My business affords me the opportunity to travel a lot and meet people with many backgrounds. This week I was in New York City. My preferred form of transportation is Uber. Uber is a great resource and intricately engaged in the fabricating of public transportation. Their App is simple and scheduling rides are easy. The best part is all the arrangements for cost and tip is disclosed and deducted from your credit card before you get in the car. At LaGuardia Airport there are designated pick up areas for Uber, Lyft, and other “ride sharing” companies. I use Uber regularly and have had exceptional experiences every time. The drivers are all independent entrepreneurs that take pride of their “company” evident by their cheerful attitude, clean cars, prompt arrival, and sometimes complimentary snacks and water.
During my ride to Newark Airport, I was picked up by Mohammed who started driving for Uber three months earlier. His English was good; his Camry was new and clean, and most importantly had navigation maps all set up to get to the airport in the most efficient time. In comparison, unionized Yellow Cab company’s fares based on time in the car and tips are not disclosed up front. There is no incentive to get you to your destination on time, and with luck, no accidents slowing up traffic. I know of many stories of Yellow Cab rides suspiciously taking longer routes and they charge a fee just for opening their door. At dinner my client told me last year during a hail storm in New York, a cab driver refused to drive he and his colleague because they only wanted to go six blocks.
I learned from Mohammed that a Medallion License in New York from Yellow Cab costs $500K, down from $1 million and that drivers for Yellow Cap must drive seven days a week to make enough to earn a living and pay the weekly fees to Yellow Cab. Mohammed owns his new car, drives when he wants and improves his success with good ratings by former “clients” (when did you last give a recommendation of a cab driver?).
What I enjoy most about my Uber rides is hearing their story (they all have stories). Mohammed, 22 years old, came to America less than two years ago from Pakistan not knowing any English. Since he was not entitled to the same government subsidies offered to Americans, he worked several different jobs and obtained his work Visa. During the following 18 months, Mohammed documented his income with tax returns because per advice that the more taxes paid, the quicker he would qualify to buy a car. Three months ago he bought his 2015 Black Camry with money saved with a loan at a “reasonable interest rate” due to his documented income. He applied and obtained his Medallion License with Uber and began driving (he now also has a license with Lyft).
Unlike his Yellow Cab colleagues, he works five days a week for 8 to 10 hours a day. On most days he earns $300 and the previous day he drove for 14 hours and made $450. Doing the math, I figured he would make over $72K a year. His goal is to buy his first home in the next year and then maybe rental property after that!
In September I met Harry Campbell at the FinCon conference (where media and finance collide) who hosts his blog and podcast site The Ride Share Guy. He specializes in all topics related to the ride share industry and has been a terrific resource to anyone interested in learning about and improving careers in Uber, Lyft, or other forms of ride share enterprise. I asked Harry about the average duration of people staying with Uber or Lyft and he said:
“About half of all drivers quit after just one year which is a pretty high turnover rate. That being said, there are lots of bonuses for getting started and like with any job, the more you do it, the more like a real job it becomes.”
In one of his blogs he states:
“There’s a lot to like about driving for rideshare companies like Uber and Lyft, and most people don’t realize just how flexible it is until they start doing it. In fact, I can’t think of another job that would allow you to log on whenever you want and work as much or as little as you want one week, then do the opposite the next week. That would be a scheduling nightmare for a manager at a retail store, but Uber lets you do just that.”
I agree with Harry. Maybe Uber and other rideshare companies are not long term careers, but they offer the opportunity to start on the path of entrepreneurialism. American youth are complaining about the lack of possibilities. Presidential candidates talk about the widening wealth gap between the haves and have-nots. However, Mohammed has proved them different. Where else can an immigrant enter a country and have the opportunity to exceed the average American income by 200% within 24 months? Ms. Clinton’s spoke disparagingly about the “Gig Economy.” She said on July 13:
She would “crack down on bosses who exploit employees by misclassifying them as contractors or even steal their wages.” While she didn’t call out Uber by name, the ride-hailing giant has come under scrutiny for its practice of classifying drivers as independent contractors rather than employees.
My opinion is the Gig Economy may be the last chance for Americans to save America. The foundation of America’s history and economic success is the result of people identifying needs and building enterprises to meet those needs. As we have discussed, small business creates more jobs, employee more people, grow earnings faster and pay more taxes than all Fortune 500 companies combined. Uber’s acceptance into markets has been nothing less than a battle against unions and union supportive politicians. Politicians and regulators site “safety” and need for regulation over Uber to protect its drivers and customers. Currently, Uber banned in cities throughout the US and the world include Brazil, San Antonio, Austin, and the entire state of Nevada limiting passenger options to unionized cabs. Without a doubt, unions served their purpose during the early years of our country’s merge into the industrial age when companies forced employees to work in unhealthy environments at sub-standard wages. Some corporate farmers and land owners instituted housing fees well above employee wages that kept employees indebted like slaves never able to leave or pay off their debt.
Americans need to vet out their political candidates to determine who will pass business-friendly legislation and structure tax laws that encourage risk and growth. Promises to save America and provide government subsidies are not what Americans need. Government entitlement programs with tax payer paid tax-free subsidies are financial traps that lure people in with no exit strategy. Now via the internet, it is easier to apply for government subsidies includes unemployment, food stamps, Medi-Cal, housing assistance, child support, etc.
Some people at various times in their life need help as life happens, and they find themselves in desperate situations. I get it. However, more politician’s formula to getting re-elected is to campaign to a growing population of government subsidized voters on the platform of attacking the rich (formerly the “man”), enhance government programs, and re-distributing the wealth to narrow the wealth gap among Americans. Politicians, many of whom never worked in private sector, are inept in creating jobs. They are skilled at enslaving people into government programs and then obtain their votes in fear of losing the benefits – not much different than early day farmland owners.
Business owners create jobs and, as stated earlier, mostly by small business owners that include your local retail stores, construction company, landscaper, carpet cleaners, painter, dry cleaners, and Uber drivers.
What America needs is more people like Mohammed. Congratulations to him and I hope his entrepreneurial spirit spreads to others!
Anton is the Co-founder of Financial Time Traveler, CEO of Up Capital Management, Inc., a Registered Investment Advisor, as well as the Co-Founder of Harris-Bay Real Estate Investments. His curiosity is a key attribute to his success and he plans on sharing his love for people and business as much as possible.