For the past week, Naked Capitalism has run a series of articles by transportation industry expert Hubert Horan on the economic shenanigans of Uber, which cooks the numbers it shows investors, drivers and the press to make it seem like something other than a black box that uses arrogance and lawlessness to make a bet on establishing a monopoly on transport in the world's major cities.
Horan started with four articles on Uber's economics: Understanding Uber’s Bleak Operating Economics; Understanding Uber’s Uncompetitive Costs; Understanding False Claims About Uber’s Innovation and Competitive Advantages and Understanding That Unregulated Monopoly Was Always Uber’s Central Objective — today, he finishes (?) up with a fascinating Q&A with the commentators who've followed the series.
To simplify just a bit, the Uber strategy was to (1) jumpstart rapid growth with driver pay premiums that would get lots of drivers to switch from traditional operators; these premiums were real but not as large as they seemed because drivers hadn’t figured out how to properly deduct vehicle costs to determine true take home pay, and by willful falsehoods (our drivers make $90,000) (2) gradually cut back driver pay once Uber was clearly a large established play by eliminating incentive programs and increasing the percentage of fares Uber retained; but drivers can’t do anything about pay cuts because they’ve locked themselves into car payments (3) At some point—and according to the study quoted in the second article in the series, it may have already happened—true Uber take home pay (after vehicle costs) is no better or slightly worse than what Yellow Cab paid before (4) Uber achieves industry dominance, drivers have no alternatives, and take home pay falls to (or even below) minimum wage level.
