I've just started driving for Uber this week and it has quickly answered a few questions for me. Everyone always seems to be trying to determine what Uber pays to someone driving for them full time and if it is worth it. There is lots of back and forth on this issue. My opinion is somewhere in the middle, but it is far from a glowing experience.
My initial idea on driving with Uber was to make a decent amount of money until I can find a full-time job. At the same time I have taken a job that on the surface pays far less than Uber pays at only $10/hr... so why take the $10/hr job?
In order to answer that question, we need to look at how things have gone in my first 3 days driving with Uber.
- Friday - $53.85
- Saturday - $76.67
- Sunday - $51.08
Looking at how much I earned is not the whole story. We also need to look at how long I spent driving.
- Friday - 4 hours
- Saturday - 8 hours
- Sunday - 3.5 hours
As you can see, how much you make driving for Uber can vary wildly depending on the day. Friday and Sunday I averaged around $15/hr. Saturday I was only able to average about $11/hr. So overall this seems pretty good right? We haven't begun to factor in the costs of driving for Uber, and boy are they extensive.
When you drive for Uber, they list you as an independent contractor. Doing things this way is better for Uber and much much worse for the drivers. Being an independent contractor means all of the taxes need to be covered by the driver themselves. I have already made a decent amount from my previous job this year meaning I expect my Federal tax rate to be 25%, add that to South Carolina's incredibly high income tax rate of 7% and we're already looking at 32% of my income allocated to taxes.
Wait that's still not everything, I am now required to pay Self Employment tax to cover Social Security, Medicare, and everything else under that category at a blistering 15.3%. Those of you keeping track, yes this means that 47.3% of everything I make is taxed almost cutting my earnings in half.
Aside from taxes, gas purchases are going to massively eat into your earnings. If I worked 8 hours a day, I'd need to fill my car up around 4-5 times a week at $25 per fill-up. In other words, I'm spending $100-$125 per week on gasoline.
Many of you may be aware of the ability to write off the mileage on your car. The current Federal mileage rate is $0.54 per mile. This is quite a lot of money to be able to write off. Now this will likely negate many of the taxes you owe to the government, but the write off only applies to your taxes at the end of the year. Until the tax season closes you will need to carry that money in case your taxes don't work out exactly as you plan, meaning that money is unusable until you file taxes.
Uber is the only one making out well in this deal, and even they seem to be struggling to turn a profit these days. Drivers bear all of the burden with taxes, wear on the car, mileage, and gas purchases. If you add in that Uber suggests buying water and candy for riders too, it just becomes unreasonable at some point.
This is not to mention that you must carry your own health insurance that could easily wipe out a week's worth of earnings.
Keep in mind that I am forced to drive with UberX which has the worst rates out there. I drove a full hour with a passenger yesterday and earned $35. Keep in mind that it was another full hour back to Greenville to get near where there were more passengers for me to start picking up.
So, should you drive for Uber?
If you need to do this for extra money, it will work for that. If you are considering doing this full time, turn around and run the other way fast! The math is just not in your favor.