Friday, May 1, 2015

In San Francisco, Uber/Lyft drivers are paid less per mile than cabdrivers were in the Depression

1931 San Francisco taxi rates (adusted for inflation) compared to current Uber, Lyft, and taxi rates.

In the Depression, cabdriving became a back-up job for waves of unemployed workers. Car dealers, having trouble finding buyers, promoted cars as “job-creators”—buy a car and get an instant job, driving that car as your own taxicab! The result was a massive oversupply of cabs on the street, and a race to the bottom as desperate "wildcat" drivers competed for business by slashing prices lower and lower.

In San Francisco, the lowest rates appeared in 1931, and it is worth comparing them (adjusted for inflation) to the costs of cabs (including UberX and Lyft) in the present day:

SF Taxi Rate in 1931 Value in 2014 dollars: SF Taxis today Lyft today UberX today
flag drop $0.15 (first 1/4 mile) $2.30 $3.50 (first 1/5 mile) $2.25 $2.20
per mile rate $0.30 $4.61 $2.75 $1.35 $1.30
first mile total $0.37 $5.68 $5.70 $3.60 $3.50

This quick and dirty comparison can’t tell us everything; other factors would include the cost of gas (lower in 1931), and typical miles-per-gallon (ditto). One thing that is known: the cut-rate cabbies of the Depression cut costs by going without insurance.

But the surprising thing is that at most, a ride in a modern cab will equal the cost of a ride in the Depression; with a higher drop charge, and lower mileage rates than 1931 cabs, a one mile ride in a 2015 taxi is almost exactly the same price as it would have been in 1931. But a ride in UberX or Lyft (unless “surge pricing” is in effect) will be over a third less.

These prices may seem great to the consumer, but the drivers of these vehicles (all three kinds) are independent contractors, whose income is directly affected by these prices. Uber drivers, in particular, have complained that, during regular pricing, they can actually lose money on rides. (No wonder Uber drivers have declared a general strike today to protest low mileage rates!)

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