It's not clear to me that the contracting model for drivers is illegal. Drivers choose their own hours, own their own cars, and don't have to be exclusive to either Uber or Lyft--many drivers drive for both more or less simultaneously. That's the most clear cut example of a valid, legal contractor model I've seen.

If working your own hours, with your own equipment, for one or two companies is illegal then myself and a lot of Hacker News are working illegally.

working almost 40 hours of week for only one company as a contractor _is_ illegal. In the eyes of the IRS you are an employee, not a contractor. But this is illegal for the employer rather than the employee in this case.

That's not true. Working 40 hours in a week is not a problem. A contractor can put in an unlimited number of hours if they wish. 20, 40, 80 - it doesn't matter.

The differentiator you're probably thinking of is whether the worker chooses which hours they work. If the worker decides independently how much they will work and at what times then the IRS doesn't tend to consider the relationship employment -- regardless of how much time is put in. This is precisely how these driving services operate.

If the employer is scheduling a fixed schedule, say 9-5 M-F, then the IRS considers it an employment arrangement. Regardless of the number of hours worked. But that is not at all how these services operate.

One of the defining features of Uber is that the drivers set their own hours, too. That's how surge pricing is supposed to work--it's supposed to incentivize part-time drivers to get off their butts and drive during peak times.

Sometimes it backfires; Uber sent warning emails about surge pricing New Years Eve to drivers and to riders, and the cumulative effect of the warnings resulted in a glut of drivers and relatively little surge pricing in Seattle, at least according to a driver I talked to. In this case, leaving it as a contract arrangement even works for Uber because it lets them leverage market forces where a traditional employment model would make it impossible.

Why would a lyft driver be paying SF rent? The notion that low income earners ought to be renting in extremely expensive neighborhoods is nonsense.

If I can commute across the bay so can everyone else.

I'm a little sad that the entirety of SF is now considered "extremely expensive neighborhoods".

What's your response going to be when Oakland also becomes "extremely expensive neighborhoods" (if it isn't already)?

Well I live a lot further away than Oakland. I commute from along the 680 corridor which is further than may are willing to endure, I think. Luckily there's still quite a lot of affordable housing in safe neighborhoods in San Leandro, Hayward and El Cerrito (to name a few), all of which are much shorter commutes than mine.

But the more general answer to your question: When supply outstrips demand the only reasonable response is to build more housing.

Complaining that driving jobs have low value isn't constructive. The value of those jobs will approach zero soon due to technology. Instead, address the economic imbalance and let supply meet the demand.

Walnut Creek

Most of the Lyft drivers I've spoken to recently lived in Walnut Creek or further out. I only occasionally seem to get someone from Oakland, let alone SF.

The uber announcement notes that "Partner Drivers will receive fares based on time and distance, the same as they normally do." So it appears they aren't taking the hit. Lyft doesn't comment on it...

Drivers' salaries can only go as low as drivers are willing to be paid to drive. That's no different than literally any commercial interaction. You could always volunteer to pay more, and the other party would probably be appreciative.

Of course, in this case I think it's pretty clear that Lyft and Uber are subsidizing the rides and paying drivers much more than the cost of the ride. If wealthy investors want to pay people to drive me around, I'm game.

This only holds so long as you believe the drivers are rational actors, and account for all of their own costs. From talking to drivers I've ridden with, most have literally no idea how much their driving is depreciating the car, nor do they factor in things like an increased maintenance schedule into their calculations.

I suspect Uber and Lyft would continue to experience their current glut of drivers, even if the entire model boiled down to nothing more than drivers effectively trading the equity of their vehicles for cash at a terrible exchange rate.

I prefer the assumption that people tend to be rational actors who account for their own costs than the assumption that there is some group of people able to rationally prescribe actions and account for the costs of other people they have never met.

What does meeting people have to do with anything?

It's pretty straightforward to figure out what the costs are of an UberX or Lyft driver, knowing their car model and year and also knowing how much they drive. These are facts, and they can be calculated once and held to public scrutiny and review. There's no need for everyone to redo that calculation.

Now that we have something that can be calculated, we can move forward based on reason, without having to decide which of two assumptions we prefer.