If you go onto Uber’s webpage, and have a look at the section that deals with drivers and their earnings, you find this graph (irrespective of which country you’re logging in from):
Of course, what this doesn’t tell you is that ‘$19.04’ is a gross number. It’s before the driver has repaid the financing on his or her vehicle, and fuel, and running costs, etc. And this has spawned many videos on the youtube. Like this one:
But this did get me thinking. Because speaking as a UberX user here in Johannesburg, there are a number of things that I experience on almost every trip:
- UberX drivers are clearly petrified of making it through a traffic signal while the light is green. Instead, the car will slow to a crawl until the light goes amber – at which point, we’ll suddenly zoot up to the line and stop. And if the UberX driver can’t crawl slowly enough to catch the amber light, we’ll limp through the intersection dejectedly.
- UberX drivers love a road with speed bumps. Every speed bump gets treated as though the vehicle is cresting Everest. After wheezing up the one side, he/she then takes off from the speed hump in 4th gear, laboriously not-gaining-speed while relying on the speed-bump ‘downhill’ to build momentum. And then we coast along with that momentum, until the UberX driver can gleefully (albeit unnecessarily) apply the brakes ahead of the next speed bump.
- UberX drivers are also fans of being a traffic obstruction. It seems to be their general view that speed limits are a good 50% more than an Uber’s recommended velocity. Which in turn means that every other car on the road is weaving behind your Uber, trying to overtake, eventually risking blind rises and oncoming traffic. Meanwhile, the UberX driver is calmly focused on his speedometer needle, ensuring that it never peeps above 40km/h on the open road, and 30km/h in the suburbs. Unless, of course, there’s a red or amber traffic light ahead – in which case, we’re free to accelerate to a halt.
- Traffic circles are just a space to stop in general confusion, and wave all the other cars on while the UberX driver tries to decide when or if the car will ever have right of way.
This naturally leads one to the conclusion that driving on two glasses of wine is genuinely safer than taking an UberX. Or you should just double-down on your losses, share with a friend, and take a more expensive (but less frustrating) UberBlack.
And that last part is actually the point. UberBlack drivers somehow manage to drive normally – it’s mostly UberX drivers that tortoise around.
Which does seem to suggest that there is an earnings problem in play. UberBlack drivers earn more per trip, and so perhaps they don’t feel the same need to extend the ‘time’ portion of their rate.
Uber Earning Calculations
So I went to do some South-Africa-specific fact-checking of that video up top.
Here is an extract from Uber Rates Johannesburg:
Then, because UberX drivers are almost always found in a Toyota Corolla, I went and got a ‘running costs’ certificate from the AA (I have since been repeatedly spammed by them – but such is the internet).
So on a ‘per km’ basis, that Uber is costing R2.99 per km to run.
Compare this to an UberBlack vehicle (an Audi):
So on a hypothetical km-for-km basis:
An Hourly Rate
Using that, I want to work out a hypothetical hourly rate (after costs). Let’s assume that the average Uber driver in Johannesburg:
- Completes 2 full trips every hour (20 minutes per trip, excluding getting to the pick-up); and
- Each trip, on average, is about 8km of chargeable km – with 1 extra km of driving to the pick-up destination.
Then let’s assume that there are a few other costs floating around (bottles of water at R7 per bottle, airtime, tolls, fines, car washes, etc). So I’ve worked on an extra R35 per hour for UberX drivers, and R55 per hour for UberBlack drivers:
This is clearly much lower than that ‘$19 per hour’ on the Uber page. It’s closer to $3 per hour.
And it’s also assuming that an Uber driver drives two trips per hour, every hour that he/she is on the roads. Which is clearly unreasonable – there are news articles (like this one from the Times) which talk about drivers waiting for hours before their next trip.
But even if you accept that assumption about 2 trips per hour: for an UberX driver, extending every trip by 5 minutes works out to a 10% increase in net hourly earnings. So there are good reasons for their general slowness on the roads*.
*And even if UberBlack drivers could do the same – they have a lot more to lose if their slowness caused their ratings to drop…
Why is this different to other countries?
In that video up top, there is an assumption that an Uber driver ‘borrows’ against their future depreciation and other costs, in order to generate cash. That is: they can get the full cash payout upfront after completing the trip, while the costs for vehicle replacement, repairs and maintenance, tax, etc, are future costs that they don’t have to pay just yet. So in that way, this is a type of self-borrowing scheme.
But in South Africa, most Uber drivers don’t own the cars that they drive (at least, that’s my experience when speaking to drivers on trips). This means that they’ll be paying rental on the vehicle every day/week – so there is a much greater consciousness of the actual costs involved. And a bigger concern with covering them.
If you’re going to UberX around, offer a cash tip for a speedy trip.
Alternatively, leave 10 minutes early.
Either way, you’ll be paying for it.
Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.