Those poor dim-witted drivers. Seriously though, it only take a couple of seconds of Googling to calculate the depreciation of a vehicle. "Financial modelling" is a pretty grandiose word for "subtract $0.50 for every mile you drive".
Don't assume everyone who takes a lower-paying job is stupid.
And that doesn't make them stupid or dim witted.
Math is a skill, just like kindness or empathy.
Because if you are using your already well used car or a newly purchased well used car, the vast majority of the depreciation has already happened. The main reason you keep it is for tax reasons, not to calculate profit.
My 10 year old car is in great shape but has 175k miles on it. It would work fine to drive for Uber with. The resale value is $3500 at best. Putting another $100k driving for Uber would not affect that resale value very much and even if it did, it can only go to zero.
And no, maintenance doesn't become significantly more expensive on a higher mileage car. In fact, as a 10 year old vehicle, it is significantly less difficult and expensive to have it repaired and the replacement parts are significantly less expensive as well due to the availability of aftermarket and salvage options.
They just don’t have an option for better pay:quality of life at work ratio. Which generally applies to the work of 95% of the people in the world, they simply don’t have a better option.
I'm sure some don't understand the real costs. But most are doing what they think they need to do in the here and now and, to be honest, if people are really trying to minimize car costs, they're probably at least a bit less than IRS allowances.
In some sense that's a tautology. Everything that anybody is doing is because they've made the decision that that is the best thing for them at that time given their current circumstances. Outside of that I wouldn't label it this way. Driving Uber is not the only option in America.
Because remember that most jobs require you to show up daily at your own expense during off-the-clock time causing vehicle depreciation all the same.
And that is a difficult reality.
It doesn't cost that. That number is what the IRS accepts for deducting mileage expenses. That doesn't mean that's what it costs everyone. An older model and fuel efficient car will be less than half that on a per mile basis.
That's not going to fix it. If you artificially raise the compensation rates, you're going to increase supply (i.e. incentivize more people to be Uber drivers), leading to more downtime for Uber drivers because the supply of drivers outstrips demand for them. So the per-hour salary isn't going to go up for the drivers. Uber would have to limit supply or create some sort of tiered system - but those aren't perfect solutions either.
I know for me, pre-uber I probably rode in taxis once a year. I would usually have rented a car at the airport in most cases.
The inability of drivers to calculate depreciation prevents them from being able to assess whether or not the contract they're agreeing to is fair. If they actually knew how little they were being paid after depreciation they would probably sit at home and try to find a better job.
This is a market inefficiency in that the actual cost of delivery is not properly reflected in the primary market (between Target & customer) price and instead offloaded on another party. The delivery costs are being artificially lowered by Target taking advantage of workers with low financial acumen. If the cost of delivery as paid by Target to their delivery drivers was closer to the cost + wages it would most likely result in higher prices paid by the consumer. This would end up as less people using the service and getting off the couch and into Target. Or they wouldn't buy stuff.
If a product or service is only sustainable by exploiting people's ignorance and paying them below minimum wage then I don't think that product or service should exist.
That's just a factually wrong statement. But it also don't apply here. Google restricts the number of people it hires, Uber/Target do not restrict the number of people that register to drive for them ... yet.
>The delivery costs are being artificially lowered by Target taking advantage of workers with low financial acumen.
Yes. I agree with that, but fixing this is harder than you think. Let's say Target (or Government) decides to raise the rates from, equivalent of $10/hr to $15/hr, to properly account for delivery costs (and let's assume this has no impact on demand, which it will to the detriment of the drivers). At that point, you're going to attract the delivery drivers who weren't willing to drive for $10/hr but are willing to drive for $11/hr or $12/hr or..etc. Meanwhile demand hasn't changed, which means there is less work for individual drivers, and their wages do not go up, or go up much less than you would expect.
The only way to mitigate this is for Uber/Target to become a gatekeeper, and control the supply of drivers. This means that this gig-economy business goes out the door. Not everybody would be able to just start driving for Uber.
But are there enough people who are willing to drive for $11/hr but not for $10/hr to balance out the ones already driving for $10/hr?
We don't know.
It's possible that all or most of those willing to be delivery drivers for $15/hr are already driving for $10/hr, and raising the wage to $15/hr won't have an appreciable impact on the supply of drivers.