Sign me up! I’m gonna lyft it, lyft it higher
$35/hour sounds pretty sweet! It’s nowhere close to what I use to earn as a programmer, but neither does driving for Lyft present all the hardships of the programmer life (fresh lattes, free gourmet meals, ergonomic sit-stand desks, full health insurance, gym membership, unlimited vacation, clothing-optional Fridays, etc…)
Hoo boy! I’m ready to join Lyft and earn me some $800 this weekend!!!
But wait a second. The Lyft “Become A Driver” page tells me I have to supply my own car in good working condition. I guess the internet forgot to tell Lyft I don’t own a car.
Oh well, that’s just a minor setback. I was planning to buy a car anyway. Only now I can really afford a new car because at $35/hour this new car will practically pay for itself, in, oh… how long?
But wait another second. If I’m supplying the car myself, and (as I soon learn) the gas myself, and my state-required insurance, and car repairs, and car washes, and on and on (please tell me I don’t have to buy my own pink mustache), what will I ultimately be earning as a Lyft driver?
Maths: Let’s Estimate My Net Hourly Lyft Income
According to this Consumer Reports article, “the median car costs more than $9,100 a year to own” over the first five years of ownership driving 12,000 miles a year. That means the median cars costs about 76 cents per mile driven ($9100/12000). I’m just guessing that I’ll average a speed of 30 miles/hour while I’m doing my Lyft job. So my expenses will come to about $22.80 per hour (0.76*30).
I’m also guessing (just guessing, mind you), that “make up to $35/hour” means I won’t always be making $35/hour. I’m betting that about 25% of my time is spent between customers (between dropping one off and picking up the next) so I expect I’ll average about $26.25/hour ($35x0.75) - although driver feedback pages like this tell me I’m estimating a little high.
So with expenses of $22.80/hour, and income of $26.25/hour, as a Lyft driver I will earn about $3.45/hour.
$3.45/hour!!! That’s not quite the $35/hour I was hoping for, but it’s something, right? And you do get to tell strangers “come ride my pink mustache” as you fist-pump them for donations, right?
Seriously, $3.45/hour isn’t a lot, even for an unemployed programmer. It makes me wonder how cab drivers have managed on such measly wages for so many years. But wait one more second. If cab drivers traditionally earn more than this, then I'm starting to figure out these other ads Lyft sends me:
Economics of the sharing economy - It’s nice to share
I'm starting to get it now. Lyft is an example of what investors are calling “the sharing economy”. I share my car with strangers. Strangers then share their money as a donation to Lyft. Lyft then shares 80% of that donation with me. So much sharing!
Let’s break down those shares. My $26.25/hour represents 80% of customer donations, which means the customers donated about $32.81 for that hour of my work. Lyft kept 20% of that donation, or $6.56. It breaks down like this:
- $22.80 (69.5%) – Cost of car, gas, repairs, etc… (all the up-front costs are mine)
- $3.45 (10.5%) – My profit. This is what I keep. Yea!!!!
- $6.56 (20%) – Lyft keeps this.
At first you might think this is an unfair rip-off of the driver, who is responsible for nearly all of the expenses and labor, and who only earns $3.45/hour while Lyft earns almost twice as much just for keeping a few servers running to support their mobile app. But then you realize that Lyft has high expenses too: fresh lattes, free gourmet meals, ergonomic sit-stand desks, full health insurance, gym membership, etc…
New Motto of the Sharing Economy
After thinking this through, maybe Lyft isn’t the job for me. I’ve looked at other “opportunities” in this new sharing economy (e.g., Uber, Homejoy, Instacart) but they all come down to the same “disruptive” business model: Charge the customer a fee for connecting with low-cost independent workers, externalize costs to those workers with whom you share a portion of the fee, and pocket the difference.
Maybe I’m looking at the wrong profession. Maybe I should look for a different career, like, oh... branding and marketing. Maybe Lyft can be my first customer, because here’s a great slogan I’ve created for them:
Lyft. Someone is being taken for a ride!