrew Allison

      Wigwag, I think you are being a little unfair. The Feed is a blog, not a newspaper, i.e., it reports, and comments upon, what gets published by others. Furthermore, even if the Uber drivers receive only $60K/yr in NYC, that still twice the national average. Seems to me there must be a very good reason why, “According to the San Francisco Cab Drivers Association, one third of its drivers ditched their registered cabs in a 12-month span to drive for services such as Uber, Lyft and Sidecar.”

      • wigwag

        Andrew, I agree that “The Feed” is a blog not a newspaper so the standards of journalism might not be the same. But Professor Mead and his mignons have made a habit of excoriating newspapers for sloppy reporting. Uncritically parroting something the writer of this essay read in a company press release isn’t just sloppy by journalistic standards, its sloppy by third grade standards. Surely we have a right to expect this blog to be a little more sophisticated than that.

        As for Uber, as I said in my comment, my anecdotal experience with the drivers I’ve spoken with about the company (probably about 50 in the last year or so) is not that the drivers hate the company or think its horrible. But Professor Mead (or whoever wrote this drivel) strongly implied that Uber represents a new iteration of the American economy where workers will be as well off or much better off than they are now. There is nothing about the Uber experience that suggests that this is so.

        • Andrew Allison

          Thanks for your thoughtful and courteous response. It appears to me we have two issues here: the nature of a blog and whether Uber et al., represent a disruptive change in segments of the service economy. WRT the first, surely the point of a blog is to offer opinions about the news and provide the opportunity to comment on them.

          I agree that there’s a very significant issue with the data, namely that we need to compare the take-home pay of a licensed cab driver in NYC versus that of an Uber-driver (sorry, couldn’t resist). But, again, the fact that a third of licensed San Francisco drivers ditched their cab to drive for online services in a 12-month span suggests that something is afoot.

    • free_agent

      There are some additional factors. One is that neither Uber nor the driver have to pay for a medallion, which is the bulk of the cost of a taxi ride in a tightly-regulated city. Another factor that is of concern in Boston is that Uber doesn’t have to provide service for the handicapped. I don’t know the details, but in Boston, that’s factored in as an obligation by the cab companies to provide handicapped service at the normal rates.

  • laughtiger

    This is more of a desperate campaign by Uber to fight off bad press. Their drivers are suffering and losing money from the price war against Lyft; drivers are forming unions and suing Uber all across the US. None of that would be the case if this company-produced propaganda was correct…

  • Loader2000

    There are iron laws of economics and there are only 2 ways this could end.
    1. Due to the efficiencies introduced by Uber, there will be less taxi drivers in the future making slightly more, or,
    2. Due to the efficiencies introduced by Uber, there will be less taxi drivers in the future making about the same take home pay they make now, and the extra revenue due to increased efficiency will be entirely pocketed by Uber executives and programmers.

    While 2. sounds bad, the story of the rise of the middle class in the US and Europe is basically the story of efficiencies replacing blue collar/lower class jobs with higher paying, jobs requiring greater technical expertise and education.

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