As you have probably heard, last week Uber cut rates in the San Francisco East Bay reducing the East Bay to $1.10 per mile. Well, I had a trip from the East Bay (Oakland) to San Francisco which paid me –$3.15 per hour, hooray . . . we’re in the money now. Look at the math:
You know what I think it is? I believe that Travis Kalanick does not know how to conduct business lawfully. He simply is not a good businessman. Sure he has the reins of a company valued at 51 billion dollars, but he is not conducting business within the lawful requirements or constraints of business. He is conducting business like a low level organized crime boss, forcing his way into city markets with complete disregard for rules, policies and procedures, and laws. Then he goes in and manipulates local government with fabricated data and false claims of doing good for the community. But, he has not as of yet conducted business per the law in any of his ventures.
How do you legally get away with paying workers a negative $3.15 per hour? It is quite easy actually. First you lie to the entire nation making claims that the workers are paid ridiculous incomes to the extent that if you were to tell anyone that they are making less that they do not believe you. Second, you get politicians to believe your selectively mined data that demonstrates that the worker makes a really good income and convince the politicians that the workers do not understand basic math, then the company just rakes in the cash leaving the workers searching their pockets for the pay they thought they were earning.
I would like you to note that for this trip Uber collected the $1.00 Rider Safety Fee plus a 20% commission of $4.21. Thus Uber earns $5.21 and the driver –$3.15 for the trip. Does anybody else see that something is wrong here? I have a much larger question here . . . Where is government in this situation? So far, only Hilary Clinton has voiced her concerns for the lack of government protection of workers performing labor as Independent Contractors. I believe prior to the “Sharing Economy” being claimed to be the next “Sliced Bread” for the future, no other working class has been subjected to such blatant disregard since the migrant farm laborer of the 1960’s. Yet our government sits, rotating on their thumbs, doing nothing. Worse than that, the workers themselves fail to realize they are being paid so inadequately because they still see a paycheck, not realizing the income they receive is mostly the equity of their cars.
In a best case scenario the above trip could have produced better numbers had I of had a return rider for the trip back to Oakland. The numbers in this regard would be very advantageous for the worker were such return trip to actually happen. See below:
Return trips such as this rarely happen. Were the dispatch of drivers to be handled by a live dispatcher that could select drivers to receive trips that provided return riders, drivers would not be forced to make trips that did not provide for passengers on such return trips, but Uber and the other Ride-Hail companies are “Application Based” software dispatched by a computer program that does not provide such dispatch. Lyft, (Uber’s closest competitor) and I believe SideCar provide a destination preference in their “Application” program that allows the driver to set a desired destination so that Riders traveling in the direction the driver wants to go can see the drivers preference and select a driver headed their way.
Uber only pays their drivers for the period the driver has a passenger on board. Thus is is possible for a driver to travel 15 minutes to transport a rider for a 5 minute trip and then return 15 minutes and the driver only be paid for 5 minutes of the 35 minutes required to do the job. Taxi Cab companies resolved this issue long ago by Cab Drivers refusing to take trips that did not adequately compensate the driver. Had a Taxi Driver of taken the trip in the first example, the fare would have been probably close to $100.00 because the driver would have required return trip payment to take the passenger. Uber does not require the Rider pay such fares, leaving the driver to suffer the loss. Taxi Cab Companies are regulated by their City and the Public Utilities Commission which restricts their movement to specific boundaries with a set fare price ensuring the Taxi Cab earns a positive income. Travel outside of these boundaries is also regulated by the City and the PUC which restricts the way a Taxi can pick up a return trip passenger to allow the transport of a passenger from another City unless the transport is arranged within specific guidelines. A Taxi-Cab from Oakland cannot pick up a “Street Hail” passenger in San Francisco. Uber and the other Ride-Hail companies are under no such restriction so drivers can pick up Riders using their “Application” regardless of City boundaries.
But, seldom does such return trip actually happen, leaving drivers suffering a true loss on many of the trips they accept.
The second issue of concern with Uber’s compensation to their workers, is Uber doesn’t seem to understand that their workers chose to work with them because the workers want to earn real money working for them, and Uber has removed the ability to earn real money from the math in this situation. A year ago, Uber was advertising that drivers could make 5k per month working full time in San Francisco ( Which was a lie within itself as it was possible to make 5k in fares, not in earnings.). Today it is almost impossible for a UberX driver in the City to make half that in fares per month.
My 8 hours worked for August 9, 2015 produced a negative income of –$54.78 or –$6.85 per hour. Mind you, these figures are based upon working in the East Bay. Earnings in San Francisco however are only a little better with an average days fares for UberX drivers around $100.00 before deducting expenses, and a good day around $160.00 to $200.00 in fares per day. Taxi Cab fares per day exceed $500.00 per day. See my numbers for the day below:
In reality the loss is significantly more as the costs of additional insurance that should have been paid by Uber was somehow forced upon the drivers to bear the expense creating an additional loss to the drivers not yet calculated into these findings.
The math does not lie folks. And while a handful of drivers have grabbed a select area and time to produce significantly better results, such is limited to just a handful and with the market consistently flooded with an overabundance of drivers, even that handful is having difficulty producing a reasonable days earnings.
Uber contracts their drivers under a non negotiable contract in which Uber has the right to modify the drivers compensation at any time they choose, forcing the drivers to accept the change or quit. And, Uber thinks this is the proper way to do business with their workers. Were I the CEO of a 51 billion dollar corporation in America, that paid the workers so poorly under such a contract, I would be too embarrassed to suggest I was in any way a successful businessman.