'The algorithm is our boss': Uber drivers face long hours, no benefits and sometimes danger
- Uber says its mission is "to ignite opportunity by setting the world in motion."
- Yet as the company's initial public offering unfolded in May, drivers across the country went on strike to denounce low wages and lack of benefits.
- CNBC spoke with the company's drivers about how their financial lives are faring.
AT 3 A.M., SONAM LAMA'S ALARM goes off. In his house in Queens, New York, while his wife and baby son sleep, he pulls on his clothes and makes coffee. Then he turns on his Uber app and waits.
On this morning, a warm but windy Tuesday in May, an hour passes without a passenger request. "You're just thinking, 'When is the ride going to come? When is the ride going to come?'" the 35-year-old Lama said.
A little after 5 a.m., one does. In a collared, white button-down shirt and khakis, he's dressed more formally than usual. Later in the day, he's taking a test for a job with the New York Police Department. He doesn't want to drive for Uber anymore.
"I'm not making a living," Lama said. "Almost all drivers are looking for work elsewhere."
UBER SAYS ITS MISSION IS "to ignite opportunity by setting the world in motion." Yet as the company's initial public offering unfolded in May, drivers across the country went on strike to denounce its low wages and lack of benefits.
The ride-hailing company went public at $45 a share and has since dropped to around $40. On Thursday, in its first earnings report since the IPO, Uber showed revenue of $3.1 billion and a loss of $1.01 billion.
The company labels its 3.9 million drivers as independent contractors instead of employees, a distinction that means it isn't required to provide a minimum wage or paid time off, compensation for overtime or health insurance. And drivers are almost entirely on their own when it comes to the constant expenses of their cars, including insurance, repairs and gas.
Uber says it offers people a way to work on their own schedule. And while it insists its drivers are not employees, it says it's committed to proving a support system to them.
The company points out that it recently introduced a rewards program, which gets drivers cash back on gas and discounts on car maintenance. Drivers can also sign up for an injury protection plan, in which they'd receive a monthly check should they become injured while working. Perks include tuition assistance at Arizona State University.
CNBC spoke with the company's drivers about how their financial lives are faring.
FOR FIVE YEARS NOW, Ismail has worked for Uber in Minnesota. He likes the flexibility and has always enjoyed being on the road.
He has a full-time job — as a claim support specialist at CVS — but he makes only $40,000 a year at the pharmacy. (He asked to use his first name only since he was speaking about his employer.)
"The income isn't enough," said Ismail, who is 38, married and has three young children.
In a typical week, he drives people around for 30 hours and said he makes $500.
Many people drive for companies such as Uber and Lyft because "they don't get enough from their full-time job," said Lawrence Mishel, an economist for the left-leaning Economic Policy Institute. (Indeed, more than half of Uber's drivers work less than 10 hours a week, according to the company.)
Ismail's only day off is Sunday. "You basically don't have any life," he said.
Recently, Ismail was driving a passenger to the airport when one of his tires ruptured. He lost control of the car, and it smashed into a highway wall. He and the passenger were uninjured, but the damage to his car was significant.
It will cost him more than $3,000 to fix; however, he has no savings to draw from. In the meantime, he uses his wife's car when it's available.
RICK MENDELL'S ONLY JOB is driving for Uber. He's 65 and works around 70 hours a week for the company, earning around $1,200. "That's what it takes to pay the bills," Mendell said.
He didn't expect to be doing this kind of work in his 60s. He was general manager of a towing and auto-body company for two decades, and then owned a wine bar in Corte Madera, California, which he eventually had to sell when the financial crisis hit.
"When people are unemployed, they don't go out buying $400 bottles of wine," Mendell said. He depleted his savings trying to save the business. In 2016, he and his wife moved to a rental house in Nevada, where the cost of living is lower.
At first, he interviewed for a position as a wine and spirits specialist at the Safeway supermarket chain, but the job paid just $9 an hour. He attended career fairs but said he felt discriminated against because of his age.
That's when he turned to the Uber app. A recent analysis by the Retirement Equity Lab at the New School for Social Research found that workers over age 55 are three times more likely than those under 35 to work in the gig economy.
Mendell said he loves driving for Uber. The company recently notified him that he's given rides to passengers from 71 different countries. "I have met some amazing people," he said.
One time, hip-hop star Nicki Minaj got into his car. And Mendell said he likes taking care of his passengers; he stocks his backseat area with tissues, cold water bottles and "seven phone chargers."
Yet he can't keep up with the costs of his car. After a part on his 2015 Chrysler recently became unusable, he had to trade the vehicle in for another, racking up more auto debt in the process.
"Three weeks ago, I replaced the rear brakes for $300," he said. "You have to do the preventive maintenance, no matter how painful it is." All told, his car typically costs him around $1,500 a month.
He feels trapped without any paid time off.
"I'm working 70 hours a week, year in and year out," he said, "and I have to face the fact that I can't take a vacation for one week."
With little retirement savings, he tries not to think about what would happen if he couldn't drive for Uber anymore.
LAMA'S LIFE CHANGED for the worse after Uber changed its pay structure in 2016. Of late, he said he works 40 hours a week and makes around $800. At one point, he earned over $2,000 a week, though he was putting in more hours then.
"It's stressful," Lama said. "You have to make adjustments."
It was important to his wife to feed their child, named after his father, Sonam, organic food but she's had to turn to cheaper items. The three of them used to escape the city on weekends, often to upstate New York, but they do so less these days.
Between his loan payment, the insurance, gas and frequent cleanings, oil changes and tire rotations, he said his car drains him of $2,000 a month. He's been driven into debt, and said he has a credit card balance around $16,000. He has no savings.
Beyond the interview with the NYPD, he is considering training to be an electrician or plumber. "I want stability for my family," he said.
Despite all the time he spends in his car, Lama looks out of place in it. His legs anxiously open and close. He swipes away the repeated notifications that pop up on the three phones splayed across his dashboard (one for each app — Lyft, Uber and Juno. "With Uber alone, you can't make enough," Lama said).
He laughs at the fact that he's considered an independent contractor.
"The algorithm is our boss," Lama said. "That's the main guy."
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