Taxis were originally as cheap as ubers used to be (think rickshaws in developing countries). Absent regulation, the price goes down to the cost of fuel, because this is a class of workers with barely any bargaining power. Uber originally claimed their innovation was logistical efficiencies ("traveling salesman") which would lower prices, but I don't think that matters as much as avoiding the regulation and removing bargaining power from drivers.
It's a cycle: rickshaws > regulation > new rickshaws ("innovation") > regulation.
This will hurt the people who take ubers for convenience e.g. don't feel like walking or squeamish about public transit. But won't affect people who need to get A > B directly. IMO this is a good thing -- more people on public transit will improve public transit.
This absolutely hurts people who need to go to A->B in suburban areas where public transit is abysmal (due to everyone driving, not using Uber). e.g. a family member of mine frequently helps with picking my kid up at school (by using Uber as she can't drive).
Public transit is so slow (an hour vs. 10 minutes driving) that it isn't possible to use it schedule-wise - we'll just be taking the pricing hit. Others might be less able to absorb the pricing hit and will just suffer (it's either pay more or lose job).
Yes, if you really need to get from A > B, your "willingness to pay" can afford the price hike. Sure, you'd rather pay less money for what you buy, but that goes for everything in life. Point is you still buy it.
If you didn't really need that uber, you get back to walking, biking, or busing. Or decide not to take the trip.
Well, yes, but the question is whether it is good or bad for society to add regulations that lead to driving up the cost of "taxi" services and people potentially being unable to get places.
You might be helping the small segment of low income drivers, but hurting plenty of other low income users who may have difficulty paying higher prices. I have no idea what the net effect is, but what worries me is the state (as far as I'm aware) didn't run such an analysis before passing such far reaching laws.
I usually just didn't go whereever I am going now - like to a social outing which involves drinking, because I don't want DUI, getting there by public transit sucks and finding a cab while drunk sucks too. Or paid through the nose, if it's a necessary trip, or driven full hour super-tired after a 10 hour flight (not illegal, unlike DUI, but almost as dangerous, sigh). As every quality of life improvement, Uber is not strictly necessary - people lived millenia without it, right? It just... well, improves the quality of life.
I know people who use rideshares to get to the job, and wouldn't have a job without that possibility. They'd probably had another one - but probably worse one due to restricted choices.
How does it hurt them? Instead of a seeing a fixed price, they'll now see a range, and decide if the upper amount of that range is something they're willing to pay.
For the 10-minute ride in your example, the upper and lower ranges aren't going to be very far apart.
Uber has been subsidizing the rates with VC money for years, which is why they've never been profitable, while being able to destroy competition that does have as deep a war chest.
They'll now get to raise rates and move to profitability while using employee protection laws as air cover.
Uber has been profitable on a unit economics basis, they've used the VC money to expand into new markets and test new models (Uber Eats, self-driving).
> Here is the thing about Uber and Lyft (and much of the “sharing economy”).
> They don’t pay the cost of their capital.
> The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.
> These business models are ways of draining capital from the economy and putting them into the hands of a few investors and executives. They prey on desperate people who need money now, even if the money is insufficient to pay their total costs. Drivers are draining their own reserves to get cash now, but, hey, they gotta eat and pay the bills.
> The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.
That isn't at all the same thing as being unsustainable, because people typically have cars whether or not they drive for Uber. Depreciation comes from both miles and vehicle age, but in general more of it comes from vehicle age. It doesn't matter if the rates can cover the portion of the depreciation attributable to vehicle age because it's not an avoidable cost; you pay it either way.
Critics also like to do these calculations using "average" vehicles and so on, but people aren't stupid. If you're making a living from driving then you buy a car that gets above average mileage and below average maintenance costs. The fact that you can't make a living doing it in a pickup truck is pretty irrelevant when the people doing it are driving hybrid sedans.
The average numbers also get brought down by the people doing it on the side. Some people drive to work every morning and will take a couple of passengers who are going in the same direction. Those people have close to zero incremental costs; they don't have to recover anything. Meanwhile the people doing it full time aren't taking whatever rides they can get at whatever rates they can get along their existing commute, they're working in the places and times that give the best rates, so they need to make more than the part timer but they also do make more.
The whole thing is in balance. If people aren't making enough money to sustain themselves then sooner or later they figure that out and they quit, which makes the price go up because there is less competition. If the price is high enough to be attractive to people then more people start driving and it comes down some. You reach an equilibrium.
I don't know what your models are doing, but if you look at e.g. a ten year old Ford Focus, the original price was somewhere around $17,000. With only one mile on it the bluebook is now around $3800, with 120,000 miles it's around $1800. Which implies that being ten years old accounts for something north of $13,000 of deprecation and adding 120,000 miles accounts for only $2000 more.
That may be different for cars bought after they've already suffered most of the age-related depreciation they ever will, but in that case there is only modest depreciation in either event because the car can't lose much value to depreciation if it was already not worth very much when you bought it.
A ten year old Ford Focus with one mile on the odometer isn’t realistic. Download real data from cars.com by scraping the HTML and build a linear regression.
Who should we trust to make the calculation on whether it is a fair price for a "human" ?
- 1 blogger with potentially an axe to grind
- miilions of people who vokuntarily drive their cars and make money in the process
Uber from my house to the airport has been a little over half of what taxi was (~$60 with tips vs. $100-120+). If it goes back to double that, I won't go bankrupt but I can't say I am rich enough that spending extra $100 on every trip is nothing to me. And yes, there's no public transit worth mentioning around here.
"Taxi prices" are the way they are because taxi companies aren't propped up by a Japanese billionaire and his coterie of Gulf oil barons and VC pals whose stated goal is to monopolize the market.
Uber's a public company now, it has to price its services to make a profit, or to at least reduce the billions it loses each year because its prices aren't in line with market forces.
> "Taxi prices" are the way they are because taxi companies aren't propped up by a Japanese billionaire and his coterie of Gulf oil barons and VC pals whose stated goal is to monopolize the market.
That can't be the whole story. Surely the artificial restriction of supply (taxi medallions, etc) must contribute to a higher cost.
Taxi prices in most jurisdictions are regulated by a public transit regulator (there are some exceptions - Sweden deregulated taxis and every taxi can set its own price, you have to check the price sticker in the window before getting into make sure you're not going to get ripped off), as a tradeoff between affordability and taxi drivers being able to make a living. Medallions are there to keep the number of taxis down so that the taxis that do have medallions have enough riders to keep busy enough to make a living. Adding more medallions wouldn't lower the price, changing the regulated price would.
>Lower prices at the cost of turning a group of people into a serf class, is not a good tradeoff imo
All of the estimates I've seen range from $10-20 an hour after all of their expenses are factored in. Let's be really conservative and take the bottom quartile, so Uber drivers make $10-12.50 an hour.
That's.... a perfectly normal wage for tens of millions of people. Have you eaten a meal out or gotten a coffee, ever? That's how much money the people behind the counter were making. Did you feel like you were contributing to a 'serf class' when you bought a coffee this morning, or bought dinner last week?
And if these people weren't employed by Uber, they'd be working for $10-12 an hour at a different employer instead. Kind of by definition, they lack the ability to earn more money in the market (especially this job market!) because if they could they'd already be doing so
The minimum wage in California (the subject of the OP) for companies with more than 25 employees is $13.00. I know you were trying to be conservative in your estimate and I don't know if that $10-20 range you're referencing is for California, the USA, or all Uber drivers. Maybe the real average is higher than that, but it's wrong to present $10-12 as a "perfectly normal" wage for workers in California.
I don't have an issue with Uber/Lyft/any gig companies being required to pay workers effectively whatever the minimum wage is wherever they are (which is obviously much lower in other states). And maybe a regulator can sample drivers, look at their annual expenses, and work out what their 'effective' wage is, I'm fine with that.
I just think it's overly dramatic when people present lower wage jobs as literally serfdom or whatever- especially when the HN crowd has undoubtedly eaten out, had drinks, hired a contractor, got coffee, or employed a cleaner that was probably making the same as an Uber driver. There will always be low wage jobs. No one's picketing coffeeshops for making their employees 'serfs', why single out Uber?
Also keep in mind that pretty much no minimum wage job except ridesharing allows you to earn to and from your way to work.
If you make $13 and hour on an 8 hour shift in California with a 1 hour commute each way and a $3 bus fare each way, it comes out to $9.80/hour not $13.
I mean to be fair, the argument is that the expenses (basically, wear & tear on the vehicle) are significant. The IRS I guess has a whole schedule for vehicle depreciation, they have this down to a science. So $23ish an hour but large vehicle expenses drag this down to quite a bit less
Serf class? Hardly. Uber and Lyft allow pretty much anyone to use their car and make money for rides. This is a complete choice and if you can make a living at it? Great. If not, it's a great way to make some extra money on the side.
The end result will be that many people just won't be able to drive for Uber or Lyft any longer. So you are taking money making opportunities away from many people and giving to a select few (the ones that can make the cut as employees).
The next step will be unionization..and then we will be back to the taxi cab situation: high prices, difficult to become a driver, and sub-par technology that stays decades behind the rest of the world.
They weren't the serf class though. Most of the people I know that drive uber, and on the comments on these many of the people that said they were driving uber weren't doing it to make a living they were doing as a little extra spending cash or to meet new people.
Quite frankly anyone that thinks they can suddenly make a decent living off of just driving people around and had that vision of making it rich doing Uber was stupid in the first place. If it is easy enough for anyone to do it then rest assured it won't be lucrative. The corollary is true if something takes great skill and is difficult and people need it then you are probably going to be able quite a bit more. Supply and demand economics 101, if we keep trying to approach economic issues from social perspectives we are going to end up with lots of stupid decisions that cause more problems than the solve. Classic example rent control.
I agree but then the only solutions are to either have a massive shift over to government services to help people, or let people die in the street if they don't have the resources and get sick. The two major political parties in the United States seem like they would rather destroy the system than accept one of those two positions, Republicans against growth in government and Democrats against letting people go without help
However you could use the tax system to do things like pay certain workers "reverse income tax" where instead of taxing their income you support the lower prices with tax credits for their profession.
Are you talking about a Negative Income Tax? It is one of the most effective ways to rebalance the economy (Milton Friedman famously supported one), and can be designed to work like a Universal Basic Income. The other common option is the EITC, but both NIT and EITC only help those who file taxes in the first place.
If everyone ought to have something, it shouldn’t matter whether they’re employable at the moment. How their industry is doing, macroeconomic cycles, whether their skills are in demand, whether they produce enough value to justify hiring at the wage you consider fair, whether bosses and coworkers like them personally. None of that should be an input into whether or not you can see a doctor or eat a meal.
Cutting checks is a lot simpler than policing the terms of private transactions. Particularly when not all those transactions look like full time work for one corporate employer.
More than subsidizing humans, it actually pumps money directly into automation. Currently the value prop of an automated solution to companies is the total cost of human labor it replaces. If humans get more expensive, the machines/software looks more appealing to implement.
Machines work 24/7, never get sick, and don't unionize.
Why then tie it to labor at all, why not the full UBI? Also why tax credits - many low wage jobs aren't well served by annualized refunds (you can see that in stats where medical visits surge for a bit after tax refunds...).
A UBI of course has a lot of other benefits (being distributed monthly or more often, going to people who are unable to work, being universal and therefore more resistant politically).
Because a negative income tax increases labor market attachment, giving workers more skills, work experience and pride and increases the number of people working. A higher minimum wage on the other hand reduces the number of people working and has no positive effects on employment or skills. From a politician’s perspective a minimum wage is superior because the link between a higher minimum wage and greater unemployment is opaque but that from subsidizing employment is quite direct. Also all of the social cost of subsidizing employment is borne by the government while that of the reduction in labor supply and employment is borne by employers who can’t find workers and potential employees.
You’re right that annualized refunds are far from ideal. Monthly would be better.
Uber isn't even that cheap. My 3 mile, 10 minute Uber-X trips in the South Bay typically cost around $10. That should produce a pretty good wage if the driver utilization was high enough -- as a comparison, that's about triple the cost of say a Didi in Shanghai.
My wife drives for Lyft, she does not have to, she is an extrovert and loves to talk to other people. She puts up with her share of crap, people puking in her van (a lot) lots of drunks, guys hitting on her (usually drunk), you name it it happens. (disclaimer: she drives weekends from about 9pm to 4am in a van for plus size rides (rides over 3 people), so some could consider a lot of this self inflicted on her part, but someone has to drive the inebriated).
She drives to talk to people and make a bit of extra money, it was never meant to be a job to support us. I personally think she is crazy for putting up with all she does. Anytime she is waiting for passengers or going through a drive through (for the passengers) for 15 minutes she makes NO money, because the ride price is fixed (and yes after events passengers will get in the van and one will be outside talking to someone else and she has to wait for them to get in, not getting paid for her time). She tells me all the time, a few riders are really grateful, but most don't care and the driver is just some person they hired (she has hard candy and the large things of bubble gum for riders, a few weeks ago a group of guys stole one of the things of gum, she saw them walking away with it and laughing, $6 down the drain).
There are also the passengers who order the Lyft, she shows up and they are 2 streets over from where they said and tell her to go to a different location. Again, she could cancel the ride, but unless someone is in the same location waiting for a ride she would be losing more time and money.
So i think charging for ride time is fine. If the driver does take extra turns and time for more money you can always give them a lower rating, i am unsure about Uber, but the driver rating at Lyft really does mean something.
It can be a useful way to extract some value from your car without selling it. Say you are between jobs and have a car you bought new. You would like to keep the car, as you know its history, so you drive Uber to "sell" a part of the car until you get a new job.
Not really. More like a way to sell a fraction of your vehicle's value while working for less than minimum wage in some cases. Not a great situation but, you are not paying high interest on a loan that you have to pay back.
It’s definitely the invisible hand of the market at work here and not the massive amounts of marketing subsidies being thrown at the product. That’s why Uber is posting so much profit each quarter, right?
Take it from a software contractor that's refused full time from multiple Fortune 100 companies: You don't know what's best for someone else. Choice is the only form of empowerment.
Software work is incredibly different from what Uber does.
Edit:
On top of that, I'm not coming into this thinking that this is whats best for all those people in their current situation. This is what I think is best for my society and country. I do not want companies to be able to push off large costs of doing business to their employees by just calling them contractors. I don't think this is good for _me_ in general and so I would support laws like this
> This is what I think is best for my society and country.
Could you be wrong? Perhaps Uber drivers chose the profession by choice. Perhaps before the company Uber existed, these drivers would be less content.
Perhaps you or I are not smart enough to calculate what each individual wants and needs.
Despite the fact that we commit the world's most powerful computers to the cause, weather prediction systems are incredibly inaccurate. Should those wearing inappropriate attire be fined?
Yea, but I can turn the question right back around at you. You are trying to claim that this law shouldn't have passed because people can make the best decision for themselves. I am saying that I view this law passing as one of the best decisions for me. I do not want to work in an environment where companies can be this predatory without regulation. Letting companies do so will embolden other companies and then put downward pressure on my wages.
I think one thing you're getting at is this idea that all players can make locally optimal choices which result in a globally non-optimal solution. I.e. uber drivers could individually want to drive uber rather than work a 9/5 retail job, but all of them would have been better off unionizing or something.
The other thing sounds like "this policy is good for me personally so I'll support it", which is at least honest.
Taxis were an exact example of what you describe. How did that work out?
Have you ever asked an Uber driver how they feel about the law? All the ones I spoke with dislike it. You think you're doing good by forcing people how to live? Your position is either arrogant or uninformed. Uber driver loved their jobs and the freedom they provided until politicians came in to enforce your view of the world. If they couldn't figure out taxis, what make you think they can figure out Uber?
>Have you ever asked an Uber driver how they feel about the law?
I literally do not care about their opinion. I believe how Uber acts is bad for a society to let continue. The Uber drivers may be getting a good deal for themselves, but I think it has negative externalities that they themselves don't care about.
Someone may be fine getting abused, or it may even be the best deal they personally can get at the moment. When we watch it happen and let it happen we are implicitly condoning the behavior which leads to others to act just as bad or worse.
You are not going to change my mind on this by trying to convince me that the drivers don't want it, I already believe you and it is not influencing my decision
love how thoughtful people in this forum come downvote all contributions like this blindly without offering a single genuine counterpoint. god forbid we apply logic over religious political views.
The definition offered in the first paragraph of that article seems to conjure the exact same imagery in my head that the parent post did. How exactly is he parent off base with this comparison?
"As with slaves, serfs could be bought, sold, or traded (...), abused with no rights over their own bodies, could not leave the land they were bound to, and could marry only with their lord's permission."
Does anyone really think this is how Uber drivers live?
You could argue yes but on a grander scale. There are many laws that cover what you can do to your own body and the government claims the output of your labor as theirs. Trump just tried to buy Greenland and the inhabitants. You require papers to leave the country and permission to revoke your citizenship. Marriage (a religious institution) licenses were originally created to prevent different ethnicities from union and are still used to prevent same sex marriages.
They have very little control over their lives and work, Uber does not let them set prices and they arent making enough money to go retire early. I refer to them as serfs in that they have to answer to Uber with no actual negotiating power on their own.
I mean prices will go up no matter what. But also as a reasonable person, why would complain if the price reflects the living wage of a person providing the service ? I know if we used child labor my tv would be a lot cheaper, but do I really complain about that ?
The law at issue merely codified in statute what the California Supreme Court had long held to be the way the law worked (and added some new exceptions not germane to Uber), so there was no relevant change to the law. So, it's the same legal regime Uber has always been working under, and so the policy change is, no matter what the PR spin is, not actually driven by the new law.
Wrong, the Supreme Court produced a test for use in case of litigation, not to proactively apply to every non-litigant. Codification of the test is a step change, and its litany of incomprehensible exceptions is a strong sign that the test and the law are severely flawed in the general context.
> Wrong, the Supreme Court produced a test for use in case of litigation, not to proactively apply to every non-litigant.
That's...not how law works. The law doesn't adopt a different meaning in litigation than it has in administrative application; when the Court adopts an interpretration/operationalization of the law (which is what adopting a “test for use in litigation” is), it defines what the law is. That's true in general in common law systems, and it's certainly true in specific in that administrative application if California State Law is controlled by how that law has been interpreted by the State Supreme Court.
> Are you suggesting Lorena Gonzalez wasted her time completely?
Making the legal regime more resilient against future change in the composition of the Supreme Court is a thing, whether it's something that justifies the effort expended or not, it's really not my place to say. But AB5 did not substantively alter the status quo legal regime faced by Uber, etc., so any change in practice they shot was not driven by a change in legal regime stemming from the law.
