I occasionally find myself in an Uber or Lyft. I like to hear about the lives of the people who do the driving. They’re overwhelmingly from the distant suburbs and drive in to the city to collect fares. An hour away is the most typical distance. I ask why they don’t just drive near where they live. The numbers don’t add up. Not enough volume. The distances are too far and the empty round trips burn up miles with no income. And the price they get for each trip is geographically sensitive based on supply and demand. A driver can pick up and drop off fares continuously all day and all night in the city at a higher rate than a few scattered fares in the suburbs with a lower rate. Commuting in to town is wildly more profitable.
In Denver I chatted with a 30-ish woman driver about her situation. She left West Virginia looking for work. She rents an apartment in Colorado Springs an hour away since rents are half what they are in Denver. This arrangement is what economists call geospatial arbitrage. Her commute in and out of the city is paid for with airport fares from suburbia. She earns 90% of her income from Lyft and Uber. She said she’s saving up to buy a house back in Appalachia. She had a pleasant hippy vibe. She just got her certificate for therapeutic massage and a table at a work share space in a trendy neighborhood. She talked about how she liked Colorado because people ask if she enjoys her work and what she’s striving to achieve in her personal growth. No one back home in West Virginia ever asks about happiness. They focus more specifically on bread and butter and keeping warm and dry. But it’s home and West Virginia is beautiful and the kind of place where you can buy a house on the cheap and be close to your people. She’ll never buy a home in Denver. Never.
http://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-uber-driver/
Great link to MMM. Yes, Lyft and Uber’s corporate profitability are based on the human tendency to value small short term gains over huge long term liabilities. No surprise there.
I then went down a rabbit hole with his take on oil companies going the way of Kodak. I’m not convinced, but it was an interesting thought experiment.
I’ve talked with a number of Lyft drivers over the years. A lot of them are immigrants, but one was an MBA between jobs who was curious about the economics of driving for Lyft and Uber. She was wondering how much driving it would take to make one’s car payments, at least until her real job started in a few weeks. Another was an army veteran who worked in construction, lived about an hour out in the suburbs and gamed Lyft and Uber like a boss, as they say. Apparently, there are incentives for taking riders on long commutes and options to bid only for them. That meant he usually had fares each way. When his day job knocked off, he spent a couple of hours a day doing in town driving. Like many drivers, he had both Lyft and Uber running on his phone. He was saving up and buying real estate.
Are you the Johnny from the YouTube video? Do you still have the garage-home in Hawaii? You’re a good writer!
Yep. Same Johnny. Nope. I sold the Hawaii house a couple of years ago. How’d you find me here?
No idea!😱
Hi Johnny. I also found you through Kirsten’s YouTube video after someone mentioned your blog in the comments. That was last week and I’ve been binge reading your articles since then. I love your photos and writing style.
My wife and I currently own our home near L.A. but are tempted to sell and move in with my aging parents. Our options are to convert the existing 20X40 garage into an ADU or to build a small home on the 10,000 sq. ft. lot. We would do this with the proceeds from the sale of our home (current equity is approx. $300K), and either invest the balance or wait for the market to turn and purchase another home in the future. Thoughts?
Gerry, I’m absolutely not the right person to provide advice of any kind. I don’t know any of the particulars of your situation. In general I’m a big fan of multi generational housing for mutual support, etc. And this is a great time to sell property while we’re still in a cyclical bubble. I have a personal bias against stocks and bonds, but that’s just me. Earthquake/fire/flood hazards at your mom and dad’s place? So many variables….
Just read this article on what you had called the precariat.
https://www.barrons.com/articles/a-recession-could-be-big-trouble-for-the-gig-economy-51545927389?mod=mktw
Just like sweatshop workers back in the day. This article says temps are a rising share of the workforce even in manufacturing.
https://www.marketplace.org/2018/11/13/business/divided-decade/how-great-recession-helped-normalize-use-temp-workers?mod=article_inline
And yet, these workers are also the consumers that will have to buy all the stuff required to keep profits and thus executive pay high. I wonder how high total U.S. debts are going, post Trump tax cuts.
Love the Never-Never Girl Kelly Girl ad.
Interesting. I remember a discussion on a forum about how Uber and how it really screws over the people who work as drivers (mainly in the cost of car maintenance). But I think that, if folks are happy to work that way, then it’s not a bad deal for them. There’s so much more to life than cost as your last example illustrates. I’d take West Virginia over Colorado any day, even if no one asks about happiness. “Happiness” is one of those vacuous terms that our current society idolizes (as in “makes an idol of”) far too much. It’s not unimportant, but I think the last couple of generations have made it far more important than it warrants.
To quote Douglas Coupland, “Sharing is ownership for losers.”
I think everyone should be responsible for their own happiness. I decide every morning to have a great day. Not everything goes well but I don’t let one bad event ruin the rest of the day’s events. Now if you let advertising determine your happiness then I think you are doomed. 🙂
Double squeeze. Falling incomes. And relentless propaganda that says you have to spend more to have a decent life.
Accommodated by more family members (women) in the labor force, multiple job holdings, the elimination of retirement savings, rising mortgage and credit card debt, and then soaring public debt.
Until the screwed generations born after 1957 or so are forced to retire into poverty and see the standard of living that had been the whole project of their lives collapse.
Yes, as is sometimes pointed out on this site, it’s just a matter of when things collapse (and force some form of restructuring), not whether they collapse or not.
Collapse is a term that comes with a lot of baggage. A more technical description might be to say that things revert to a less complex form.
“Ash to ash, dust to dust…” 😉