> 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
"The Market Fairy Will Not Solve the Problems of Uber and Lyft"
https://www.ianwelsh.net/the-market-fairy-will-not-solve-the...
> 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.