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How much can you make driving for Uber or Lyft? What you need to know

As COVID-19 restrictions lift, is now the right time to drive for Uber, Lyft? 


Uber and Lyft can put cash in your pocket — What you need to know first

How much can you make driving for Uber or Lyft? We dug into the math to find out.

Many of us have been the beneficiary of a ride-sharing service, like Uber or Lyft. Now, in a time of economic downturn with millions cash-strapped and unemployed, more of us are turning to the driver’s seat.

Is now the right time to start driving for Uber or Lyft?

Uber and Lyft have long served as a godsend for scores of people looking to break into the gig economy sector. Drivers can make money in a pinch working the hours they want to — weekends, early mornings to the airport and back, and evenings downtown. But, like everything, COVID-19 has upended this division of the gig economy — where Uber is considered the largest in the sector — and raised questions for viability and safety.

Uber is seeing signs of recovery as businesses reopen, and social outings are expected to follow, company executives have said. Commuters are returning to the ride-hauling service, once again, executives say, offering opportunity for those strapped for cash to pull in some extra dollars quickly.
 

Is it safe to drive for Uber or Lyft right now? 

In May, Uber announced policies requiring drivers and passengers to wear masks. The company also added a requirement that drivers ensure cleanliness of their vehicles. Front passenger seats were also placed off-limits to encourage social distancing. This means a 25% reduction in capacity for most vehicles.

Uber has also pledged its endorsement to mask-wearing. Drivers are required to upload a mask-wearing selfie before they can pick up a passenger. Passengers aren’t required to provide the same proof, but a driver or rider can cancel the ride if the other doesn’t wear a mask. Repeat offenders can be kicked off the platform, Uber says.

Uber says it has distributed personal protective equipment, like disposable masks and hand sanitizer, to 450,000-plus drivers. Lyft has taken similar measures, equipping its fleet with PPE as well as 60,000 of its most active drivers a plastic partition. Lyft also says drivers can cancel a ride if they don’t feel safe.
 

How much can I make driving for Uber or Lyft?

Let’s get down to dollars and sense.

How much per hour can you make driving for Uber or Lyft?

It’s complicated.

The trouble of nailing down firm numbers is that earnings vary wildly between drivers. It’s consistently inconsistent. How often a driver chooses to work, when they choose to work, and where they choose to work all add to the complexity.

That doesn’t even begin to explain the situation. Expenses further complicate the math.

Gig economy exists for a reason: to outsource costs.

Uber owns no cars. You do, and you assume the expenses for it. That means you, the driver, are responsible for gasoline, vehicle maintenance, and insurance. Wear and tear and vehicle depreciation? That’s yours, too.

 

Show me a number: How much do Uber and Lyft drivers make?

About $17 per hour.

Now, let me explain.

Gridwise, a rideshare software company, calculated the number based on 2019 data from 100,000-plus rideshare drivers in the United States.

The figure provided is the median earnings per hour for drivers before expenses. That number shows wages earned after Uber takes its cut (about 20%), but before personal taxes.
 

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And with the pandemic, those earnings have taken a hit. Early 2020 figures show earnings decreased more than 30% in March when the pandemic first took hold. In Los Angeles, for example, driver earnings dropped to $11.74 an hour — a 36% decline from a peak of $18.48 posted just weeks earlier.
 

About expenses — You need to subtract a few things

As a driver, you will endure expenses. And these go beyond just gas.

The cost of gas is the largest variable cost, and it depends on prices in your location. According to a 2018 report, rideshare drivers spend between $0.05 and $0.27 per mile on fuel.

Insurance is another factor. It’s a common misconception that your personal vehicle insurance policy provides full coverage when you’re engaged in rideshare activities. Unfortunately, that’s not the case. Instead, drivers will typically need to add a rideshare insurance to fill in the gaps. This usually costs between $15 and $20 per month.

Another expense is maintenance and repairs, which, according to estimates, adds up to $0.13 per mile. Add one more thing: depreciation. Vehicles lose value the more they’re on the road. One estimate suggests this adds another $0.05 per mile.

Add it all up, and the calculated cost of driving for Uber is about $0.30 per mile. One of Uber’s own executives backed this estimate.

Now, back to earnings for a minute.

Estimates show drivers earned as much as $1.14 per mile in some markets, and as little as $0.63 per mile in others. With expenses subtracted — of course, these will vary — a driver may earn between $0.30 to $1, more or less.
 

And at the center of it all, waiting time

Like I said earlier about the math — it’s complicated.

Working in the gig economy means you only make money when you have a gig.

Bands only get paid when they’re hired for a show. Uber drivers only get paid when they’re hired for a ride. Uber calls this engaged time.

When there’s demand for more rides, a driver’s potential wages rise significantly. Without a rider in the car, a driver doesn’t make any money. And with COVID-19, ride requests have slipped.

Requested trips declined 80% in April. Bookings were down 75% through June, Uber says. Lyft reports about the same.

Uber has not provided location breakdowns of the economic recovery, but noted West Coast ridership is down in its latest report filings.

The pandemic continues to dry up the number of drivers providing the service. Riders, as a result, are experiencing longer wait times and higher fares.
 

A political showdown may upend this sector

California cares about the time its drivers spend behind the wheel. Uber does, too.

And it’s all at the center of a major political debate that could change the future for drivers in the state — and beyond.

California legislators passed a law last year effectively requiring Uber and Lyft to extend workplace benefits to drivers, including minimum wage, health insurance, and paid sick leave. This law, known as AB-5, would classify rideshare drivers in California as employees.

Uber and Lyft have repeatedly refused and argued that drivers are independent contractors. The companies describe themselves as digital apps that match drivers with riders — and not transportation providers.

Uber and Lyft are challenging the California law with a November ballot initiative that, if approved, would exempt them from nearly all state and local labor laws. This is the most expensive ballot measure funded in the state’s history.
 

Prop 22? More like Catch-22

A lot is at stake here. If forced to reclassify their drivers as employees, the companies say their businesses would become upended. Uber and Lyft could be required to schedule shifts, dropping the flexibility drivers enjoy. They would also need to raise fares, decrease and even stop service in some areas, they say.

Uber estimated that at least 150,000 of its 210,000 active drivers in California would no longer be able to work for the company. They also estimated fares would rise between 20% and 120% across the state.

Uber has countered with its own opposition ballot measure, called Prop 22. Under this measure, app-based drivers would continue to work as independent contractors and receive new benefits. These benefits would include an earnings guarantee tied to 120% of minimum wage, plus 30 cents a mile, and a healthcare subsidy starting at 15 hours per week.

The guaranteed wage only applies to engaged time. Drive time spent circling the block waiting on a ride request would remain unpaid. Legislators continue to ask, “Should a worker be paid for their downtime?” A vote here will decide.

So, how much would a driver make under Uber’s Prop 22?

It’s complicated.

And how much would a driver make under AB-5?

It’s complicated.
 

All that aside, you’re ready to get behind the wheel

Uber can be an excellent side hustle to supplement income, or even replace lost income. Three in four drivers say they rely on rideshare for 25% of their income.

Before you cash-in on the side hustle, ask yourself: Is driving for Uber or Lyft worth it?

This answer will be different for everyone.

Don’t slide behind the wheel until you know your expenses and have planned accordingly.

Expenses like maintenance and repairs are likely to jump, and you will likely need to add to your insurance policy. These costs don’t always come cheap.

Everyone is different. Weigh the expenses with your earning potential. Know what you need to make to make rideshare driving worth it for you.

Doing the math upfront will help you save time and money.

For more money-saving advice, plus financial tips and tricks, visit Net Pay Advance.

Wednesday, October 14, 2020

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