A recent article in Crain’s echoes what other taxi medallion financial industry veterans have been reporting: that former taxi drivers are sick of being shafted by Uber and are returning to driving taxis. NYC taxi drivers are netting $1,500 per week according to Crain’s. This jibes with what one taxi medallion financial industry driver told me – that “the experienced drivers are raking in the money like they always have. It’s the little tricks that matter, those little things that decades of driving in NYC you will learn.”
The evidence has been mounting, and is now indisputable, that Uber drivers make no more than a taxi medallion driver does, and probably make less. It is laughable for Uber to claim that drivers are working fewer hours and earning more per hour, as it claimed earlier this year, after instituting rate cuts. Uber must think people are really stupid to buy that nonsense. It’s mathematically impossible…unless surge pricing is occurring at virtually every moment. Independent studies have shown that surge pricing occurs about 10% of the time, and when it does occur, demand declines.
Uber’s own internal study showed that 50% of drivers leave after one year, and far more than that as time goes on. The reason is obvious: they believed they would earn big money but when they add in their hidden expenses, they learn they are losing the majority of revenue to those expenses. The amortized per-hour rate for liability insurance in New York is the real killer for Uber drivers.
Uber is not only getting desperate for drivers, it is trying to trap the unwary in predatory lease deals. What we’ve since learned is that if a driver wants to return the car after 30 days, they can…except they still must pay out the lease! So not only are they being charged extortionate prices, but still must pay if Uber deactivates them for a low rating!
The goal is obvious: trap the unwary driver into indentured servitude. The lease payments are automatically deducted from the driver’s paycheck…along with 36.2% of income via commissions, taxes, and fees in New York City.
Is it any wonder Uber drivers are running screaming back to the taxi medallion financial industry? Uber may have dropped the claim that one can earn $90,000 a year driving for them, but the contempt they show for drivers and those who are financially under-educated knows no bounds.
These tactics align with the thesis that Uber is desperate to maintain its ridiculous private market valuation. After all, if driving for Uber were such a great deal, why aren’t more people doing it? Why are they quitting after a year? Why are they scraping the bottom of the barrel to find drivers by getting them into lousy lease deals? If the per-hour pay is so fantastic, why must they go after subprime credit drivers to get them into cars?
The big question: why hasn’t Uber released actual data on exactly how much all NYC drivers are making if the wages are so terrific?
Uber is slowly imploding and putting one bandage after another on its wounds. With more class-action employee/independent contractor lawsuits on the way, and a price-fixing lawsuit pending in NYC, it’s only a matter of time before the taxi medallion financial industry has its own surge.