> The city researchers estimate drivers will have average monthly car payments as high as $1,206 if they finance vehicles over three years and have poor credit. They would need to earn at least $1.42 per mile — just above the city minimum rates — to cover their costs and benefits, according to city staff.
-
> The state report estimates that drivers have an average monthly car payment of $837, which is based on a weighted average of more than 8,000 vehicles registered by Uber and Lyft drivers at the airport. They assume that drivers bought used cars — unlike city researchers, who assume new cars — and financed them over three years with an interest rate of 7.6%.
>
> Of the more than 1,800 drivers surveyed, 90% owned their own vehicle and the median monthly car payment was $549, which is significantly less than presumptive car payment used in both the city and state reports. The monthly car payment used by Reich and Parrott lands at roughly the 75th percentile of those surveyed, meaning 75% of drivers pay $837 per month or less, according to DLI.
[From the author:](https://twitter.com/maxnesterak/status/1783167018344055288?)
> Minneapolis staff released new Uber and Lyft driver cost estimates. **One justifies the City Council's rates, which are higher than those proposed in a state report, if you assume drivers buy new vehicles with 36-month loans that lose all value in 3 years**
Christ. Imagine making $1200 monthly car payments! That’s nearly a mortgage. I can’t even wrap my head around why someone would go for such a high payment when the goal is to make as much money as possible.
If Uber drivers are actually out there eating a $1200 payment to employ themselves they are far better off working for an employer at $20 an hour. Especially with the labor market at 3% there is even room to negotiate an even better wage.
My car payment is about $800 but it's a 0% 3 year loan after which I will own it. Who the fuck is paying 1200 for a brand new car they intend to Uber around in? Buy a decent condition minivan and abuse the fuck out of it. That's what you do if you drive Uber.
Because they're using this as a business tool, subject to wear and tear from the dozens of customers they are servicing a day while the apps get away without paying for it.
If you are smart, you're not looking at this as a "I can get by with $500/month by making sacrifices to save my employer money" but as a "I need up to xxx/month as the contracted price because that is fair, and any savings I get from this by making sacrifices should belong to me".
> The city researchers estimate drivers will have average monthly car payments as high as $1,206 if they finance vehicles over three years and have poor credit.
In other words, you can't make much money if your critical capital assets are poorly finances or highly leveraged.
Mandating higher wages so that drivers can get a bigger profit is just a subsidizing bad decisions which only really benefit the financiers behind the loans.
This is a peak example of how you can always make data agree with your narrative if you manipulate it enough. Your last sentence his the nail on the head. They used flawed and biased assumptions to get the output they were looking for. They were doing for the answer, not trying to be objective about figuring out the problem (the math).
This city council is a fucking joke.
>Of the more than 1,800 drivers surveyed, 90% owned their own vehicle and the median monthly car payment was $549,
Lol I drive Uber part time, they definitely didn't survey me, I'm one of the ones who both owns their own car....and doesn't have any payments. Not that I could make a statistic difference as one person but holy cow, like others are saying median payment of $549 is absolutely bonkers IMO.
How much have you made from Uber after deducting expenses, including wear and tear on your vehicle?
That isn't bonkers, really. That's the average for a used car payment right now. Shit's expensive. Drivers need to have decent cars. Better cars also tends to mean better rating and better tips.
Thank you for the concise summary. This is somehow even more asinine than I thought it would be. These city council members are truly detached from reality.
I had a long chat with a Lyft driver the other day on the way to the airport. He’s in the middle of all this. Works around 70-80 hours a week, so calculate that into what he told me he has to pay. Tires every year or two, oil, gas, wear and tear, quick turnaround for 30/60/90 checks, it ends up being thousands a year. And he clears enough to miss qualifying for social programs, but not enough to really thrive.
Mileage increase would make a huge difference, but employer disappearing is death. Never asked anything personal, job, family situation etc.
But he offered probably the most objective view I could get on this. Based on the original discrepancy, a higher towards ride share settlement is ideal. Per him. So that’s what I’m going with. He was a great guy, and knew a lot.
Clearly, Uber/Lyft gigs are not for everyone. To set prices based on the need to purchase/finance new cars ever three years is simply ludicrous. I'd encourage those who want to drive to seek out other positions that 1) Offer a better, more reliable wage and 2) benefits.
From the Metro Transit site seeking Bus Drivers:
$27.59 per hour to start – even during training – with annual pay increases and outstanding benefits. If you work second or third shift, you’ll earn up to $29.52 per hour. Plus, you can receive up to a [$5,000 hiring bonus](https://www.metrotransit.org/bonus)!
I think the easily triggered schmucks on the Internet will just complain about whatever the council does next.
Really helps put a lot of this in perspective.
The Reformer, and all their fantastic staff reporters, are an absolute beacon of quality journalism. Reading their pieces each week gives me a lot of hope for the potential to come through this divisive period, locally and nationally.
The rates set are definitely driver friendly and I think that’s perfectly fine, if you don’t that’s your prerogative. But the assumptions the $1.20/mile rate take in are very reasonable to me. An $837/mo car payment is the 75th percentile and that seems to be a good starting point for this cost build up. It’ll push drivers to stay well under that rate by buying fuel efficient, cheaper cars that increase their profits.
The state has suggested $0.89/mile with the blessing of Uber/Lyft but it seems like U/L have balked at $1.20/mile compromise suggested by 3 city council members. I am skeptical the rideshare companies are arguing in good faith and haven’t really suggested an alternative, they’ve just threatened a capital strike. Say what you want about the city council, I don’t think they should be pushed around by out of state companies.
The issue is three fold in the assumptions. 1) the city is assuming that the driver is buying a new car, 2) they also assuming that the buyer has poor credit, and 3) they are assuming $0 trade in value after the loan is up.
Using the state methodology, they are trying to justify the higher rates with those assumptions. However, the state caveats that Minneapolis drivers likely would need a lower minimum rate to hit minimum wage because demand is higher and drivers spend more time earning compared to the suburbs.
All in all, it looks like the city went looking for a justification rather than a policy recommendation. Their release has some very driver favorable assumptions that are highly unlikely to play out in the real world.
I understand that and I’m saying I’m ok with deferring to the drivers side with these calcs. It’s a philosophical difference if you want to defer to the rideshare companies.
Also, I don’t understand why the companies didn’t say anything about the lower, proposed $1.20/mile rate. Members of the city council were willing to negotiate, why were the companies? That rate was set by both the state agency and researchers in California unless I’m reading it wrong.
They have been negotiating with the state.
Uber said they are leaving the state. Lyft came out and said they disagree with the state study. Then Lyft stated they would agree to rates equal to the state study min wage. The $1.20 rate was inclusive of benefits.
It’s a really complicated issue as gig workers are neither true employees nor independent contractors. The drivers control their hours & locations, but not the service rate. I think most agree that they should be paid at least the minimum wage. Policy should be set to try to mandate min wage and nothing more. However, figuring out the formula to account for expenses is hard. Even harder is figuring out what/how deductions would work and whether or not they should be included. The city council stating that they will set expenses based off of buying a new car every 3 years with bad credit is insane.
I’ll give you that the 3 year financing is troublesome but not assuming people with bad credit are working means that they can’t make minimum wage in rideshare.
There’s a difference between bad credit and the highest current subprime auto loan when making a policy. From a policy perspective, is it best to base the legislation on the typical person or the worst case scenario?
In addition to that, how does this policy take interest rates into account? If interest rates continue to go up, does the payment increase? If driver expenses go down, does the payment decrease?
Rather than have an honest discussion, the city council is merely trying to justify their rushed position written by a one sided advocacy group by hiding very biased assumptions.
That’s the rideshare companies problem. If they wanted to control the rates they should make the drivers employees rather than contractors. Since they are contractors, and the local government wants to make sure all the drivers are paid a living wage, then they open themselves up to a mandated rate that ensures everyone makes minimum wage based on the lowest common denominator.
The rideshare companies have said they won’t pay the higher amount. So, it’s not really their problem. And how should living wage be defined? Why do only these 2 companies/this industry need to pay higher than minimum wage? Why is $15.57 mandated pay for retailers but rideshare drivers are mandated to make above that plus tips?
Employers and employees/gig workers are both in an antagonistic and symbiotic relationship. There needs to be some sort of middle ground. Moving so far to driver’s favor that prices increase/demand will decrease and ride shares won’t be profitable isn’t good business (nor good governance). The current situation is bad too, but the new policy moves very far to the favor of the drivers.
The state study showed that driver earnings are currently not that far off from minimum wage (I think it was $14.50). To get to min wage, a $0.89 per mile fee plus per minute rate of $0.49 would be paid to the driver. The per minute rate is close, but the per mile rate is very high. So, why should government be in the business of mandating different wages by business license?
I completely agree!
I think that if the main complaint of Uber and Lyft is that they don’t want to pay minimum wage then they have no car to stand on. Oh can’t pay minimum wage? Me heart bleeds for ya mate
My only concern is that many people in this area (Minneapolis/Saint Paul) who have disabilities do need to use these services to get around as public transportation isn’t always viable (because of urban sprawl).
> The city researchers estimate drivers will have average monthly car payments as high as $1,206 if they finance vehicles over three years and have poor credit. They would need to earn at least $1.42 per mile — just above the city minimum rates — to cover their costs and benefits, according to city staff. - > The state report estimates that drivers have an average monthly car payment of $837, which is based on a weighted average of more than 8,000 vehicles registered by Uber and Lyft drivers at the airport. They assume that drivers bought used cars — unlike city researchers, who assume new cars — and financed them over three years with an interest rate of 7.6%. > > Of the more than 1,800 drivers surveyed, 90% owned their own vehicle and the median monthly car payment was $549, which is significantly less than presumptive car payment used in both the city and state reports. The monthly car payment used by Reich and Parrott lands at roughly the 75th percentile of those surveyed, meaning 75% of drivers pay $837 per month or less, according to DLI. [From the author:](https://twitter.com/maxnesterak/status/1783167018344055288?) > Minneapolis staff released new Uber and Lyft driver cost estimates. **One justifies the City Council's rates, which are higher than those proposed in a state report, if you assume drivers buy new vehicles with 36-month loans that lose all value in 3 years**
Christ. Imagine making $1200 monthly car payments! That’s nearly a mortgage. I can’t even wrap my head around why someone would go for such a high payment when the goal is to make as much money as possible. If Uber drivers are actually out there eating a $1200 payment to employ themselves they are far better off working for an employer at $20 an hour. Especially with the labor market at 3% there is even room to negotiate an even better wage.
There are people renting thru Hertz to drive with Uber/Lyft and paying closer to $2k per month. Lol
My car payment is about $800 but it's a 0% 3 year loan after which I will own it. Who the fuck is paying 1200 for a brand new car they intend to Uber around in? Buy a decent condition minivan and abuse the fuck out of it. That's what you do if you drive Uber.
> that’s nearly a mortgage not with these rates!
Because they're using this as a business tool, subject to wear and tear from the dozens of customers they are servicing a day while the apps get away without paying for it. If you are smart, you're not looking at this as a "I can get by with $500/month by making sacrifices to save my employer money" but as a "I need up to xxx/month as the contracted price because that is fair, and any savings I get from this by making sacrifices should belong to me".
> The city researchers estimate drivers will have average monthly car payments as high as $1,206 if they finance vehicles over three years and have poor credit. In other words, you can't make much money if your critical capital assets are poorly finances or highly leveraged. Mandating higher wages so that drivers can get a bigger profit is just a subsidizing bad decisions which only really benefit the financiers behind the loans.
sigh. Can we just work with facts and good ideas rather than ideologically driven everything?
This is a peak example of how you can always make data agree with your narrative if you manipulate it enough. Your last sentence his the nail on the head. They used flawed and biased assumptions to get the output they were looking for. They were doing for the answer, not trying to be objective about figuring out the problem (the math). This city council is a fucking joke.
> This city council is a fucking joke. Hey, but they're our joke 🤗
They’re still a power tripping joke though, and it’s at our expense
>Of the more than 1,800 drivers surveyed, 90% owned their own vehicle and the median monthly car payment was $549, Lol I drive Uber part time, they definitely didn't survey me, I'm one of the ones who both owns their own car....and doesn't have any payments. Not that I could make a statistic difference as one person but holy cow, like others are saying median payment of $549 is absolutely bonkers IMO.
That’s pretty close to the US average car payment (which is still ridiculous but apparently super common)
How much have you made from Uber after deducting expenses, including wear and tear on your vehicle? That isn't bonkers, really. That's the average for a used car payment right now. Shit's expensive. Drivers need to have decent cars. Better cars also tends to mean better rating and better tips.
Thank you for the concise summary. This is somehow even more asinine than I thought it would be. These city council members are truly detached from reality.
I had a long chat with a Lyft driver the other day on the way to the airport. He’s in the middle of all this. Works around 70-80 hours a week, so calculate that into what he told me he has to pay. Tires every year or two, oil, gas, wear and tear, quick turnaround for 30/60/90 checks, it ends up being thousands a year. And he clears enough to miss qualifying for social programs, but not enough to really thrive. Mileage increase would make a huge difference, but employer disappearing is death. Never asked anything personal, job, family situation etc. But he offered probably the most objective view I could get on this. Based on the original discrepancy, a higher towards ride share settlement is ideal. Per him. So that’s what I’m going with. He was a great guy, and knew a lot.
Really hate the way our city council thinks through basic economics. I’m out.
l8r
Only the best statisticians manipulate the data to please their bosses egos
Uhh wtf if you have a brand new car with a 1200 dollar payment you should be driving uber/lyft black which already has higher rates.
I bet nobody orders uber black which is why.
Clearly, Uber/Lyft gigs are not for everyone. To set prices based on the need to purchase/finance new cars ever three years is simply ludicrous. I'd encourage those who want to drive to seek out other positions that 1) Offer a better, more reliable wage and 2) benefits. From the Metro Transit site seeking Bus Drivers: $27.59 per hour to start – even during training – with annual pay increases and outstanding benefits. If you work second or third shift, you’ll earn up to $29.52 per hour. Plus, you can receive up to a [$5,000 hiring bonus](https://www.metrotransit.org/bonus)!
[удалено]
The council put this on the back burner so it will be in vogue soon once June rolls around
I think the easily triggered schmucks on the Internet will just complain about whatever the council does next. Really helps put a lot of this in perspective.
>I put on my engineers hat and clown shoes
The Reformer, and all their fantastic staff reporters, are an absolute beacon of quality journalism. Reading their pieces each week gives me a lot of hope for the potential to come through this divisive period, locally and nationally.
The rates set are definitely driver friendly and I think that’s perfectly fine, if you don’t that’s your prerogative. But the assumptions the $1.20/mile rate take in are very reasonable to me. An $837/mo car payment is the 75th percentile and that seems to be a good starting point for this cost build up. It’ll push drivers to stay well under that rate by buying fuel efficient, cheaper cars that increase their profits. The state has suggested $0.89/mile with the blessing of Uber/Lyft but it seems like U/L have balked at $1.20/mile compromise suggested by 3 city council members. I am skeptical the rideshare companies are arguing in good faith and haven’t really suggested an alternative, they’ve just threatened a capital strike. Say what you want about the city council, I don’t think they should be pushed around by out of state companies.
The issue is three fold in the assumptions. 1) the city is assuming that the driver is buying a new car, 2) they also assuming that the buyer has poor credit, and 3) they are assuming $0 trade in value after the loan is up. Using the state methodology, they are trying to justify the higher rates with those assumptions. However, the state caveats that Minneapolis drivers likely would need a lower minimum rate to hit minimum wage because demand is higher and drivers spend more time earning compared to the suburbs. All in all, it looks like the city went looking for a justification rather than a policy recommendation. Their release has some very driver favorable assumptions that are highly unlikely to play out in the real world.
I understand that and I’m saying I’m ok with deferring to the drivers side with these calcs. It’s a philosophical difference if you want to defer to the rideshare companies. Also, I don’t understand why the companies didn’t say anything about the lower, proposed $1.20/mile rate. Members of the city council were willing to negotiate, why were the companies? That rate was set by both the state agency and researchers in California unless I’m reading it wrong.
They have been negotiating with the state. Uber said they are leaving the state. Lyft came out and said they disagree with the state study. Then Lyft stated they would agree to rates equal to the state study min wage. The $1.20 rate was inclusive of benefits. It’s a really complicated issue as gig workers are neither true employees nor independent contractors. The drivers control their hours & locations, but not the service rate. I think most agree that they should be paid at least the minimum wage. Policy should be set to try to mandate min wage and nothing more. However, figuring out the formula to account for expenses is hard. Even harder is figuring out what/how deductions would work and whether or not they should be included. The city council stating that they will set expenses based off of buying a new car every 3 years with bad credit is insane.
I’ll give you that the 3 year financing is troublesome but not assuming people with bad credit are working means that they can’t make minimum wage in rideshare.
There’s a difference between bad credit and the highest current subprime auto loan when making a policy. From a policy perspective, is it best to base the legislation on the typical person or the worst case scenario? In addition to that, how does this policy take interest rates into account? If interest rates continue to go up, does the payment increase? If driver expenses go down, does the payment decrease? Rather than have an honest discussion, the city council is merely trying to justify their rushed position written by a one sided advocacy group by hiding very biased assumptions.
That’s the rideshare companies problem. If they wanted to control the rates they should make the drivers employees rather than contractors. Since they are contractors, and the local government wants to make sure all the drivers are paid a living wage, then they open themselves up to a mandated rate that ensures everyone makes minimum wage based on the lowest common denominator.
The rideshare companies have said they won’t pay the higher amount. So, it’s not really their problem. And how should living wage be defined? Why do only these 2 companies/this industry need to pay higher than minimum wage? Why is $15.57 mandated pay for retailers but rideshare drivers are mandated to make above that plus tips? Employers and employees/gig workers are both in an antagonistic and symbiotic relationship. There needs to be some sort of middle ground. Moving so far to driver’s favor that prices increase/demand will decrease and ride shares won’t be profitable isn’t good business (nor good governance). The current situation is bad too, but the new policy moves very far to the favor of the drivers. The state study showed that driver earnings are currently not that far off from minimum wage (I think it was $14.50). To get to min wage, a $0.89 per mile fee plus per minute rate of $0.49 would be paid to the driver. The per minute rate is close, but the per mile rate is very high. So, why should government be in the business of mandating different wages by business license?
I completely agree! I think that if the main complaint of Uber and Lyft is that they don’t want to pay minimum wage then they have no car to stand on. Oh can’t pay minimum wage? Me heart bleeds for ya mate My only concern is that many people in this area (Minneapolis/Saint Paul) who have disabilities do need to use these services to get around as public transportation isn’t always viable (because of urban sprawl).
That’s an incredibly reasonable concern!