Unless you have been living on another planet, you have heard of Uber, the king of the ride sharing startups disrupting the traditional taxi industry around the country. Uber has been a boon to consumers looking for cheap transportation. It has also been a thorn in the side of cab drivers, medallion owners, and anyone else that has a financial interest in keeping the incumbents from facing competition. Today we will examine if it is really possible to make money and get rich by driving an Uber. In theory, by cutting out middle men such as medallion owners, Uber drivers should see a substantial windfall. However, it is also possible that Uber pockets the profits and keeps its drivers from reaping any of the rewards. What Do You Need?To drive for Uber, one simply needs a smartphone, a relatively new four door vehicle, and a standard car insurance policy. The cost of additional insurance needed to drive a commercial vehicle is currently covered by Uber. Uber will also not accept drivers under 21 or anyone that has too many negative marks on his or her driving record, including accidents and DUIs. A speeding ticket here and there should be okay. Drivers must consistently receive positive reviews from riders or they will be kicked out of the network. Uber expects drivers to average 4.7 out of 5 stars or above. Now on to the money. During a recent interview, Uber executives stated that drivers in New York City can earn as much as $90,000 per year and drivers in San Francisco can earn $74,191 per year, all for a 40-hour work week. However, Uber has since clarified those estimates. As of today, the company claims that the average wage for its drivers in New York City is somewhere around $25 per hour. It is unclear if Uber is taking expenses such as tolls, gas, and car depreciation into account. In other words, even if we take Uber’s numbers at face value and assume they are accounting for all of the expenses, the wages aren’t great. $25 an hour is certainly a living wage, even in New York City, but it is not the kind of money that will make one rich. Making More MoneyAnecdotally, from speaking with drivers, the key to making lots of money is to drive during peak hours when Uber tacks on a multiplier or “congestion” fee on every ride. That multiplier goes almost entirely to the driver and can double or even triple a fare.
This makes it possible to make a lot of money, even as much as $100 an hour, for short periods of the day. In that sense, one can earn a “I am rich” level salary for an hour here and there, just not by any other meaningful measure. However, all hope is not lost. For existing taxi drivers and chauffeurs, the national annual median wage is around $22,840, or $10.98 an hour. Even the rainmakers are barely earning what would be considered a living wage. The top 10% averaged $17.72 an hour. When compared to the driving industry, Uber provides an option to make lots of money. It might not make a driver rich, but it will certainly give an existing driver a living wage and a healthy bump in salary.
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