My first class this year will be all about the economics of Uber- the benefits and (mostly hidden) costs of the service. I am updating my picture of the company via some recent news articles.
* This unexpectedly encyclopedic webpage covers everything from user reviews to their miserable profits. Another tidbit: "A report from MIT found that US drivers working for Uber and Lyft made an average of $8.55 an hour – higher than a previously reported figure of $3.37 (and the federal minimum wage of $7.25), though still below what any would consider a decent salary (and the minimum wage in 20 states)."
* Yahoo! finance pegs Uber as having an impressively bad profit margin of negative 50% or so.
* A bit about the new California law: the NYT opinion page in June of 2020 notes that "By one estimate, Lyft and Uber saved more than $400 million from 2014 to 2019 by not paying into California’s unemployment fund....One study found that, under the ballot proposal, hourly wages would be a meager $5.64 after factoring in driver down time and other expenses, like fuel and vehicle maintenance. Uber’s threat to halt operations in the nation’s largest state is implausible, particularly as it struggles to overcome billions in annual losses."
* Another NYT opinion article, this one in January of 2021, sums up the arguments against the new California Proposition 22, which passed in November. They argue that time between gigs should be compensated as it is for regular employees; as it is, gig workers don’t get traditional wage protections, workers’ compensation, health insurance, overtime, or unemployment benefits. They argue this is against other labor laws.
* An August article about business is going for the company: "Uber has consistently lost money....Uber said it still intended to become profitable sometime next year.....But in the United States, which is one of Uber’s largest markets, rides were down 50 percent to 85 percent in many major cities."
* Obviously the pandemic has taken a huge toll on Uber's business, but the bright side has been Uber Eats. Unfortunately, (again from the encyclopedic page): "Uber Eats’ revenue contribution looks considerably less impressive .... it accounts for 10% of net revenue, while rides accounts for 85% (compared to 69% of gross bookings)."
* While Uber has held on due to investor's generosity, the recent spinoff of their automated car division, and a bit of help from Uber Eats, Uber is eating taxis' lunch. Grim times for cabbies.
* Meanwhile, a recent review finds that Uber vehicles continue to contribute to traffic congestion and increase car ownership, while incentivizing use of vehicles with low gas mileage and bad records of killing pedestrians. There is a bit of recent activity from the companies as far as encouraging connects with public transit.
* Seattle has recently implemented a 24% fare hike designed to ensure that drivers earn at least the $15 minimum wage. Meanwhile, Lyft has introduced a program cutting wages (while allegedly increasing rides).
* During the pandemic, Oregon decided to treat unemployed gig workers as worthy of unemployment benefits. That was pretty nice of them- and it saved some of them a lot of stress- but of course it came from Uber's decision not to pay their part of unemployment payroll taxes, which in California alone would have been about $80 million/ year.
* Update, February 2021: Overall Uber lost $6.8 billion in 2020, but say they are "well on track to achieving our profitability goals in 2021."
