Rich and Strange Aeons

An exercise.

Say you want to work full time as a ridehail driver, 40 hour weeks, 2000 hour year. Does it work?

Eyeballing the apps, passengers pay $1/minute. $60/hour, nice!

But Lyft takes like 25% of that, so $45/hour. (Uber, who knows.)

And you're not carrying fares all the time. Let's favor the driver, 10% or so deadhead time, so $40/hour.

That's $80,000/year, but we have to pay taxes too. $60,000 take-home, or maybe $54,000 if paying self-employment tax.

Ah, but expenses! Let's say an average of 30 MPH, but also 30 MPG, these cancel out, so going through 2000 gallons (for 60,000 miles), maybe $6000/year. More to the point, putting 60,000 miles of wear on the car.

This says about 5 cents per mile in maintenance costs, so another $3000.

New drivers typically already have a car, but if you're putting this much mileage on it, you might need to replace it in oh, say, 3 years. If it's $30,000 cash down, that's $10,000/year.

Insurance $2k? I dunno.

Total expenses $21,000 out of after-tax income of $54,000, $33,000 net, or $16.50/hour. Matches some other estimates I've seen. Maybe you can get a tax deduction on business expenses, too. Note that's *after* tax, so it's better than a $16.50/hour job.

Of course, if you're not carrying paying passengers 90% of the time, then your income goes down a lot. But so do most of the expenses... at least if you can pull over and park somewhere until the next fare. (Free parking subsidies Uber, as does free use of the roads despite congestion.)

If you only carry fares half the time, after-tax income drops to $30-33,000 (lower gross means lower taxes), expenses $11-12,000. Optimistically, $22,000 net income, or $11/hour profit. Still not bad... depending on what you have to pay in rent and health insurance. Of course, in the cities where there's a lot of ridehail business, rents have been going up to like $1000/month for a room.

But it does look doable. It's not like alternative "anyone can do it" jobs pay great either.

Of course, excitingly, the *companies* still don't make money, which can only be fixed by them taking more of the fare or by raising prices, which will reduce demand while not getting the driver anything more (because this is money the company needs to break even...)

Ridehail being a more accurate name for Lyft and Uber than 'rideshare'.

Some people talk as if ridehail is the wave of the future, to become a dominant transit mode, despite neither company reporting profits yet. Let's see what that would be like.

The average American driver drives 15,000 miles a year. Ridehail cost per mile component is around $1. Total cost of urban trips (based on a sampling of the apps in Boston and LA) is $2-4/mile, going down the longer the drive is, maybe around $2/mile for 10 mile trips. If you replaced your car with ridehail, you'd be paying $30,000/year. Trés affordable! /s Now, maybe a lot of those miles are longer road trips you wouldn't use ridehail for, so your local driving might be 10,000 miles; that's only $20,000.

Different approach: the app prices are more constant in time units, about $1/minute. The average commute to work is 30 minutes; if you ridehailed to work, you'd be paying $60/workday, or $15,000 over 250 workdays (a year). That's just for your commute, never mind groceries, taking kids to school or things, going out...

That's all for the original product, single person on demand. If you do the Lyft Line/Uber Pool approach, that can halve costs. A mere $7,500 for your work commute! ...assuming no rush hour surge pricing. And car pooling has more time variability, of course. For the 10,000 miles of local driving, $10,000/year. Not that far from estimates of total cost of car ownership for 15,000 miles/year.

Urban car trips tend to be 15-30 MPH, I figure; 10,000 miles is 20,000 to 40,000 minutes, so $20-40K/yeared, or $10-20K pooled.

Competition is fierce, neither company is profitable, and there's doubt as to whether it's really profitable for drivers if they accounted for all costs, so prices are more likely to go up than down.

My T pass is $1014/year. Granted it's often slower (not at rush hour!) It's also 90-99% less likely to mangle or kill me, but most people don't worry about that.