When Steve Smith began driving for Uber and Lyft several months ago, he concentrated on picking up passengers near his Walnut Creek neighborhood in the San Francisco Bay Area.
“At first I thought I was earning money,” says Smith, who also works in the oil industry.
But then he signed up for SherpaShare, a free analytics site that helps ride-hailing drivers calculate their real incomes. He discovered that his net pay was much lower than the $20 an hour he had estimated.
“I was probably making $10 an hour in Walnut Creek, if I took into account my total travel time,” Smith says.
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Lyft and Uber market themselves as frictionless routes to high-paying work. Lyft’s application page entices would-be drivers with the promise “Make up to $35/hr driving with Lyft.” Uber has asserted that the median yearly income for drivers with UberX, the company’s lowest-priced service, is “more than $90,000” in New York and “more than $74,000” in San Francisco.
But those rosy outlooks tend to refer to the higher end of their driver pay scales and omit details such as the cost of gas, car payments, insurance, depreciation and self-employment taxes. With SherpaShare, drivers can input their daily incomes, number of fares, working hours, expenses and mileage to obtain not only more concrete information on their net pay, but also insights into the driving patterns that are most profitable for them.
In Smith’s case, he understood after examining his SherpaShare charts that Walnut Creek, though convenient, was his least profitable terrain.
“I realized I was spending a lot of time waiting, and I could earn a lot more by going to another area,” he said. “As soon as I was working in Oakland and Berkeley, I was making $20 to $25 an hour – and San Francisco added another $10 an hour.”
Over the past five years, with the advent of the sharing economy, hundreds of thousands of people have rented out their homes, their cars, their parking spaces or themselves for short-term contract work through virtual marketplaces. The sites and apps act as brokers, taking commissions on the transactions. The companies typically treat the people who find gigs through their platforms as independent contractors who are not entitled to standard employee benefits and may be fired at will. (Some drivers in California are suing Lyft and Uber contending that their drivers should be classified as employees.)
Venture capitalists see big opportunities in the business model. Uber has raised about $6 billion in venture financing and is valued at more than $40 billion; Lyft is valued at $3 billion. Investors see the potential for these kinds of companies to take on sectors like mail and courier services and grocery and meal delivery services now dominated by Amazon and GrubHub.
The novice freelancers attracted to this work often overestimate their potential income, employment researchers say. Contingent workers may also be unprepared for virtual labor marketplaces that frequently change their compensation rates and vary the incentives they use to encourage people to work certain schedules.
“One of the things that I think that workers, young and old, value is having some certainty and control over both hours and earnings,” says Thomas Kochan, a professor of work and employment research and engineering systems at the MIT Sloan School of Management who is teaching an online course this semester on the future of work. “When you take that away,” he says, “you create enormous uncertainty and stress.”
Over the past year, startups such as Peers, an organization for independent contractors; Even, an app intended to help create a steady income flow from workers’ irregular paychecks; and SherpaShare have sprung up to help people navigate the financial complexities of so-called gig work.
“We realized the biggest challenge was that drivers didn’t understand how much they needed to pay for fuel, car maintenance, depreciation and tax,” Ryder Pearce, a co-founder of SherpaShare, said recently at the company’s San Francisco office.
He and his co-founder, Jianming Zhou, met at an event for startup entrepreneurs in early 2014. They each had experience in travel and transit – Pearce as an urban planner who had developed bicycle paths and street zones for pedestrians in New York City and Zhou as a software engineer at location-based startups and the founder of a travel-planning site.
SherpaShare’s founders say their service now has more than 10,000 active users including drivers who work for Uber, Lyft and Sidecar, and for food delivery services including Postmates, Fluc and DoorDash. About two-thirds of those users work for more than one service, Zhou says.
“We want to become a financial layer for those services,” he says. “We are giving the picks and shovels to these drivers who haven’t had any support.”
To understand the challenges drivers face and the financial analysis that could help them, Pearce and Zhou occasionally drive for Lyft and Uber. This year, the two produced a short video for drivers explaining how they could use their SherpaShare data to complete their tax forms. For now, SherpaShare is free for individual drivers, but the startup, based in Menlo Park, Calif., plans eventually to charge for additional services.
The site collates the income reports drivers receive from ride-sharing apps – along with expenses such as gas – and displays the data in pie charts and graphs, enabling people to compare their gross and net weekly pay or their Lyft income to their Uber income. Users can also compare their daily average income and average number of trips to the daily driver averages in their own city.
Running the Numbers
Freelance driving has proved to be a popular occupation. By the end of 2014 in the United States, more than 160,000 people, slightly more than Amazon employs worldwide, worked as Uber drivers.
“The flexibility really jumps out,” David Plouffe, Uber’s senior vice president for policy and strategy, said in an interview early this year. “There’s really nothing like it in our economy where a person has complete control over their work hours.”
Drivers who find gigs through virtual labor marketplaces, however, often have control over little else. Uber and Lyft, for instance, each set the rules and rates for drivers who use their apps and typically take a 20 percent commission on fares. The apps also offer complex incentives to drivers – with reduced-fare pricing during certain promotions, increased fares for certain neighborhoods during peak commuting hours, and bonuses for people willing to drive for 30 hours a week or more.
Even so, some drivers say that, when they do the math, they have found that they earned less than they had expected.
Drivers who use SherpaShare say they find it easier to predict their incomes and to compare the companies’ public statements on driver pay with their own earnings.
“If you drive for multiple platforms as I do, it’s difficult to keep track of your earnings and related information like the number of rides I’ve completed per company,” says Carlos Silva, who has been driving for ride-hailing services in the San Francisco area for more than a year. “Since I started using Sherpa, with a tap I can see detailed information on how I am doing, how much I’m making.”
This month, SherpaShare introduced a mobile app that calculates total mileage and driving time, from the moment drivers first leave home to pick up a passenger to the moment they turn off their ride-hailing apps for the day.
Once the company can automatically factor in idle time, Zhou says, drivers may discover that their true hourly pay is lower. But at least they will be able to make data-based choices about their future gig work.