But, as I say, Felix is wondering if running a Prius instead of a Lincoln is that much of a saving. At first, it sounds like a dispute for people with both too much time and too much money, but midway through his column Felix takes a sharp left. Uber says that a Prius ride will be 30% to 40% cheaper than a Lincoln.
“If that’s the case,” says Felix, “then if you compare a sedan driver and a hybrid driver, the hybrid driver will need to be making three trips for every two the sedan driver makes, just to end up with the same amount of money. In order for the hybrid to be more attractive than the sedan, and taking into account the fact that at the margin you’d rather make fewer trips than more trips, a typical driver would realistically be hoping to double the number of fares she was getting before she was happy switching to the cheaper car.
“But I suspect that the real relationship here is not between Uber and its drivers, so much as it is between Uber and car-service companies. Any given driver might well prefer to continue driving a sedan, rather than being moved over to a hybrid. But the car-service companies make money on every fare, and so their best interest is served just by increasing the total number of fares, rather than the average income received per driver per day.
“As a result, I suspect that this move is going to decrease Uber drivers’ take-home income, on average, rather than increase it. As you might expect, when prices drop. But it will increase income for both the car-service companies and for Uber itself — and it will increase the total number of Uber drivers.
“It’s easy to sign up with Uber if you’re a company; much harder if you’re a single driver. The Uber model is that Uber contracts with the owners of capital, who then employ the labor needed to provide the service. And once again, the rich will end up making more, the not-rich will end up making less, and the rich will present the whole thing as a victory for all concerned.”
Of course, cheaper rides might encourage more people to use Uber, meaning more work for more Uber drivers. And, if Uber actually makes the overall transportation system more efficient, that makes the whole economy more productive. On the other hand, if driving a Prius is actually a bad deal economically for the drivers, they’ll look for more remunerative employment, forcing wages up.
Felix’s real beef is with Uber’s treatment of its customers, not its drivers, about which he’s written before, and about which I’ve written before, how companies trick you into arrangements that are convenient for you—you push a button and you’ve got a car—and then they hit you with a huge bill, which you, being a sucker, passively pay, ending up feeling like an asshole. “And so merchants will always find ways to charge us more now, if we’re not going to really feel how much we paid until much later. And then, when customers start revolting at the high prices they’re paying, the merchants will act like they’re doing us a favor by offering an inferior and cheaper option.” Those bastards!
Afterwords
By the time Felix reaches the end of his article, he’s not talking so much about Uber, which clearly got his goat sometime in the past, but his new bete noir, gas stations who charge much less per gallon of gas if you pay in cash rather than credit card. Felix gives as an example gas stations that charge the “real” price of gas when you pay cash and then much extra when you use a credit card—more than the service fee they pay the credit card company. That’s “price gouging,” howls Felix, citing as an example gas stations in Long Island that supposedly charge $2 bucks a gallon extra when you’re paying with plastic. Well, I agree that anyone who pays $2 extra a gallon for using a credit card is an idiot, but 1) paying with cash isn’t an “inferior” option, it’s just cheaper. And convenience—not having to load up with cash every couple of days, not having to stand in line to pay for your gas to the attendant, who may be fixing the Big Gulp dispenser or cleaning the doughnut case—is more than just convenience. It’s time. And time, dude, is money.
