2015 June 28 Sunday
Uber Enabling Go Getters To Get More
Tyler Cowen argues In an Uber world fortune favors the freelancer. Self-starters and go-getters gain greater advantages from the ability to sell one's services easily online in smaller increments.
Drivers can earn money without working full time, and without having to wait around at taxi stands for the next passenger. The workers can use their newly acquired spare time for other purposes, including studying for college, teaching themselves programming or simultaneously offering themselves out for different sharing services: If no one wants a ride, go help someone with repairs around the house.
Think about taxi drivers today sitting in a taxi line at an airport waiting for people to walk up and ask for rides. That's terribly inefficient. If someone with a lot of talents can sign up with multiple online work bidding services (e.g. taxi driver, package delivery driver, personal shopping driver, restaurant delivery driver) they can stay busy more of the time and sometimes accomplish multiple things at once (e.g. transport a person and deliver a package).
I can even imagine interleaving security patrols with delivery services, collecting mail while people are on vacation, cutting hair, and other personal services. Do whatever pays the most for the next hour. Then switch to a higher bidding request for a different service.
Since Since a higher percentage of Uber drivers than taxi drivers are college graduates the Uber drivers are smarter on average. In theory they've got greater intellectual capacity to switch between different tasks. Will we see these sorts of people take on a wide mix of personal service jobs as online job bidding services address a larger assortment of needs?
My guess is that services like Uber will widen the already very large employment gaps between educational levels.
By Randall Parker at 2015 June 28 08:45 PM
Interesting prospect. Who's creating the IT to dispatch all this multi-tasking freelancing? Presumably they're taking a large slice (just as Uber is). If the multitasker is using several companies' dispatch (maybe several for each type of service), then how will they coordinate efficient freelancing routes through the city, avoiding worst traffic, etc. Surely these are savants. In other words, I agree that the returns for this mode of work are higher for the intelligent+energetic, but I expect that the same abilities employed with more focus will be worth more. Perhaps you'll see more desk+internet jobs overlapping with freelancing (as is already the case - admin jobs where you're writing your novel during downtime, etc)
Well I'm glad to know you have no auto insurance policy. I'm also glad to know I'm a couple of time zones away from you:
BTW, did you know that the State of California declared that Uber IS an 'employer'?
If fact, Uber has just confirmed that fact:
An ''independent contractor'' can possess and even use firearms (you know, that whole ''Second Amendment'' thing) but AN EMPLOYEE can be terminated BY THEIR EMPLOYER for doing so:
Tell me, is an Uber driver AN EMPLOYEE or ''an independent contractor''?
The data I've seen for the hourly wages of Uber drivers isn't all that impressive - maybe $15/hour tops. That's disproportionately in big cities where wages already tend to be higher, and it doesn't include the costs of gas and depreciation on your car. (Q: does driving for Uber allow you to write off your car costs as a business expense?)
My guess is that driving for Uber only makes sense for most people if you're driving somewhere you're already headed to anyway. It may also be a great carpooling device*, allowing you to find people in your area who are headed roughly the same place at the same time you are. Once you get to know these people, you can turn off the service and collect the money straight from them, without giving Uber a cut. I suspect to at least some degree that's already happening.
What's Uber's cut of the earnings? It's going to have to be low enough for people not to bother to cheat the service.
* Which, incidentally, is a great reason for cities not to ban it. All the money they spend on mass transit, encouraging us to carpool, etc. - Uber is a profitable way to reduce carbon footprint and traffic congestion. If Uber's lobbyists aren't already making these arguments, then they damn well should be.
Randall, Uber drivers seem to make very little:
"Drivers responded by telling Business Insider's Maya Kosoff that they were often making less than minimum wage, with yearly earnings in the range of $10,000 to $41,000.
When UberX arrived in Philadelphia, Emily Guendelsberger, a senior staff writer at the Philadelphia City Paper, became curious about how much drivers would make.
So in January, she went undercover.
In an article in the Philadelphia City Paper, she explains that on her first trip as a driver, the money looked good:
As I let him off at 30th Street Station, he waves goodbye and thanks me, and says he's rating me five stars. The fare pops up on my phone: $10.85. The price of almost two beers for 15 minutes of driving! And if my neighbor had taken a cab, with tip, it would have been an even $20.
But in the long run, Guendelsberger found that the numbers didn't add up. One reason was Uber's massive fare cut, which took place just before she started driving. And since UberX drivers aren't licensed with the company and use their own cars, expenses such as insurance and gas add up, while the car's value depreciates.
Over the course of 100 rides, her hourly rate averaged out to $17. But after subtracting the 28% cut that Uber takes and 19% for car-related expenses, her actual pay ended up being $9.34 an hour.
Driving for UberX isn't the worst-paying job I've ever had. I made less scooping ice cream as a 15-year-old, if you don't adjust for inflation. If I worked 10 hours a day, six days a week with one week off, I'd net almost $30,000 a year before taxes.
But if I wanted to net that $90,000 a year figure that so many passengers asked about, I would only have to work, let's see ...
27 hours a day, 365 days a year."
UPDATE: It seems Uber has all the aroma of any 'dot-com' from 15 years ago:
''Uber Technologies Inc. is telling prospective investors that it generates $470 million in operating losses on $415 million in revenue, according to a document provided to prospective investors.
The term sheet viewed by Bloomberg News, which is being used to sell $1 billion to $1.2 billion in convertible bonds, doesn’t make clear the time period for those results. The document also touts 300 percent year-over-year growth.''
To use the term coined back then Uber has a 'burn rate' (negative revenues) of $55 million a year. In the comments of the linked post were:
>>Azzuri_82: "Yeah, what exactly is 'UBER' losing so much money on?!"
Naw. Hookers and blow.
Tounge-in-cheek obviously, but I do know what they ARE spending a lot on; advertising.
Kim Kommando, Coast-to-Coast and several other major radio buys with the host doing live reads for 'driveforuber.com'
This happened with the 'dot-coms' back then as well - tons of promotion, not much revenue:
Don't be surprised to see Uber to not survive another year - or be greatly diminished, like AOL today.
Uber has a compelling business idea - one that will last - but one wonders about barriers to entry. How big is the moat around their business model? Not huge, I don't think. They have the burden of being the first to create a market, and breaking down both legal and psychological barriers to their idea as well as increasing public awareness. The competitors who follow won't have to do that, and it will be very easy for competing services to offer drivers a higher cut of the revenue. I think it has a profitable future, but it ain't no Google, Amazon, Facebook, or eBay.