Friday, June 16, 2017

Uber Drivers and Long Hours: Did NPR Miss the Bigger Story?

Uber drivers can spend up to 14, or even 20, hours a day on the road. A recent NPR story highlighted the safety risks of the long hours. The story blamed Uber’s variable pricing and pay, which make it hard for drivers to know how much they’ll make in a shift.

As alarming as NPR’s report was, the financial reality for Uber drivers might be even worse than described. The figures presented suggest Uber drivers could make more asking McDonalds’ diners if they want fries with their burger.

NPR followed a Muncie, Indiana Uber driver on a Friday night. Driver Kyle Reninger prefers working weekend nights, when surge fares are most likely. These “nuggets of the Uber gold rush,” as the story called them, are the higher prices, and higher pay, that kick in when demand is high and supply low.

The story mentioned only the number and level of surge fares as sources of variability in Uber drivers’ earnings. The story overlooked variations in wait time between fares, distance to pick up fares, the value of each fare, and the size of tips. These are largely random. Drivers can't control where their next customer will be or where they'll want to go.

Random events hold the possibility of unexpected rewards. The uncertainty of a random reward is more addictive than the certainty of a known payment. Maybe the next customer will be just a block away, maybe they’ll want a ride to the next state, and maybe they’ll tip with a fistful of $100 bills. It could happen!

At the end of his shift Reninger had been in his car, either delivering a customer, waiting for a customer, or driving around looking for one, for 14 hours and 9 minutes. He drove 401.2 miles and made $165.30 from Uber. With tips, he “nearly hit his goal of $200.” That was “nearly” $200 before expenses.

The story noted the figures didn’t include the cost of gas, but it also overlooked other vehicle expenses. Every mile a car is driven moves it closer to maintenance, repair, and replacement costs. The IRS calculates that operating a vehicle costs 53.5 cents/mile. This means that Reninger's 401.2 miles cost him $214.64—more than he earned.

Uber drivers should be able to deduct business mileage expenses. Reninger and his wife make and sell vegan baked goods; perhaps his Uber driving losses offset bakery earnings. But is the hefty time investment worth it?

Did NPR wait for an unlucky driver on an unusually slow day? I can’t tell. If NPR's figures are correct, Uber drivers make appallingly little. Why do people choose to drive when they could make more at a minimum wage job? Reninger said, “If you don't enjoy doing it, then what's the point, really?” Does he drive for Uber as a hobby? To get out of the house and meet people?

I wonder the hope that the next customer will be the big one, the meter-busting fare with the outlandish tip, keeps Uber drivers in their cars hour after hour. The company seems to have plugged into our love of uncertainty and dream of hitting it rich. It’s the same dream that keeps poor people buying more lottery tickets than the affluent. But the fact is, buying lottery tickets keeps poor people poor.

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