Have Rising Gas Prices & Uber’s Serial Fiascos Impacted the Desire to Become an Uber Driver?

But there’s a bottom for everything.

Uber drivers are on the hook for their own social security and Medicare taxes, plus the costs of the vehicle, vehicle maintenance, insurance, and fuel. Gasoline prices have surged since mid-2016. Uber has no fuel surcharge, and the drivers eat the additional costs. Has this impacted interest in becoming an Uber driver? And the disclosures of misconduct by Uber, starting in late 2016 – have they impacted interest in becoming an Uber driver?

One way to measure the possibly changing interest by the public in becoming an Uber driver is to look at the search results for “become an Uber driver.” SEMrush, a marketing data provider, sorted through the data and correlated it to gasoline prices and to Uber’s fiasco disclosures. Here is what they found – gasoline prices first:

The chart above compares the average price of gasoline (red line) to the search volume for “become an Uber driver” (gray line). Search volume more than tripled in 2014 through mid-2015, as gas prices fell, then plateaued through late 2016, and then plunged by around 40% as gas prices surged.

But gas prices surged just as Uber was getting raked over the coals publicly, with a seemingly endless series of disclosures, scandals, and legal fights. This was when Lyft made large market-share gains, at the expense of Uber: riders were reacting to the disclosures. And potential drivers?

The chart below by SEMrush shows the search volume since the end of 2016 for “become an Uber driver,” annotated with 14 of the many disclosures and scandals as they popped up in the media for all to see. Numbered 1 through 14, they’re explained below the chart:

1. #DeleteUber hashtag started trending on Twitter, made the New York Times in January 2017, and is still active.

2. Former Uber engineer Susan Fowler publishes on her blog her essay that instantly went viral, and was picked up massively by the main-stream media, exposing to the entire world the sexist culture at Uber.

3. It was revealed that Uber had for years engaged in a program to deceive authorities in areas where its service was restricted or banned. This tool, called Greyball, uses various technologies, including data collected by the Uber app, to “evade authorities in cities like Boston, Paris and Las Vegas, and in countries like Australia, China and South Korea,” the New York Times reported.

4. Uber changed the way it set fares, and fares increased as a result. But drivers complained that their pay hadn’t gone up, that Uber was calculating their share under the old method, and that the gap between the fare and what the driver receives is getting wider. These complaints made the rounds in the media.

5. Uber admits having underpaid its New York City drivers for two-and-a-half years by taking a larger cut of drivers’ fares than it was entitled to. It agreed to pay them tens of millions of dollars. This was the result of a class-action lawsuit filed a year earlier. There were numerous other lawsuits against Uber, accusing it of underpaying drivers, including a suit in Los Angeles, reported by the LA Times in April 2017, that accused Uber to pull off “an active, extensive, methodical scheme … to defraud drivers.”

6. In order to contain the toxic fallout from the scandals about its workplace culture, Uber fires 20 employees over allegations of harassment, discrimination, and inappropriate behavior, the New York Times and others reported in June 2017.

7. It was disclosed – in the USA Today and elsewhere – that many Uber drivers work dangerously long shifts, in part because Uber offers various incentives – and applies some pressures too – that encourage them to work way past legal limits.

8. Transport for London yanks Uber’s license to operate in London, based on the grounds of “public safety and security implications.”

9. To top it off: After keeping it secret for over a year, Uber discloses in November 2017 that hackers had stolen personal data from 57 million accounts of drivers and riders over a year earlier and that it had paid a $100,000 ransom. This was all over the news, and potential drivers couldn’t have missed it.

10. Waymo, Google’s autonomous vehicle division, accuses Uber in federal court in San Francisco of having stolen trade secrets relating to technologies for autonomous vehicles.

11. Pennsylvania Attorney General threatens Uber with a lawsuit over the data breach (#9 above). The lack of disclosure violated the Pennsylvania Breach of Personal Information Notification Act. Shapiro says that at least 13,500 Uber drivers in the state were affected.

12. An autonomous Uber test vehicle in Tempe, Arizona, driving in autonomous mode, but with a human driver in the car, was involved in a collision that killed a pedestrian. Uber stopped testing autonomous vehicles on streets, though it said tests would resume eventually. A few days ago, it shut down its self-driving truck division, Otto, that it had acquired for a pile of money in 2016.

13. At least 103 Uber drivers in the US have been accused of sexually assaulting or abusing their passengers over the past four years, a CNN investigation finds. “The drivers were arrested, are wanted by police, or have been named in civil suits related to the incidents,” CNN said. “At least 31 drivers have been convicted for crimes ranging from forcible touching and false imprisonment to rape, and dozens of criminal and civil cases are pending.”

14. Uber keeps how much its drivers make a secret. But after expenses, it’s not much. This secrecy about pay has produced all kinds of estimates, some of them so low that they have been discredited. In May, one of the more credible studies showed that drivers make $10.87 an hour after expenses and adjusted for the extra contributions that independent contractors make toward Medicare and social security. This places Uber drivers in the lowest fifth of American earners – not exactly very appealing prospects.

But as the chart above shows, since March this year, the negative effects of the scandals have leveled off, as the search volume stopped plunging. There is a bottom for everything.

Tesla said it “produced” 87,833 vehicles but delivered only 70,765 in the first half. The difference: 17,068 vehicles. Are these the Model 3 cars that are now stuck in huge parking lots, as documented profusely by videos and pictures on the internet? How unfinished are they? When can they be sold? Or has Tesla produced far fewer cars than it said it did? SEC, are you checking into this? Read…  Tesla Discloses Worst Quarterly Loss Ever, But Where Are the 17,000 Model 3 Cars it “Produced” But Didn’t “Deliver”?

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  46 comments for “Have Rising Gas Prices & Uber’s Serial Fiascos Impacted the Desire to Become an Uber Driver?

  1. Todd H. says:

    If I were an Uber driver, I would incorporate an LLC and register for taxation as a sub-S corporation. Then I would take all my income as distributions and write off all my other driving-related expenses like gas and repairs.

    • Kerry says:

      And if you get audited, they will impute self employed income and the accompanying taxes…

      • Todd H. says:

        If you make that much driving Uber, take a small salary and the rest as distributions.

    • Bernadette says:

      Agree, Todd H. I’ve advised some Uber drivers also to purchase a Professional Liability Errors & Omissions Insurance. None of them ‘Get It’ (the value of protecting themselves as an Independent Contractor.)
      I sense there must be a clause in the contract agreement between drivers and Uber.

      • Todd H. says:

        Your typical Uber driver is probably not a sophisticated business person, but that is still not an acceptable excuse. I suspect it is only a matter of time before someone comes up with an open-source type phone/web application that will allow anyone to run an independent ride sharing service not under the Uber-umbrella.

        • Jim Graham says:

          “”I suspect it is only a matter of time before someone comes up with an open-source type phone/web application that will allow anyone to run an independent ride sharing service not under the Uber-umbrella.””

          In reality using a cell phone to contact “your” “taxi” driver has been around since at least the mid 90’s. The local “major” cab company rented cabs to some of the locals. Most of those drivers carried a cell phone and when one of “their” customers would call “their” driver to get their ride instead of calling the cab company.

          I don’t think it is a stretch to figure that there are lots of “cabbies” all over the world doing exactly that.

  2. Chris says:

    I was thinking of driving for Uber to make so extra cash, but I think I will look at Lyft now

  3. Rates says:

    #0. Most people won’t want to be Uber drivers if good jobs are actually available. And perhaps better jobs are available again given the current state of the economy.

    All these companies like Uber/Lyft/DoorDash/AirBnb, etc are companies that thrive on desperation. I mean really, who would want to invite strangers to their cars and homes in normal times. Like really?

    In the end, I am betting there’s no bottom because the next recession is at most one year away and people will line up to “join” these companies. I expect to have a couple of maids and drivers in the next recession. Why not?

    • alex in san jose AKA digital Detroit says:

      I see a lot of things riding my bike. Yesterday I was in traffic behind a car that had a sticker for some recognizable-name law school 1988, (maybe it was 1998?) and the backwards-C Uber symbol.

      If you’re driving for Uber you’re well and truly desperate.

  4. William Smith says:

    Just move the automotive running costs from “expenses” into “current liabilities”: problem fixed. Isn’t that the fashion these days? … oh wait… “normal people” don’t have balance sheets to play with. Forget that idea then.

  5. gwlink says:

    Nobody is interested in volunteering their time for free while destroying their asset (Auto).

    They will more likely than not, still be making payments after the vehicle is driven into the ground……

    If you drive for Uber, Lyft etc…. you are a volunteer, once that is understood by all the companies will deservedly collapse.

  6. Mikey says:

    Uber drivers mostly do not understand depreciation.

    • 2banana says:

      Fairly simple too.

      Costs to drive a vehicle – gas, insurance, depreciation and wear/tear is about 50 cents a mile.

      If your revenue stream does not even cover that, you are actually donating money to Uber.

      • Setarcos says:

        For many drivers who own/buying their vehicle, it would make more sense to calculate only the marginal cost. They are already taking the depreciation hit, other costs like insurance and some of the operating costs.

        • mikey says:

          That insurance does not cover you operating your vehicle as a taxi. An accident could wipe out their accumulated profits pretty easily.

    • Rates says:

      Most Americans can’t spell it either, I bet. Otherwise they wouldn’t go crazy leasing cars.

    • roddy6667 says:

      Exactly. They only see the income. They don’t see how much they are running down the value of their car. The numbers the IRS allows are not real world expenses.
      A simple way to see is to use a Kelly Blue Book (KBB.com) or Edmunds (Edmunds.com) website program to evaluate their vehicle. Do it once with all the Uber miles included. Do it again as if they never worked for Uber. The difference is a cost that is invisible to most Uber and Lyft drivers. They are just borrowing against the equity in their vehicle.

    • Todd H. says:

      It could only make sense to drive Uber using a vehicle whose value is already fully depreciated at 10-15+ years old. But then Uber has age limits on vehicles as I understand.

      • RagnarD says:

        Maybe that’s an
        Opportunity for UberAWreck.
        Lower fares & drivers make more $$
        Win win.

  7. TropicalSunset says:

    Don’t they also have to cover their own health care premiums? Even if they drive 40 hrs a week at $10/hr that is only $19k gross income a year. That would qualify them for a nice big Obama Care subsidy to get health care paid for with other peoples money. So in this case, the unlucky folks who have to pay the full Obama Care premium would be subsidizing Uber’s “gig economy” business model.

    Curious how many drivers are in sec 8 housing and food stamps? $19k a yr as a full time Uber driver doesn’t get you very far in SF, NYC, LA, Seattle, Boston, etc…

    You are basically a taxi driver for probably a lot less money. Was being a taxi driver a sought after job? I would not want to sit in traffic and drive my car into the ground for $10/hr. Boring as hell. Even doing it part time for extra cash seems like a total waste of time.

    It’s seems like the Uber model really rests on fully autonomous cars with no drivers. Hard to know when that becomes feasible mainstream.

  8. Tack says:

    “Uber drivers are on the hook for their own social security and Medicare taxes, plus the costs of the vehicle, vehicle maintenance, insurance, and fuel. ”

    Uber’s business model is desperation. People with short term cash flow issues are likely their first candidates.

    It’s also a fact our society frowns on long periods of unemployment. Hence to keep active Uber might seem like a good gig to appear you are doing ‘something’.

    I can’t imagine Uber is ANYONE’s first choice. Cars are just too expensive to maintain as Wolf noted. Uber has hijacked the notion that a well- advertised company is somehow legitimate.

    I’ve never used Uber, as I value my life, but since a large portion of the US population is on prozac, I assume that takes the edge off the Uber experience.

    Yeah, I’ll contact a guy with a poorly maintained vehicle (the drivers are not paid enough to keep them safe) and questionable past to transfer me safely to my destination.

    The only real losers in the Uber saga are all those taxi owners who paid thousands of dollars to obey the laws governing their profession.

    • Unamused says:

      ->Yeah, I’ll contact a guy with a poorly maintained vehicle (the drivers are not paid enough to keep them safe) and questionable past to transfer me safely to my destination.

      If you don’t get a seat belt and a crash helmet and you can see the pavement through the floorboads, you really ought to be asking for a discount.

  9. Unamused says:

    ->But there’s a bottom for everything.

    Oh, that may not be true. From here it looks like a lot of people have to reach up to touch bottom.

    And to think that some people are even lower than that. Desperation can be an excellent motivator. Sometimes it can keep your wife and kids out of the ditches between the nervous breakdowns. They’re working on it.

    It only goes to show that no matter how bad things may be, things can always get worse. And yet, it’s their own fault for being shiftless turds, so irresponsible, especially the ones with only one or two part-time jobs, the lazy ingrates. If they had only selected their parents properly they wouldn’t have these problems.

  10. Bobber says:

    I suspect many guys driving for Uber are satisfying the primal urge to roam the prairie. Men derive pleasure from driving great distances and checking out the scene in several locations. Why not get paid for doing what comes natural. If a nice lady hops in the car, even better. There’s a one in a million chance she’ll want your number. Good enough odds.

    And I suspect some Uber drivers do it for the social aspect. They like the chit chat.

    The money is only part of it.

    • Unamused says:

      Translation: “Join Uber and see the world, meet interesting people, date beautiful women!”

      The ‘desperation’ theory is more plausible.

      ->The money is only part of it.

      A very small part, I’m sure.

  11. Al Loco says:

    Not surprising. My first Uber trip was great, especially with the new user discount. I probably saved $30!. Second trip was less than a cab but my mother in law had to sit with her bag in her lap due to the drivers personal belongings taking trunk space. 3Rd trip never happened due to high volume at O’Hare. Was $15 more than American Taxi. I actually realized that calling American was easier than using the Uber app and I didn’t have to go to a different pickup area. Like much of this smartphone technology, it’s cool in the beginning but long term it’s just a gimmick.

  12. Laughing Eagle says:

    If you do not understand the maintenance of a car, changing oil, air filters, batteries, etc. and you do not know how to do them, plus not having your own hand held computer to diagnose that check engine light, then you just added extra costs to pay someone else and you also increase the risk of a car breaking down.
    This job requires getting your hands oily once in a while.

  13. Ian says:

    “Uber drivers are on the hook for their own social security and Medicare taxes, plus the costs of the vehicle, vehicle maintenance, insurance, and fuel. Gasoline prices have surged since mid-2016. Uber has no fuel surcharge, and the drivers eat the additional costs.”
    And Uber still doesn’t make money. The logic behind their push for self driving cars where they would have all those costs except the miserable amount they share with the driver escapes me.

  14. ChuckA says:

    A coworker of mine drove for Lyft after he was laidoff. He was using his MIL car, she lived with him and was not driving any more. He said it was fun to do, met a lot of people, but saw no way to make living at it. It was good for grocery money and that was about it. He gave it up after about 3 months, just not enough money to justify the time he spent doing it.

  15. raxadian says:

    So being a Uber driver is worse than a Macjob? Star and stones, that’s terrible!

  16. Bernadette says:

    Wolff, Grateful and Roaring for your Uber’s analysis.

    With Uber’s shenanigans — its ‘House of Cards’ could fall apart, in spite of the Bllions of Dollars Cash Infusion by Japanese telecom, Soft Bank (for 15% ownership) and Benchmark (11%)


  17. Max Power says:

    Likely the two biggest factors for the reduced interest in driving for Uber are:

    1. Market saturation: most those who were interested in doing it have probably already tried it by now (and many have probably since realized it’s not financially worth-while).

    2. A generally improving economy providing other employment opportunities.

  18. Ambrose Bierce says:

    I wonder if these guys work with tow truck drivers? AAA? The restrictions on taxi operators no longer apply I can see a lot of synergy here.

  19. John Taylor says:

    I’ve found that a lot of Uber and Lyft drivers are immigrants who don’t speak English that well. My friends and I use them to go to concerts and such from their place in Laguna Beach, and Southern California is a giant “sanctuary city” area.

    Pay for them will remain minimal with the number of interested drivers robust as long as we encourage an ever-growing underclass of “non-documented” workers to stay here in a vulnerable state with very limited job opportunities.

  20. David Sokol says:

    For the real picture of Uber read Hubert Horans 13 part analysis. A long read but well worth it. Bottom line: Uber, Lyft etc. are destined to fail. So called self driving vehicles will kill them faster. NYC has 100,000 Uber/Lyft vehicles on the street. What will happen to their non existent bottom line when they have to purchase, insure and maintain those vehicles. Those in charge seemingly have failed to ask that question.

  21. roddy6667 says:

    Uber and its cohorts remind me of multilevel marketing. When a new “associate” starts in the “business” they extract the names of all his family, friends, and work associates from him to target for sales. The new person quickly quits, but it doesn’t matter, because he is replaced by another sucker who is milked.
    Rinse and repeat.

  22. Cosmin says:

    I don’t want to dump on all your Uber-driver hate hour, but it’s actually not as bad as you make it seem. I started driving for Uber a year ago. I bought my Hyundai Elantra in 2013, when I was working in marine electronics. Uber allows me to work a few months, travel to Eastern europe for a few months, come back and it pick it right up again without looking for a job.
    I can spread out my hours during the day and not even feel 9 hours pass by. I can also work less than 9 hours, I put that as the equivalent of a 40-hour job, plus transit. I make around 24$ (CAN) per hour driving. Gas is expensive in Canada, brings me back down to around 20 when factored in. I don’t believe in taxes, so I use all tax credits I can and work up to the taxation floor, about 20k (again, CAN$). Then, I fly away to somewhere better.
    I’ve put some 20k kilometres on my car since I started Ubering, closing in on 100k after 5 1/2 years owning it, so I don’t think depreciation is a huge problem for me. I do the normal, regular maintenance and the annual Uber inspection.
    Couple of notes: taxi drivers had to pay inflated prices for artificially scarce medallions, which is an outdated and inefficient way to work out offer and demand. Medallion prices crashed, so what? Good riddance.
    My insurance went up 100$ per year when I told them I’ll be driving Uber, no biggie.
    Just doing this until the price of silver goes through the roof. ;)

    • Alex says:

      Medallion to you, pension to a retired taxi driver. Medallion rates plummeted and some poor working ex-cabbie is eating dog food for his retirement. Did you or Uber contribute to the fellow who followed the rules and invested his time and money in regulated businesses for decades only to see that deregulation without fair compensation allowed. There are thousands of real people who trusted that rules would be followed and that they would have pensions only to see them stolen. Uber has enriched a select few with boatloads of money but screwed many hardworking, honest people. The medallion system provided a retirement mechanism for ex-cabbies. What does Uber provide for its dedicated work force in retirement?

      • Cosmin says:

        You get money, you set aside how much you want for retirement. Simple. Investing in a Ponzi scheme was always going to end badly when the Ponzi stopped. Seriously, NYC medallions going up from 2500 to 1.3 million in 70 years didn’t give them pause? That they’ve been funneled into such a lousy investment at the expense of diversification is their problem. Regulated, my @$$. More like cronyism and price-fixing. If it were regulated, they could have made medallions non-resellable and offered enough of them to satisfy demand from the start. Their way, the original recipients cashed out and the poor sobs who enriched them are left holding the bag and offer their sob stories to the world. Not interested.

        • Alex says:

          1. Taxi business was a regulated business with fixed number of cabs on road, ensuring that the individual taxi driver could make a sustainable living.
          2. Drivers stayed in the business for decades, investing in the business because it was a regulated, controlled environment. Not everyone could throw a cab on the road and drive people around at cut throat costs without proper commercial insurance. Uber with its global influence with Goldman Sachs, Saudi money, diverting income to the Netherlands undermined the efforts of mostly visible minorities for the benefit of a select few. Cronyism/ponzi scheme?. More like Wall Street power at work…neo liberalism über Alles…all for us… nothing for the worker. Medallions stolen without compensation. Uber even created its own language to describe a taxi: ridesharing. The truth is that it’s business model is based on lies and theft. Most owners of taxi medallions that I know earned them through hard work and perseverance…saving and working….only to see them yanked from them and told that technology has changed… Uber spends boatloads on lobbying…why? Because politicians were eager to sellout small time non-white capitalists to the übercapitalists from New York. How can you resist? You can’t. Uber has also harnessed the power of social media to influence the elected officials so that all ridesharing rules are in their benefit to the detriment of the taxi industry. That’s not fair play .The 2008 financial crisis was a “sob” story and you saw what deregulation did to the world economy…with record payouts to banks, finance businesses, auto makers, all from tax payers money. Thievery Inc.

        • Cosmin says:

          You say “fixed number of cabs”, I say shortage. You say “cut throat costs”, I say lower prices for clients (creating more clients, as well). You say “regulated business”, I say government-created monopoly. Of course those protected from competition would be in favor of the status quo. But technology made that system obsolete.
          Didn’t you ever see a line of taxis, waiting for hours on end at “strategic locations”? Do you understand that they have to then overcharge the client , to compensate for all that waiting time? That contributes to their high costs. You have a bunch of taxis out there, too many when not needed, too few when required… There’s no Uber in Vancouver. When I get clients from Vancouver, do you know what they tell me? They tell me they wait an hour for a taxi to come. They tell me taxis refuse rides if the destination is too far, or haggle for a high flat fee if it’s too close. So where’s your regulated business now? I mean, all you got from 2008 is “deregulation is bad”? I thought a reader of this site would know better.
          Perhaps less obtuse readers will realize the medallion system was unsustainable in any case. It’s just stupid. So a guy wants to drive a taxi, he gets a mortgage and buys a million-dollar medallion. He stretches the amortization for the medallion loan for 40 years, his entire taxi-driving carreer. So cab prices have to cover his loan payment in addition to his salary and operating costs. What about the first guy, though? He bought his medallion for 10k. Worked for 40 years, got his salary, had no loan payment to cover so twice as much remained in his pocket. He wants to retire, sells his medallion. But why would anyone buy it? Why don’t they let him retire and let the medallion be destroyed? And then they apply for a fresh one? They get tricked into paying a “reseller” price, thinking a greater fool would be there to resell to afterwards, at a higher price even, that would increase the fee for clients even more. The guy buying his medallion for a million and resells it for a million has just put himself into bondage for no reason. So he wants to sell it for two millions. Ultimately, the client pays the increase in medallion prices that has to be exponential. Does that strike you as sustainable at all?
          So who’s the unsophisticated now? ;)

    • Shawn says:

      As a fellow driver, love it.

      There are plenty of drivers for whom the value is questionably, but there are plenty of others who have found a way to derive significant value.

  23. Lion says:

    Just back from Washington DC. Used Uber for the 1st time and was impressed. DC may be an ideal Uber market as the rides are usually short. Our family of 4 took Uber 9 times for a cost of about $80. In DC you can order a regular cab from the Uber app, go figure. The Uber cars were mostly new and clean, much better than the taxis I saw. I asked several Uber drivers what the grossed in a day. Most said $150 or more. Most also complain some about the 20% they pay Uber.

    Three times I rode in a new Camry, I’m also impressed with those cars.

  24. mark says:

    For all the negativity and scandals involving Uber over the years, amounting to what I feel has essentially been a smear campaign, Uber is hands-down the best company I’ve ever worked for, Lyft to me is not even a poor man’s Uber, mysteriously, nobody seems to ever want to report the stats on Lyft, I would imagine statistically they are similar to Uber’s (along with every single other major corporation in America, for that matter) but for whatever reason, Uber’s scandals are magnified; unfortunately for me, I have not been able to drive for the past year because of one too many tickets on my driving record, but am counting the days till I go back to driving again.

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