Alto is a ride share company that hires its hourly workers and provides them with a well-maintained car to drive
Expected pay: $14 – $24 per hour
Commissions & fees: NA
Where: Dallas, San Francisco, Los Angeles, Washington, D.C. and Miami
Requirements: Over age 21, pass a drug screen, upload a resume, and go through an interview process
How it works
Uber and Lyft expect the people who drive for them to be independent contractors and provide their own car, pay for their own insurance, maintenance and gas without reimbursement.
Alto hires its drivers, provides them with a well-maintained car and pays the full cost of operating it. The site also pays drivers for every hour they’re on the clock. (That also differs from Uber and Lyft, which only pay drivers for “engaged time,” which essentially corresponds to when there’s a customer in the car.) And Alto drivers can accumulate paid time off and get other employee benefits, if they choose to work full-time.
This combination makes Alto a vastly more attractive option for drivers than Uber and Lyft — even if Uber and Lyft officially generate higher average hourly earnings.
Let’s do a little math to illustrate the point. Just for example’s sake, let’s say the Alto driver earned $20 per hour and the Uber driver earned $30 per hour. They both drive roughly 25 miles in any given hour and are both in the 15% federal income tax bracket.
The Alto driver gets $20, put pays 15% of that in income taxes and another 7.65% in Social Security and Medicare taxes. He takes home $15.47 after tax.
The Uber driver gets $30. But he has to pay for auto insurance, gas, repairs, car washes, and other maintenance.
How much any given individual will spend on these items varies. However, the IRS estimates that the average cost of maintaining a car is 56 cents per mile. Since he drives 25 miles in any given hour, that amounts to $14. His net pay is now just $16.
He only needs to pay tax on his after-expense income. But because he must pay both the employer and employee share of Social Security and Medicare taxes, his net tax rate is higher. He pays 15% in income taxes and 15.3% in Social Security and Medicare taxes. His net pay is just $11.15 — nearly 40% less than the Alto driver, who theoretically earned less per hour.
The only shortcoming of Alto, as far as we can see, is that it only operates in a handful of cities. If you happen to be in one of those cities, however, we think it’s a great choice for people who want to drive for a living.
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