With rideshare services like Uber and Lyft promising take-home pay as generous as $75,000 and up, it might seem as if you should quit your job and start driving.
But does it really work out as well? How much should you trust in the rosy future that these opportunities promise?
The truth is somewhat complicated. Here’s some interesting salary info for drivers who are working for rideshare services.
Uber says its drivers make $6 more than traditional cab drivers, but the devil is in the details. Source
What The Research Says
According to MBO Partners, a creator of digital tools for the self-employed, the reality tends to be somewhat less encouraging:
- You’re likely to survive but not thrive. Close to 60% of those who work in the gig economy make $40,000 a year or less for their efforts.
- You do have a chance of thriving. Almost 17% of gig economy workers make $75,000 a year.
Most workers in the gig economy, though, see their involvement as part-time rather than full-time. That means that when earnings from other activities are added to gig earnings, the total is likely to be a respectable figure.
So, when combined with other full- or part-time income, you’d probably be quite happy with your earnings as an Uber driver or a Lyft driver.
See the results from Ridester’s survey of 2,625 Uber and Lyft drivers, regarding their satisfaction with earnings. This is one of the largest and most comprehensive independent driver earnings studies to date.
Here’s What You’re In For
Certainly, you can make a decent income on the side driving for Uber or Lyft — if you’re willing to put in the hours.
Before you jump in, though, it’s important to know what your expenses will be.
It can be deceptive to consider your gross income from driving alone. At between $20 and $25 an hour, you’re likely to net about $1,000 a week.
However, here’s what you will need to take out for costs:
Commission
Uber drivers need to put aside 20% of their take-home income for Uber’s commission (“license fee,” in Uber’s lingo).
Since 2014, first-time Uber drivers in many parts of the country have had to pay 25%. Drivers in some regions even put up with a 30% fee structure.
In other words, if you’re making $1,000 a week, you only get to take home between $700 and $800.
Insurance
Insurance for rideshare cars tends to be more expensive than insurance for personal cars.
While you could hide from your insurer what you’re actually doing with your car, it wouldn’t be a smart idea. Insurance companies usually find out when they look at your mileage.
Insurance can cost as much as $3,000 a year for a car such as the Toyota Camry. This works out to about $65 a week.
Car payment
You have to own your own vehicle in order to drive for Uber.
Car leases do not allow for-hire situations (unless you find a lease specifically aimed at ridesharing drivers).
You’ll pay about $100 a week for your car payment. It wouldn’t hurt to also count depreciation — what your car loses in value as you drive it around.
Calculating what your car loses in value each week that you drive it (it works out to about $100 a week) and setting aside that amount to start a “new car fund” should help you buy a new car once you’re done with your current vehicle.
Taxes
Rideshare drivers pay business taxes as if they were in business for themselves.
Any expenses associated with running your vehicle count as tax deductions.
On average, you can expect to pay $150 a week toward taxes, Social Security, and Medicare.
When you count everything, you’re left with about $10 for every hour that you drive for Uber. This figure doesn’t include vacation pay, unemployment insurance, and many of the other benefits that you would likely get at a regular job.
The Bottom Line
In the end, working a rideshare job for a company like Uber does offer flexibility and reasonable pay, but it only works out well if you’re willing to put in a great deal of time and capital.
For everyone else, driving for Uber usually ends up as nothing more than a minimum-wage job.
When you decide that a regular job simply isn’t the life you always dreamed of, work in the sharing economy can seem attractive — you’ll just want to keep in mind all of the costs associated with working in rideshare services.
Testimonials From Others Driving For Uber
- Pros & Cons Of Driving For Uber And Lyft
- Uber Driver Pay, Secrets, Tips & Tricks
- Is Driving For Uber Worth It?
- What It’s Really Like To Be An Uber Driver
- Earnings Driving For Uber vs UberX
- Uber Reviews: Pros & Cons From Uber Drivers
- What Uber Drivers Really Make (According To They Pay Stubs)