Recent Study on the Ride Share Gig Economy and Added Thoughts

Here is the study:

http://ceepr.mit.edu/files/papers/2018-005-Brief.pdf

Notable highlight:

"We perform a detailed analysis of Uber and Lyft ride-hailing driver economics by pairing results from a survey of over 1100 drivers with detailed vehicle cost information. Results show that per hour worked, median profit from driving is $3.37/hour before taxes, and 74% of drivers earn less than the minimum wage in their state. 30% of drivers are actually losing money once vehicle expenses are included. On a per-mile basis, median gross driver revenue is $0.59/mile but vehicle operating expenses reduce real driver profit to a median of $0.29/mile. For tax purposes the $0.54/mile standard mileage deduction in 2016 means that nearly half of drivers can declare a loss on their taxes. If drivers are fully able to capitalize on these losses for tax purposes, 73.5% of an estimated U.S. market $4.8B in annual ride-hailing driver profit is untaxed."

And this is the rub for an industry that maintains a substantial market.

Added thoughts:

Uber or Lyft having externalized transportation cost infrastructure to ride share drivers removes incentive in provisioning scarcity to ride share driver supply.  While on the other hand, potentially encouraging market growth for demand, as some consumer have related, the average time to service could be in some cases considerably lower relative to traditional cab services.   Market saturation of supply drivers likely leads more likely to shortened arrival times for supply customers while ensuring greater likelihood of ride share orders being fulfilled as opposed to cancelled.  Also having externalized transportation costs in such way, it has the advantage in cost leveraging the cost per ride to consumer while maintaining profit margins relative to traditional ride services.  This displacement, of course, is passed to drivers of the ride share service.

Here are additional factors that can make pay rates quite low:

• Cost per ride doesn't pay as much when minimum hourly pay rates are non existent.  
• The frequency of rides per hour are small alongside small mileage added to lengthier deployment times and mileage in providing a ride in the first place.  That is, unpaid travel distance meeting small paid travel distance.  
• Too much downtime travel distance.
• Too many drivers in queue for a given location (e.g., waiting at the airport with 96 others in queue), not enough demand.

Maximizing travel fares:

• Frequenting locations where clients may be utilizing transportation in specialized ways as opposed to a primary source of transportation.     
• Choosing locations where clients that use ride share as primary means more frequently may be more likely to use the service, in absence to public transportation offering, for shorter trips and especially in non specialized ways.  
• Events based ride shares could potentially have better pay outs since these are more likely to require highway miles and lengthier travel times.  
• Pickups with drop off at the airport especially where travel distance to and from are increased. 
• Reducing non paid travel time.
• Finding minimum distance routes to higher frequency ride share demand locations.
• Use multiple ride shares (if possible). 
• Reducing total per day travel miles while increasing the number of rides per day.  
• Offering ride share when the pay makes sense.  What is a base hour rate goal?  Getting paid to do other things when typical base hour rate during such time isn't in keeping.  
• Doing ride share in conjunction with other types of paid services (e.g., not Uber delivers but other types of specialty delivery services that pay decent).  Thus signing on to Uber to offset downtime loss of income when other delivery and/or transport services are slow as means to supplement primary income as opposed to primary means.   

Because Ride Share conceptualizes the market of drivers as intelligently driven by the supply of drivers and consumers more so, there is likely more managerial stress burden placed upon drivers to make critical economic decisions as to whether or not the market is viable as a means to income.  The gig economy is revolutionizing the ways that time is spent and the valuation for such.  Like the outset of the industrial revolution and all ramifications entailed by emerging technologies and sociological manifestation therein, it as likely that society is being transformed to think in different ways about the utilization of time and resources.  There is the power of potential exploitation and maybe in the future greater empowerment for individuals in maximizing their returns for time spent.  Proliferating diversification of gig related work is a likely reality for our economy.  Increasingly companies, corporations may be looking to pay independent contractors for task related work as opposed to lengthier paid downtime stays.  This inherently puts greater time management stress on individuals in such economy to maintain some paid work load when it is necessary, but also being intelligently cognizant in ways that were less commonplace in the past.  Knowledge and task based services as they become increasingly transient in terms of continued usage will likely mean less are as highly specialized in providing services and more likely having better adaptive management skills and/or utilizing adaptive management services that makes more likely effectiveness of individuals in being able to deliver profitably skills sets, services and products.  One should predict that our future economy will likely put greater premiums (not less) for task service related deliveries if it is ever to be sustainable.  Of course, externalizing lean efficiency is yet another thing... 

Thus a maxim:  Don't be afraid to express your worth for what you are doing and don't settle for less.