The Real Cost of Uber

This is a response to a recent article on Bill Moyers’ website

Taxi drivers have always (well, for decades at least; and at most companies, though not all) been independent contractors, not employees. So the fact that Uber drivers are independent contractors paying a percentage to the person that really should be their employer is already standard practice in the taxi world. But in the taxi world, you probably pay ~70% of your fares (excluding tips), while Uber drivers are only paying 20% (possibly including tips­—I think it’s 20% of whatever is collected via the app, so cash tips would be excluded). That, right there, is what Uber tells people in order to woo them in the first place.

Also, both the taxi driver and the Uber driver are stuck with paying all their own taxes. You know that ~30% that is taken out of your paycheck before you even get it? Add another ~13%, because you’re responsible for the “employer’s portion” of Social Security and Medicare/Medicaid taxes. So if you actually want to compare what you make as an independent contractor (Uber driver or carpenter) vs being an employee, reduce the independent-contractor wage by a full eighth! $20/hr driving for Uber is equivalent to about $17.50/hr working for a legitimate employer. And if you’re making close to minimum wage, say, $8/hr, it’s more like $7/hr—and that’s before you figure in the regular taxes that everyone pays.

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