Comparing Uber and Taxi Base Rates To Compare Uber And Taxi Driver Gross Income Is Just Wrong

Readers, see my post:

Now You Can Compare Uber And Taxi Rates In 1001 Locations Worldwide

Try routes you are familiar with.

See how often a ride with UBER IS LESS EXPENSIVE than a ride with a medallion taxi.

Of course they are. Taxi drivers making onerous debt payments or paying medallion lease fees can’t possibly compete with Uber. They are forced to pay thousands of dollars for a piece of tin which in most jurisdictions is simply an occupational license costing less than $500.

Offering lower rates is Uber’s overwhelming benefit to consumers.

Thinking lower prices for a service ALWAYS triggers lower wages for the producers of the service is a misunderstanding of the primary benefit of FREE MARKET CAPITALISM.

Companies that lower prices through radical increases in efficiency benefit consumers AND producers.

If any of you think high prices are required to generate high wages simply don’t understand the POWER OF THE FREE MARKET. PERIOD.

Focusing on the cost of a ride from Point A to Point B to estimate Uber vs taxi driver income ignores Uber’s massive Big Data competitive advantage.

Across 300 cities worldwide in real time, Uber optimizes driver incomes and passenger fares using millions of data points. Uber continually steals the best data scientists in the world from Google and Facebook.

“Surge pricing” is a negative term that vilifies dynamic pricing. Those of you who insist market clearing prices need to be replaced by government imposed fixed taxi rates are ENEMIES OF FREE MARKETS. PERIOD.

Dynamic pricing obviously boosts Uber driver income above income otherwise generated by base rates.

Uber’s data scientists have created software that offers drivers hourly income guarantees to get them on the road when they are needed by passengers. Without these guarantees, driver income would drop exactly when they are needed behind the wheel.

As an active Uber driver, I personally get these guarantees and incentives in real time. Here’s an email and text I JUST RECEIVED:

Make More With Uber. This weekend, we’re bringing you hourly guarantees to make the most of your time on the road.
You will earn $28 per hour in gross fares when you drive during these times:

Thursday Evening February 4 5:00pm – 7:00pm
Friday Late Night February 6 12:00am – 2:00am
Saturday Late Night February 7 12:00am – 2:00am

To get in on the earnings, sign up below: MAKE $28 PER HOUR

Once again, Uber’s massive Big Data advantage satisfies the needs of drivers and passengers.

Uber’s nonstop driver incentives and guarantees ensures their income meets the target Uber’s data scientists KNOW will keep drivers consistently earning more than medallion taxi drivers.

Only a hard core Uber Denier is blind to the relentless competition devastating the indentured servants of Big Taxi.

Only a hard core Uber Denier is blind to the hemorrhage of medallion taxi drivers defecting to Uber.

My article, The Impact On Medallion Financial Of Uber Driver Pay was published in Seeking Alpha on October 27, 2010.

The model I provided in the article provided the framework to use varying LOGICAL and REASONABLE input values to calculate varying Uber driver income estimates.

Wickerman20, a frequent commenter on TAXI on Seeking Alpha and the Yahoo Finance Message Board had the intelligence and civility to discuss the model and reasonable input values in an extensive discussion in the comments with me about the less complex cases of Chicago and Boston, but especially the much, much more complex model and input values needed for New York.

I’ve had similarly substantive discussions with others in addition that are not documented on message boards.

NO ONE has suggested a model or input values that arrive at Uber driver incomes lower than medallion taxi drivers.

  • Net Uber Driver Pre-Tax Income After All Incremental Costs in the U.S. is $17.99
  • Net Taxi Driver Pre-Tax Income After All Incremental Costs in the U.S. is $12.35
  • Uber drivers earn 47% more per hour than taxi drivers in the U.S.

The $17.99 value is derived from the Hall Krueger study, the most comprehensive study of Uber drivers to date. An Analysis of the Labor Market for Uber’s Driver-Partners in the United States was published on January 22, 2015.

Gross Uber Driver Income in the study is from October 2014 and was sourced directly from Uber’s accounting system.

Do we all wish there was a more recent study? Absolutely. However, there isn’t one.

In October 2014 there was a unique and complex mix of base passenger rates, commission percentages, incentives and guarantees in New York resulting in a value of $27.71 per hour.

WickerMan20 recently received an email from Alan Krueger stating that the Uber gross income value was before municipal taxes and fees, not after. My upcoming article specifically on pay for New York Uber drivers will offer an input value that takes this email into account.

However, we can’t estimate New York Uber driver income for February 2016 by making only two adjustments to the October 2014 value.

It’s true that commission rates decreased from 25% to 20% and base rates decreased by 15% between the two dates separated by 16 months.

Between these two dates, radically different dynamic pricing, incentives and guarantees prevailed. They can’t be ignored.

Comparing Uber and Taxi Base Rates To Compare Uber And Taxi Driver Gross Income Is Just Wrong





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