This column provides tips, insights, and observations on TNCs like Uber and Lyft from a driver that’s worked with them for several years.
“How much money do Uber drivers make?”
It’s by far the most common question asked regarding Uber. I hear it from curious passengers. I read it on online forums and social media spaces from people looking to make some extra cash. I see it asked by those who have recently found themselves either unemployed or under-employed hoping that they can still find a way to keep the lights on and food on the table. Everyone has their own financial goals in mind, and want to know if Lyft or Uber or a similar service can help them achieve them. Unfortunately, it’s also the hardest question to give a simple answer to.
How much money you make driving for one or multiple TNCs will vary wildly depending on several factors. How busy is your market? How saturated is your market? What hours will you be driving? What promotions are available? Do you have a car that qualifies for a higher tier of service, like a minivan or luxury SUV? Even dumb luck plays a big role; one day you’ll make $200 on a unicorn fare, the next you won’t make half that amount after driving around all day.
Even taking those variations into account, the amount of money most drivers can make will likely fall far short of whatever they see advertised on Craigslist.
Money in
Driver promotions, which were once blamed as the source of Uber’s financial troubles, can account for a very significant portion of a driver’s income. These are various bonuses that give extra money for providing trips in a certain area, during a certain time, or for completing a certain number of trips in a week. These bonuses have declined in quality now that driver ranks have swelled; in my home market of Los Angeles, the decreasing generosity of driver promotions was the primary factor in why my average income (after commission) declined from $1000 in a 40-hour week in April 2016 to $800 in a 60-hour week by January 2017. If you compare it hourly, that’s a “wage” of $25 cut in less than a year to around $13.33.
There’s also driver saturation, which is what happens when you get an increase in drivers without an increase in demand. More drivers are competing for fewer rides, and you spend more time idle and making nothing.
Still, if you drive during the busiest hours (typically morning and evening rush hour as well as weekend nights) and can avoid hot spots that become clogged with six empty TNC vehicles cruising down every block, you have the best chance of coming out ahead.
Even better, if you have a vehicle that qualifies for a premium tier of service, like UberSelect or Lyft Premier/ Lux, your earnings potential goes up significantly. These fares are popular with business clients and celebrities, and tend to be longer rides than your average one-mile Prius trip. Even without promotions, some Select and Premier drivers in Los Angeles are still clearing $1500-2000 a week after commissions, and that’s with only working 35-45 hours a week.
Money out
What gets a lot of new drivers in trouble is that they fail to properly account for their expenses. That pay statement you’ll get in your mailbox every Tuesday doesn’t take into account how much gas you spent, nor the cost of rideshare insurance, or the cost of car washes and cleaning supplies, or the cost of the cell phone data you’re using if you don’t have an unlimited plan, or the cost of the more frequent maintenance that comes with driving a hundred miles or more a day. Don’t forget that you’ll need to set aside something for taxes too, especially if you’re a full-time driver; part-timers will most likely have their tax burden offset by whatever’s being withheld from their main job’s paycheck.
My expenses averaged out to around $300 a week. Some weeks they’d be lower, other weeks higher… like the weeks when I needed to get new tires or a synthetic oil change. As a full-time driver I would also go through a full tank of gas per day and a car wash every other day. More importantly, my expenses didn’t go down when my income did in 2016; they actually increased slightly because of the additional time I was putting in!
If you subtract my average expenses from my average income, noted earlier, and figure the hourly wages again, you get a modest $17.50 per hour in April 2016, and a miserable $8.33 per hour in January 2017.
The numbers get even worse if you’re taking part in one of the many TNC-approved car rental programs available to drivers. While Uber recently ended it’s Xchange Leasing program, which was the most reasonably priced of the bunch, services like Hyrecar, Lyft’s Express Drive, and Hertz’s own TNC rental programs can cost well over $200 per week. These programs include maintenance and some also include insurance (otherwise it’s an extra charge), but you still have to pay for gas, as well as your other non-vehicle expenses like a phone mount and charger. Your total expenses can easily exceed $400 in a week.
After doing the math it’s not hard to see that finding a way to reduce your expenses is going to make a pretty big difference in how much money you’re able to make as an TNC driver. Unfortunately, the best way to do this is likely to be prohibitively expensive, and that’s moving closer to a busy area. It’s not surprising that with their meager earnings many Uber drivers can’t afford to live in the areas that they service, so they have to commute from outlying regions. This commute can take up a lot of time and gas, so some drivers opt to save more money by sleeping in their cars for days or even weeks at a time.
The side hustle
Where TNC driving makes the most sense is as supplemental income. There are several advantages to being a part-time driver compared to being full time. First, your expenses will be lower, since they’re likely to be offset by personal use of your vehicle. Secondly, the flexible schedule makes up for the low average hourly rate. Third, if your schedule is flexible enough for you to cherry-pick the best times to drive, like during special events, you’ll make a lot more money in less time. Some veteran drivers won’t even turn their apps on unless they see a plethora of Uber Surge or Lyft Prime Time.
But the best advantage of being a part-time driver may be a psychological one; there’s less pressure to make as much money as possible. Take the good days, let the bad ones slide, and go with the flow. Not having to rely on Uber or Lyft as a primary source of income is, ironically, liberating. I say ironically because so many people sign up to be TNC drivers because they’re looking for financial freedom, and yet they end up in a low-wage hamster wheel.
The bottom line
With all that said, would I recommend becoming an Uber or Lyft driver? It depends on your goals. If you’re eventually planning on owning your own private car service, sure, it’s a good way to get your business started. If you just want some extra cash to save up for a vacation and you have some free time (and a late-model vehicle), it’s worth a try. Just make sure you use a referral code when you sign up, it’ll give you a boost to your earnings. (If you’re kind enough to use my referral codes, it’ll give me a little kickback as well, so use t2ccj for Uber and SEKANI4 for Lyft.)
I would strongly not recommend this gig for anyone that’s looking for a way to pay their bills full time. What you make for the hours you put in really just isn’t worth it in the vast majority of cases. Some people can make the numbers work, and more power to them, but most people will be very disappointed with their pay statements.
Sekani Wright is an experienced TNC driver working in the Los Angeles metropolitan area. If you have any questions you would like answered for this column, you can contact him at djsekani at gmail dot com, or on twitter and reddit at the username djsekani. Have a safe trip!