Business

Boise Uber drivers struggle with lower fares

John Margarit on driving for Uber in Boise

Eagle resident John Margarit explains what he loves about driving for Uber and why Uber's fare reduction resulted in him cutting his hours on the road.
Up Next
Eagle resident John Margarit explains what he loves about driving for Uber and why Uber's fare reduction resulted in him cutting his hours on the road.

Good luck finding a more enthusiastic Uber driver than John Margarit.

The 53-year-old treated UberX, the smartphone app that connects passengers looking for rides with drivers looking for fares, as more than a full-time job. He got out of bed in his Eagle home to accept fares in the middle of the night. He has logged nearly 18,000 miles driving for Uber since October.

However, Margarit said he has reduced his driving from more than five days a week to peak hours on Fridays and Saturdays since Uber slashed its per-mile fare from $1.75 to $1 in January. Margarit said the cut prompted some Treasure Valley Uber drivers to quit. He said he now earns less than Idaho’s $7.25 minimum hourly wage after expenses.

“They are nickeling and diming us to the point where driving isn’t worth it,” Margarit said.

Uber spokesman Michael Amodeo countered that Treasure Valley driver and rider numbers have increased since Uber launched here in the Treasure Valley in 2014 and since the fare cut.

AFFECTED DRIVERS

Margarit changes out of his California beach-goer T-shirts and sunglasses into sharp dress dress shirts and slacks during peak hours on Friday and Saturday nights. He keeps the sun roof down in his 2015 Kia Optima in warm weather, cutting the alcohol breath from drunken passengers riding home from bars.

He chats with riders. They seem to appreciate his easygoing nature: He has a printout of Uber reports showing that he is among the top-rated drivers in the Valley, Uber’s only Idaho market, averaging a rating of 4.9 stars out of five. Among riders’ comments: “Love the seat warmers.” “Every driver should be this guy. 10 stars.”

Margarit’s reports show that he earned between $600 to $1,000 per week from last October, when he started, through December. That was enough to leave construction management, where he had gone without paid work after completing several interior-remodeling jobs. Driving for Uber afforded Margarit the flexibility to drive during his fiancée’s long shifts as a nurse and after dropping off his 11-year old son, Jacob, at hockey practice.

His Uber reports show he now typically earns $250 to $450 per week. “When you look at gas, taxes, wear and tear on vehicle, driving to pick up riders, it works out to maybe five bucks an hour,” Margarit said.

As an independent Uber contractor paid by the mile, he is not subject to the wage law, though the company guarantees $9 per hour for active drivers and $14 per hour during peak hours. At $9 per hour, Margarit said, his take-home pay falls below minimum wage. (Uber and drivers in California and Massachusetts settled lawsuits Thursday, allowing Uber to keep its drivers as independent contractors.)

Margarit said his Uber pay and his fiancée’s nursing job meant the couple was doing well financially before the fare drop. “I was making plenty of money with Uber, and I liked it,” he said. Now he intends soon to look for work or return to school.

69%of Uber drivers have other full-time or part-time work.

20% of Uber drivers rely on the service as their only income. Uber driver survey

38% say Uber fares are not a significant income source.Uber driver survey

DRIVERS DOWNSHIFT

Boisean David Yahn said he drives for Uber to get out of the house. At 64, Yahn is retired from a career as an auto dealership financial manager. He turns on the UberX app at 4 a.m., when his biological alarm clock rings anyway, to catch travelers heading to Boise Airport.

Uber advertises the flexibility for drivers to log on and off with a push of a button. That appeals to Yahn.

“If I don’t want to go out, I don’t have to tell anybody,” Yahn said.

Yahn does not drive during peak hours, because he doesn’t like driving drunken passengers and does not need the money. Social Security and a small veteran’s disability benefit pay his bills. Uber “gives me money for playing and something to do,” he said.

Yahn said his earnings have fallen about a third to $400 per week since the fare fell, though he still drives about 40 hours a week. He said he nets about $6.25 per hour after expenses, not enough to support full-time drivers he knows.

One driver acquaintance quit. Another now drives 14 hours a day, six days a week to turn a profit after making payments on a vehicle bought specifically to drive for Uber, Yahn said.

“Uber is a fantastic system, but these rates are killing the drivers,” he said. “The people who relied on driving as a primary source of income can’t do it, and I can’t blame them.”

UBER RESPONDS

Uber, which serves at least 100 cities in the U.S. and 408 across the globe, lowered fare rates in many U.S. cities to attract more riders, Amodeo said.

Uber collects 20 percent to 25 percent of most drivers’ fares, plus a $1.05-per-ride fee.

Uber cut fares to attract people not using the service, such as commuters. If successful, the increased volume was expected to result in higher paychecks for drivers even at the lower rate.

Amodeo said this week that about 1,000 Treasure Valley drivers had logged at least one ride within the last month. The spokesman said he did not have ridership numbers and that a usage spike during Treefort Music Fest in March may have caused much of the increase.

Brian Taggart, a Boise Uber driver referred to the Statesman by Uber, said the fare cut has drawn more riders. Taggart, 53, is a retired pilot who accepts two to five afternoon rides each day to supplement his pension.

“All of the passengers have noticed it,” he said. “Uber’s goal was to have people use it more often than before. That’s happened.”

Margarit and Yahn disagree. Both said they make a point of asking riders about the reduced fare. They say most riders told them they had not noticed a difference in their Uber fares, which they said shows Uber’s strategy isn’t increasing rider volume.

“Nobody complained about the prices,” Margarit said. “Everybody loves the service. [Uber] could have raised rates by a quarter and nobody would have cared.”

Taggart said there is always demand for rides when he turns on his driver app. He said a full-time driver might have to log more hours as a result of the rate cut, but driving is more of a social experience for him and a way to make “beer and lunch money.”

“If you are a retiree or on fixed income, it’s all about the tax write-off [for mileage and expenses], not about the increase of your net worth, because I don’t think Uber is a way to do that,” Taggart said.

Half of Uber drivers average fewer than 10 hours of driving per week. 19% are women. Uber driver survey

It’s difficult to say how much Uber has hurt the Treasure Valley’s taxi business. Calls to several Treasure Valley taxi companies were not returned.

Currently, 143 taxi vehicles are registered in Boise, according to the city clerk’s office. That is up from 135 in 2015 — Uber’s first full year in the Treasure Valley — but down from 173 in 2014.

About a third of Uber drivers surveyed nationwide in November had prior experience as professional drivers, the company said. That was down from 49 percent one year before.

11%of Uber drivers are students.Uber driver survey

ADJUSTMENT COMING?

Margarit said he would return to driving full-time if Uber restored the $1.75 fare. He said the company does not understand that he sometimes drives 15 minutes for a fare that winds up around the Uber minimum of $4.50, resulting in $3 to $4 in take-home for drivers. That is why he contends Uber’s strategy might work in other cities but not here.

Amodeo said a team in Seattle tracks trends and operations in Boise. The spokesman said Uber’s strategy is working here, but if that changes, Uber will act as it did in Charlotte, where it reduced a 40 percent rate cut to a 29 percent cut to encourage drivers to take more riders.

Related stories from Idaho Statesman

  Comments