Why Uber Drivers Should Oppose Laws, like Minnesota's Uber Bill H-2369—Despite More Income
“I don’t want a 40% increase in my fares driven by law.”
Hi there, fellow Uber drivers. Today I'm diving into the controversial Minnesota Uber Bill - H2369. This might raise eyebrows, but bear with me as I outline my stance.
Two things to note before we get started:
I don’t live in Minnesota and have no real say in what the people of Minnesota want. But while I want to earn more money, I don’t feel this is the best way for Uber drivers to earn more money. Also, I only looked at the Minimum Compensation (Section 2) of the bill and won’t address the other sections of the legislation.
I drive in Syracuse, New York which has upfront pricing. The last time we were paid per mile and per minute was July 31st, 2022. At the time the rates were $.68 per mile and $.16 per minute. The bill’s $1.45 per mile rate seems exorbitant.
The Numbers
Let's crunch some numbers first. Last week, my earnings were $538.44 for 41 trips (40 and 1 cancelation). That's $46.48 per hour before expenses, which is not too shabby.
To calculate my income, I recorded the miles and time of each trip and measured the difference. And to simplify the calculation, I rounded up the minutes to the whole minute. I was "active," 391 total minutes and 142.5 miles. Uber paid me fares of $259.13. I also earned $150.00 in promotions, $56.25 in surges, $68.06, and $5.00 in other earnings. The $0.96 difference in my fares was wait time as other earnings, and I record it as fares.
Yet, I want to focus on the fares for this exercise. We should assume that the promotions, surges, and tips will remain the same. Knowing the time and miles, I recreated each trip using the $1.45 per mile, $0.34 per minute, and $5.00 fare minimum rates. That's how I concluded I would have earned $105.58 more using the Minnesota rates. That's 40% more in fares paid to me.
Here are some highlights from the analysis:
35 of the trips would have seen a pay increase.
$2.58 was the average increase for every trip
On one trip, I would have earned $11.78 more than what Uber paid me.
Uber's service fee was $158.71, but they also paid me $150 in promotions, meaning Uber only earned $8.71 or $0.21 per trip.
If this bill was law in New York, I would have earned $55.73 per hour. Wow! According to the proposed rates in H2369, I would have earned $105.58 more, a whopping 40% increase. Sounds great, right?
Well, not so fast. Despite the financial benefits, I support Governor Tim Walz's vetoing the bill. The numbers might be tempting; it’s not that I don't appreciate a pay increase. Who wouldn't? But several factors concern me.
Three Reasons I Don't Support Government Increasing Fares
It has Economic Implications
This 40% fare hike doesn't come out of thin air. This bill is a minimum wage and will cause more drivers to lose their job. Uber will raise prices to cover the cost increase.
Last week I earned $150 in promotions, reducing Uber's take from $158.71 to $8.71. In my market, there's no way Uber can afford to pay me an additional 40% in fares. Uber will have to reduce the promotions paid.
On the one hand, I don't mind shifting my income from promotions to fares. However, Uber uses promotions as a way to increase income; not every driver completes Quests. I assume Uber uses the Quests to keep drivers on the road, especially in unprofitable times.
And if Uber doesn't want to be unprofitable, they will increase rider payments. Based on my trips last week, the average rider payment could leap from $15.84 to $22.17 per trip. Increased prices will reduce the number of riders. The promise of increased fare payments to drivers will mean more drivers turning on the app. Remember, this bill only promises more income if you take a trip, not more income. More potential earnings means more drivers online.
Increased fares paid to drivers will disrupt the market, reducing drivers' earnings.
It Devalues Humans
The legislation emphasizes miles driven rather than time spent. How? It requires payment of $1.45 per mile and $.34 per hour when we're active.
Why is my car paid more than me?
We're not vehicles ferrying passengers but humans who deserve compensation for our time. Yes, our cars need to earn their keep, but shouldn't the driver's time be valued more?
For example, my car costs $.20 per mile. I drive a 2022 Prius, and my fuel costs are low, about $.06 per mile. Even if I drove an SUV getting 20mpg, I estimate the costs would be $.18 per mile. In addition to gas, I estimate that my maintenance costs are $.04 per mile, and the depreciation is $.10 per mile. I guess the cost per mile for most Uber drivers' cars would be somewhere between $.15 to $.43 per mile. $1.45 covers a lot more than the costs. This is fine; we should profit from our cars, but 5x margins on car costs are extreme.
Worse, this bill only pays Uber drivers $20.40 per hour ($.34 per minute) we someone is in the car. This means the car is making money, but not the human. I think this type of thinking reduces us to the value of our car, not the value of our time.
It's Immoral
I do not like governmental overreach into the free-market economy. The government's power to influence Uber driver pay feels unsettling to me. Uber drivers should earn more, and Uber has room for improvement. However, getting the government involved in such a direct way could have unforeseen consequences.
We feel good when the government does things for us, but it shouldn't be at the expense of others. We can't have the government picking winners and losers. As an Uber driver, I might be a winner in this scenario, but riders will pay more and lose.
Today, Uber drivers can use our free will to decide whether to turn the Uber app on and drive. More so, we can pick which trips we want to take; we even know what we will earn before every trip.
Once government gets involved, citizens lose their choice. Let's not cede our citizens' rights for token favors by the government, because we may not be on the “winning” side the next time government takes action.
At the end of the day, the choice of whether or not to support legislation like H2369 is a personal one. I believe in seeking a fairer wage for Uber drivers. Still, I also believe it should be done in a way that benefits us, our riders, and the overall health of the gig economy.
I'm here to support you as we navigate these murky waters together. If you want to improve your skills and earning potential as an Uber driver, consider subscribing to the Thrive Uber Driver course. Let's not just aim for higher fares but a better overall driving experience!
As always, stay safe on the roads, and remember, not everyone who promises to "tip you in the app" will actually do it!
