No, Driving for Uber Is Not a Payday Loan: New at Reason

Some critics of Uber insist it’s as bad as a payday loan. Just how hyperbolic are they being?

Nick Archer and Jared Meyer write:

Considering that over half of Uber drivers still actively partner with the platform a year after they first started, the claim that Uber drivers lose money is laughable. But how much does it actually cost to drive for Uber?

Showing their confusion about the associated costs of driving with Uber, many commentators accept the 54 cents per mile that the IRS allows drivers to deduct from their taxes as the cost of driving. This amount drastically overstates the cost of owning, operating, and maintaining a vehicle, and assumes the vehicle is used only to drive for Uber.

To obtain a far more accurate estimate of the costs of driving, one must isolate the increase in costs attributable to the extra miles driven for Uber. In other words, people should not look at the cost of driving, for example, 10,000 miles per year. What needs to be analyzed are the costs from increasing vehicle usage from 10,000 miles per year to 20,000 miles per year.

The difference is massive.

According to AAA’s 2016 report, after taking into account vehicle, maintenance, and fuel costs, driving 10,000 miles per year in a small sedan (the preferred vehicle for Uber drivers) costs an average of 57.4 cents per mile. This is a significant sum, and one that would make driving for Uber a lot less appealing. However, the benefit of Uber is that drivers usually already own and drive their vehicles non-commercially (around 13,000 miles per year on average).

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