If you drive for ride sharing giants Uber and Lyft and feel like you can never get ahead, you’re not wrong. While these companies woo drivers with promises of high earnings, the reality is far different and often dismal. Uber and Lyft drivers can find better jobs in the freelance economy. It’s not even difficult. Unfortunately, that mainly because the ride share giants make their jobs less attractive every day.
Indeed, a careful read of Uber’s pitch to prospective drivers spells it out. In big print, the pitch promises you’ll earn at least $2,200. But, read the fine print and you find out that you have to complete 300 rides for that guarantee. That works out to $7.33 a ride before expenses. Lyft’s new driver guarantee is almost identical, promising at least $1,000 — if you complete 125 rides in the first month. Average value of each ride? $8.
What do you earn after expenses? SideHusl estimates that it’s as little as $5 an hour.
Marketing vs. math
The poor pay may come as a surprise to new drivers, who hear marketing pitches claiming that they’re likely to make $20 to $25 per hour. These, however, are best-case scenarios that don’t account for your expenses.
Reality? Uber’s pay formula varies by market. However, the formula in Los Angeles can provide a reasonable proxy. That was recently changed to 21 cents per minute + 60 cents per mile, with a minimum fare of $2.62. In theory, that means that if you drove someone 50 miles in an hour, you’d earn $42.60. Sounds great, right? Except, drivers shoulder all of the costs of the drive, including gas, maintenance and insurance.
How much of your pay is eaten away by these expenses? The Internal Revenue Service figures that the average cost of repairs, maintenance, depreciation, gas and upkeep is 58 cents for each mile traveled. So, the 60 cents that Uber provides is a scant 2 cents above what the government estimates as your costs. In other words, your real pay is 21 cents per minute, plus 2 cents per mile. That puts the hourly pay at $13.60 in a best-case scenario — if you drive one passenger for a full hour on a 50-mile trip.
But in real life, you won’t have a fare every minute. And you don’t get paid for the time and gas it takes to find and pick up passengers. That can account for half of your time and expenses. In the end, making more than minimum wage is a long-shot.
The silent scourge of depreciation
But you’re already a ride share driver and are certain that you earn more? You may not be factoring in depreciation. Depreciation is a fairly tricky cost to calculate because it reflects the erosion of your car’s value over time and you won’t know the precise decline in value until you sell the vehicle. But it’s clear that the more you drive, the more wear and tear you put on the car and the faster the car depreciates.
Of course, your car will decline in value no matter what. But it will decline at a much faster rate when you put on more miles and have more passengers, wear and use.
Consider how the value of a 2015 Acura ILX changes based solely on mileage and condition, for example. Let’s say you drove an Acura sedan the typical amount per year — about 12,000 miles — and sold the car in good condition at the end of four years. You’d get between $13,000 and $15,000, according to KBB.com. But if you drove 100,000 miles and had more wear on the seats, carpet and upholstery, KBB estimates the car would be worth between $9,000 and $11,000 — $4,000 less. The bottom line: A rideshare driver shoulders about $1,000 more than the average driver in annual depreciation expenses.
Better ideas
To be sure, if you drive an economy car that gets great mileage, you may be able to net a slightly better return. But you should also know that there are plenty of flexible, part-time jobs that pay better than ride share. For instance:
If you like the idea of using your car to work, you may want to look into a handful of delivery jobs. Among the best is Amazon Flex, which pays between $18 and $25 per hour. This pay is also before expenses. But you are paid by the hour, not based on whether or not you have a fare, nor on how far you drive. This eliminates the chance that you’ll spend unpaid hours waiting or waste gas trying to find an illusive customer. And because efficient package delivery involves delivering in tight geographic areas, you’re likely to drive fewer miles, too.
Incidentally, Amazon is so desperate to find enough delivery drivers to fulfill it’s fast-delivery promises, that it has a standing offer to help potential entrepreneurs start their own delivery business. But you may make more per hour just delivering for Flex.
Meanwhile, GrubHub is the best option in the food delivery space. The reason: The site has a mileage allowance and guaranteed minimum pay, which prevents you from earning nothing when there aren’t enough deliveries during your shift. In addition, the app encourages customers to tip generously when paying for their orders. Drivers get $5 per delivery, plus a mileage allowance, plus tip.
Be a mover
If you have a truck or cargo van and don’t mind picking up heavy objects, the wages are better with moving companies. Dolly and GoShare promise to pay between $30 and $62 per hour, in addition to tips. Do check with your insurance agent before you sign on, however. You may need a commercial insurance policy or rider to cover you for both liability and potential damage to the client’s property.
Other options
And those are just a few of the options. People who are highly organized or good at social media can find jobs paying $20 or more per hour as a virtual assistant. VAs set their own hours; work remotely; and can specialize in any task that a small business or business owner might want to delegate.
Good at art or crafts? Consider setting up shop on Etsy. Love dogs? Sign up to watch them with Rover.
Meanwhile, a site called WeGoLook will pay $15 to $30 for you to take photos of accident scenes for insurance companies and lawyers.
Or, simply click around in SideHusl’s “work” page to find something that tickles your fancy. There are worse ways to make money than driving for a rideshare company, but there are many ways to make more with less effort. The trick is simply matching your skills and preferences to the right job.
Updated 2/21/2023
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