It is a shame that the 162,000 jobs created by Uber went from worthwhile to worthless
Over the past few months I have made mention of Uber’s contribution to the US economy and local community by their creation of over 162,000 jobs which in today’s economy is significant,
Last July Uber put on a major hiring drive with advertisements of Uber Drivers making 5k per month driving in San Francisco, CA. In August Uber “Guaranteed” drivers could make 5k per month driving full-time for the month. Even with Uber’s failure to actually demonstrate that the 5k was gross before Uber’s fees, driver expenses, and taxation that 5k was a net of approximately $2500.00 for the driver which was still a respectable income, not a top income for life in the San Francisco Bay Area, but still respectable.
What was most appealing of the Uber Driver jobs was you got to be an entrepreneur building your own small business, being your own boss, finally a break in the search foe a decent job for the many still trying to recover from the recession that was supposed to have ended in 2009. Think about it. 162,000 small business nation-wide. That is a lot of new business/jobs no matter how you look at it.
But, by mid September of last year, Uber commenced to taking those 162,000 worthwhile jobs to worthless with no concern for the promises they had made to the Drivers, no concern for the impact to the economy, or the communities affected by such. In Uber’s quest for domination of the Ride-Hail industry, Travis Kalanick is of the belief that the less costly the service to the consumer, the more consumers you have as customers. Basically his contention being that by decreasing rider fares ridership would increase creating higher demand for Uber’s services providing better income for drivers. So Uber decreased rider’s fares but the result was not what Uber hoped for. The result was the drivers doing twice the work with twice the expense for half the pay they had been paid previously. The only winners in the change were the riders who got the reduced fares and Uber who continues to receive their 20 to 25% of the fares in Driver Fees. In addition, this allowed Uber to also double the amount of Rider Fees they were able to collect.
The absolute loser to this change has been the Driver, who due to the rate cuts is struggling to survive with most earning less than minimum wage. In reality many are just barely covering expenses, and the few fortunate enough to be earning an income are not making the minimum wage. More than the failure to earn the minimum wage, is the failure of these jobs to profit and grow as a small business. To the many this is not so much a big deal, but when you calculate the losses nation-wide, add the families affected, and consider the impact this may have on local welfare services in many communities across this nation, it suddenly grows to a much larger concern.
The subject story ( The link appearing at the beginning of this article ) discusses how Small Business accounted for 81% of the hiring in January of this year. Hiring people into jobs of little or no value to the economy nor the community is not successful hiring or fulfillment of the growth claimed. The Ride-Hail industry calculates their hourly pay based on the time drivers have riders in their cars, not by the actual time a driver works. This allows them to inflate the hourly earnings of the drivers making fools of anyone believing the claims of high earnings for their drivers. How this works is instead of using the amount of hours it takes for a driver to work his shift, they only use the periods the driver has passengers. A driver may work 8 hours but only have passengers 50% or less of the time worked. So instead of the actual value of $10.00 per hour being claimed, they claim the value of $20.00 per hour as though the driver only worked 4 hours to earn that amount. And, again they fail to point out their figure is Gross earnings subjected to deductions for fees paid to Uber, operating expenses of the driver, and taxation on the drivers end result as earnings. The $20.00 per hour that Uber claims a driver earning, in reality for most drivers proves to be just making expenses to maybe $1.00 to $5.00 per hour pay to the driver. And, as this does not provide for any payment towards the actual small business of the driver, there is no contribution towards the growth of Small Business.
As an American Corporation Uber has failed to take responsibility for their workers, the economy, and the communities they serve. In today’s society every major concern that hires people has got to accept the responsibility of ensuring their worker are paid accordingly, if not better than the minimum wage. In Uber’s case they avoid paying taxation, workmen’s comp, and other standard payroll deductions by making the drivers Independent Contractors. Uber has consistently failed to compensate drivers sufficiently for the drivers to make a reasonable earnings because Uber fails to recognize that although Uber avoids the payment of those deductibles, the Driver is subjected to an even higher amount of deductibles as the driver has to pay both the employers and employees portions of those deductibles.
The Ride-Hail industry provided such significant opportunity for Small Business, that this should have been a success story for the growth of Small Business in America today. Instead, it has proven that while in the hands of Travis Kalanick it is nothing more than a disappointment.