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Editor’s note: This is the second story in a four-part series, reported and published with the Houston Chronicle, which examines the impact of Uber, the app-based ride-hailing service, on America’s fourth-largest city. Read parts one and three and four.
HOUSTON — One hundred job applications and still nothing. Jennifer Cantrell, 34, partway through a master’s degree in social work, had depleted her savings and needed a new plan. Through Facebook, she found out about someone subleasing cars to prospective drivers for Uber, the smartphone-based ride service. It seemed promising: She didn’t own a car but had a license and the willingness to learn the road.
So she leased a car and signed up with UberX. Yet after several months of pulling 30- to 40-hour weeks, and sometimes 60 or even 70, she found herself in the red, not only with the owner of her new Toyota but with her landlord as well. Her weekly earnings statements looked decent on their face — after Uber’s cut, around $400 for 35 hours — but she’d somehow be left with just $100 a week once she figured in gas and the lease.
Uber likes to boast that its affordable UberX “ride-sharing” service is powered by part-time drivers seeking work “outside the 9 to 5.” That sounds like a convenient sideline for people just like Cantrell: a cooler, more middle-class population than is usually drawn to taxi driving. Except that, for her, UberX was not a part-time gig; it was a full-time job that paid less than the minimum wage.
A precarious independence
The “gig economy” is having a moment. Companies such as Airbnb and TaskRabbit invite customers to transform their apartments and leisure time into business opportunities, and Uber, valued at $50 billion, does the same for automobiles. Through its UberX brand, drivers can take part in ride sharing not as employees but as self-employed, independent workers. The same goes for companies like Lyft and Sidecar, Uber’s smaller competitors in this new market of “transportation network companies,” or TNCs.
In Houston and other major U.S. cities, Uber drivers, like traditional cabbies, are considered independent contractors. As applied to occupations such as graphic design and long-haul trucking, the classification generally comes without minimum wages, overtime pay, workers’ compensation, disability or unemployment coverage, employment-based health insurance, sick days or vacation. It offers, instead, the promise of control over one’s schedule and equipment.
‘Now, to make $200, I need to stay on the app for 15 hours.’
Edgar Sanchez (pseudonym)
UberX driver in Houston
Most of the 3,500 taxi drivers in Houston, though, don’t enjoy this much freedom. A typical driver here is a middle-aged man, either a native-born American or first-generation immigrant from Africa, South Asia or the Middle East. He rents his vehicle and permit from a permit owner and hustles to turn a profit, working off a $500 weekly lease and roughly $40 per day in gas [PDF]. The city sets per-mile rates and fees.
While Uber refuses to specify how many drivers are working in the metropolitan area and has sued the city and state to prevent the release of related public documents, it has said that there are “several thousand Houstonians” using Uber “to make a living or supplement their income.” And since November 2014, when Houston began requiring Uber drivers, like cabbies, to register with the city, more than 8,000 vehicle-for-hire licenses have been issued.
UberX requires drivers to get a license, use their personal cars and meet certain minimum standards: a vehicle that’s seven years old or newer, has four doors and has logged fewer than 150,000 miles [PDF]. Houstonian Edgar Sanchez, whose name has been changed to protect his job, is a former cab driver who switched to UberX in 2013, buying a new 2012 SUV to qualify. UberX is less lucrative, but there’s just no business for traditional cabs, he said. He’s seen his income shrink dramatically, from $5,500 gross per month to just $3,200 today.
At a recent city inspection, Sanchez was told that his car could not be approved for TNC use because it has logged more than 150,000 miles. “I said, ‘Why? I used to drive a taxi, and it had 300,000 miles and ran well, no problem.’ They said, ‘It’s not a city rule; it’s Uber’s.’ … I still owe my bank $20,000 for this car.” An Uber representative said the city was responsible for setting TNC requirements. Houston says it’s in the process of reviewing driver requirements for taxis and TNCs [PDF].
Drivers like Cantrell, meanwhile, can’t afford to buy an Uber-compliant vehicle and thus resort to formal and informal leases. Uber itself offers vehicle discounts and financing options. Last year, the corporation was criticized for partnering with Santander Consumer USA, a leasing giant investigated by the Department of Justice for illegally repossessing vehicles from military personnel.
“I have seen [Uber] try to finance cars for other people, and I’m like, ‘That’s a disaster. Don’t do it,’” Cantrell said. “They offer new drivers these subprime auto loans to pay over $200 a week on their car note while the car depreciates like crazy. At least my situation is better: I can give [my lessor] my keys and say, ‘I’m not doing this no more.’”
Uneven insurance and rates
Insurance is another problem for Uber drivers. Unlike cabbies, they are required to carry personal, not commercial, auto insurance. In Houston, Uber’s $1 million backup policy kicks in only when a passenger is in the car or about to be picked up; drivers are otherwise at their insurer’s mercy. A part-time UberX driver in Houston who requested anonymity worries about navigating the hazy space between commercial and noncommercial use. At the end of last year he switched to a new insurance company. One of the forms asked whether he planned to drive for commercial purposes, to which he answered no. But was that a lie? What would happen if, while driving for UberX, he found himself in a fender bender?
The uncertainties of driving for Uber go well beyond insurance. Many drivers feel anxious about the customer ratings system, a benign feature at first blush. On each ride, a passenger chooses a rating between one and five stars, with five being the best. But, drivers say, anything less than a high four average can undermine their ability to get rides through the app.
‘[E]very day, there’s hundreds of new Uber drivers out there. ... It’s so oversaturated, it’s impossible to make any money.’
Former UberX driver, Houston
An UberX driver in Dallas who wished to be called “Joe” for fear of retaliation, has felt pressure to offer riders costly bottled water and gum, even on short rides, just to keep up his rating. And David James, an UberX driver in Pittsburgh who asked that his name be changed for fear of being dropped from the app, has heard from immigrant drivers that they receive comparatively lower ratings. “I do think the rating system encourages discrimination,” he said. “It encourages illegal activity, too. There was a girl who was drunk and she wanted to have five passengers in [my] car. I knew that was illegal and that if I got pulled over I’d be kicked off, but eventually I took them. They dinged me [on my rating] anyways because I hesitated.”
Such basics as the cost of a fare are similarly unpredictable, UberX drivers say. Sanchez recalls starting with the company at a rate of $2.50 per mile in 2013, “but eight months later it was $1.89 and last November, $1.10 a mile,” he said. (Uber did not respond to requests for confirmation of the $2.50 and $1.89 figures.) “Now, to make $200, I need to stay on the app for 15 hours.” Houston’s current fare of $1.10 per mile can surge to as much as 10 times the regular amount in certain locations during periods of high demand. By offering this boost in fares through constant driver-alert emails and text messages, Uber nudges workers to meet the increased passenger load of the annual rodeo and large conventions.
There’s another incentive: “guarantees,” or minimum hourly rates paid to drivers who meet certain conditions. In general, these surges and guarantees pull drivers into downtown and central Houston, the eight neighborhoods identified by Uber’s geofencing technology as having “consistently high” or “solid” demand. But when UberX vehicles crowd into these zones in search of higher pay, supply sometimes exceeds demand. A driver may “chase a surge” only to find, upon his arrival, that the area is no longer hot. And those trying to meet the requirements of guarantees may find it difficult to snag the requisite rides per hour.
Still, “Uber has expanded the pie — they’ve actually grown the number of rides and the size of the market,” said Eric Goldwyn, a Ph.D. candidate at Columbia University who studies transportation. Uber maintains that most of its drivers are part-time, and that may be how the gig economy works best. Of the UberX drivers interviewed in Houston, the dabblers and moonlighters were happiest with the app. The money was so-so, but they were in it as much for the ride as the income.
End of the road
Taxi and Uber drivers agree that the number of UberX cars is growing. While only the corporation knows the true number of vehicles operating in Houston, Cantrell saw the effect of oversupply in nighttime traffic and on her weekly pay statements.
She tried different tactics to beat the crowd: drive around, park somewhere strategic, chase surges, don’t chase them. Like every Uber driver, she hoped for trips long enough to absorb the $1-per-ride fee plus 20 percent commission that the company keeps for itself (28 percent for drivers activated on or after Sept. 11, 2015 [PDF]). It became difficult just to maintain what she was earning, because “every day, there’s hundreds of new Uber drivers out there. I’ll pull into a Walgreen’s parking lot, and I’ll see six of us. It’s so oversaturated, it’s impossible to make any money.”
Cantrell put her bets on a nocturnal routine downtown but got fed up by mid-July, when she received a final eviction notice for her apartment. She moved out, gave back the car she’d been renting and retired from the app, determined to start applying for 9-to-5 jobs once again.
In a stroke of luck, she got a salaried, full-time job at a social services agency and inherited an ancient Honda that a friend was giving away. Uber continued sending her text messages and emails, trying to goad her back to the wheel, but she has no intention of ever going back.
As a driver, “I work[ed] every single night from 3 or 4 p.m. until 1 or 3 a.m., the busiest times — when you’re supposed to be able to make the most money,” she said. “But certain days, you’re not going to make any money. You can make your own schedule, but … ” she trailed off, skeptical of that freedom.