The Real Costs of Working for Uber

Uber along with many new app based companies such as TaskRabbit and Airbnb are not as great as they might appear on paper. Reported in last May by Uber Technologies  the median income for a Uber driver in San Francisco was more than 74,000 dollars a year. This figured as you can image brought new attention to the company (Weiner). Many people are ready to become independent contractors and because of these companies it is now easier for people to do so. Records from December  show that the number of drivers signing up has doubled every six months for the past two years.  However this report turned out to be not entirely true because it did not account for all the deductible, independent contractors face because they do not work for a company. Uber alone would be taking 20 percent commission from those 74,000 dollars a year. Minus the cost of a rise in ones new insurance plan that covers both commercial and personal use, which many providers don’t offer, and plus Taxes (Weiner). Taxes when self-employed is very important and is not the same as working for someone else. Not only is the for different, but so is the way one reports to the federal and state. According to the article one would need to pay taxes “to the IRS each quarter” because not many people know this and wait till the end of the year like everyone else to file their return, they would then face a late fee penalty (Weiner). Not only is the producer surplus being reduce because of all the payments being made, the new worry for many Uber drivers is that they have a lot more competition because of so many new drivers appearing. In Emily Badger’s article she interviewed Chiara ,an Uber driver who now has “stopped driving for the service in December, at a time when Uber says 40,000 other new drivers in the United States signed on” (Badger, Now). The number of drivers differ from city to city because of population, but a survey of drives shows that about half of the Uber drivers fall in the range between 30 to 50 years old (Badger, Read).

Evaluating the producer costs of being an Uber driver was not reported until recently when a more detailed report was released. Drivers who want to jump into the business should look into the cost of actually being self-employed, while the idea of being your own boss does seem like a great thing to do one day, that may not be the best option since the surplus is not always convenient. Especially if a driver has an old car they would need to invest in a new one, or constantly be repairing it if the old car breaks down since that is a possibility, a car is also the necessarily tool one needs to work for Uber and a smart phone. Furthermore, since the company seems to be expanding the amount of new drivers joining Uber will keep expanding. Uber will need to keep drivers “happy and their wages up”, they will then need to “drive down prices to lure new passengers without pushing more drivers away” (Badger). Aside from this something interesting to look for in the future is the IPO release of Uber, this is a big deal because according to NASDAQ they are valued at 41 billion and many investors are looking to invest (NASDAQ).

Works Cited

Badger, Emily. “Now We Know How Many Drivers Uber Has — and Have a Better Idea of What They’re Making​.” The Washington Post 22 Jan. 2015. Web. 21 Feb. 2015. <​/&gt;.
Badger, Emily. “Read: Uber’s New Study of the Demographics, Earnings and Employment Decisions of Its Workers.” The Washington Post 22 Jan. 2015. The Washington Post. Web. 21 Feb. 2015<;.

Weiner, Joann. “The Hidden Costs of Being an Uber Driver.” The Washington Post 20 Feb. 2015. Web. 21 Feb. 2015. <;.



2 thoughts on “The Real Costs of Working for Uber

  1. This is an interesting article to me because Uber is so often perceived by the big city consumer as a win-win for the driver and customer. As you pointed out, with such a rapidly rising number of drivers, it is important to note that these drivers might be getting fooled into so readily joining the company’s ranks. I imagine there are many hidden costs that people freshly entering the driving workforce fail to realize until they are affected by them later on.


  2. Qingyang Shu says:

    I always use Uber instead of taxi when I am traveling in big cities because Uber is much cheaper and very convenient, and that’s why Uber is so popular. There are some potential costs for Uber drivers, and if people want to self-employed as Uber drivers, they need to take how much they need to invest first in consideration and calculate whether their inputs and outputs are proportional.


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