By Holly Johnson
Thanks to the modern marvel of the Internet, a slew of disruptive technologies have completely reshaped entire industries over the last decade. Think about how Amazon.com reinvented shopping by offering subscription services for everything from diapers to groceries with Amazon Prime, for example. And remember Blockbuster? Streaming video services like Amazon and Netflix turned video rental storefronts into the dinosaurs of their industry practically overnight.
But the changes are far from over. The invention of the mobile app has begun to change the way humans do nearly everything else, from shopping to traveling and more. Now, thanks to another disruptive technology called Uber, your mobile phone can summon you a private car service — or act as a punchcard for your new career as a driver.
Unless you’ve been living under a rock, you’ve likely heard quite a bit about Uber by now. If not, I’ll provide a brief explanation of what the company is and isn’t – and how it works.
Basically, Uber is an Internet-based company that connects drivers and riders for mutually beneficial ridesharing agreements. But unlike most taxi services, Uber allows its drivers to use their own cars and largely determine their own work schedules.
But the experience is different on the customer end as well. Instead of standing on a street corner hailing a cab or Uber car, patrons use the Uber app on their mobile phones. Once they request a ride, Uber drivers in the area are notified so they can offer to provide the ride and earn some cash. Uber technology is simply the platform that brings these two pieces of the transaction together.
Since Uber does nearly all of the heavy lifting, the result is an unnaturally seamless interaction between the customer and the driver. And with profit-hungry taxi companies essentially being removed from the equation, the rides Uber negotiates are generally much less expensive than the alternative (except during times of peak demand and when drivers are scarce, such as during a snowstorm).
Much to the chagrin of the big taxi lobby and local hackney departments, lower prices are a big win for consumers who rely on cheap and easy transportation to get around.
Of course, that doesn’t mean that Uber isn’t making any money. A corporate document recently leaked shows that the company plans to generate as much as $10 billion annually in the next few years. Of course, recent reports also show that Uber is currently losing money despite their rapid growth. By all accounts, however, this is due to Uber’s reinvestment in the company. By spending money now, they hope, they can gain more market share and make even more money down the line.
With such big plans in the works, it’s easy to see why so many people are trying to figure out how to get in on the ground floor of the rapidly expanding rideshare industry. Fortunately, the requirements to become an Uber driver are not insanely complicated or difficult to understand. Here’s a basic rundown of the requirements, benefits, and drawbacks of being a driver for Uber, as well as how you can get started.
What Does it Take to Be an Uber Driver?
According to Harry Campbell, a writer and entrepreneur also known as The RideShare Guy, the main things you need to get started are a smartphone and a newish four-door car. Uber requirements do state that your vehicle needs to be a newer model ( at least 2006 or 2011 in most states), but they have been known to make exceptions for older luxury cars — think a classic Mercedes.
Harry also notes that Uber requires a car inspection, but that this can be performed easily and cheaply at your local car shop. And other than owning a car and getting it inspected, there are virtually no other start-up costs involved.
Of course, Uber has an interest in making sure its drivers are safe and not crazy, which is why they also require a thorough criminal background check. While this might be a pain for potential Uber drivers and could eliminate candidates who have a criminal past or a drunk driving conviction, it’s in everyone’s best interest for Uber to ensure their drivers have a safe driving history and clean slate when it comes to criminal offenses. No one wants to hop into a car with a stranger who may or may not have been convicted of armed robbery or driving to endanger.
What Kind of Insurance Do Uber Drivers Need?
Contrary to popular belief, Uber drivers don’t need to purchase commercial insurance in order to carry passengers.
“Uber requires that you have personal auto insurance,” notes Campbell. “But once you accept a ride or while you’re on a trip, they provide primary liability insurance up to $1 million dollars and excess collision coverage with a $1,000 deductible.”
In other words, the cost of additional insurance is covered by Uber, although that expense is paid for by taking a cut out of each ride an Uber driver performs. Still, many would-be Uber drivers might be relieved to know that they don’t need to purchase special insurance to get started.
- Related: Airbnb and Uber: Insurance in the Sharing Economy
What Rules Does Uber Have for Its Drivers?
We’ve already covered the main requirements for the job – a smartphone and a decent ride. But those aren’t the only criteria.
Uber has also implemented a scoring system that lets users rate their experience and leave feedback. And according to Harry, active Uber drivers must receive mostly good marks – or else.
“After every ride, passengers are able to rate drivers on a scale of 1 to 5, and that is another way to weed out bad drivers,” says Harry. Currently, Uber asks that all drivers maintain an average of 4.6 across all of their reviews.
In addition to those requirements, Uber also requires its drivers to be 21 or over, and have no major accidents in the past few years, including DUIs. A clean driving record also helps, although a speeding ticket or two may not necessarily disqualify you from the gig completely.
How Do You Get Started Driving for Uber?
Applying to be a driver for Uber is as easy as visiting their website to fill out any applicable forms and submitting to a criminal background check and vehicle inspection. And since the company is currently in growth mode, they are even offering sign-up bonuses of $100 to new drivers who complete at least 20 rides.
And just because you don’t live in a huge or tech-savvy city like San Francisco, New York, or Las Vegas, don’t think you can’t drive for Uber. The company is currently expanding globally and actively trying to spread its reach into markets of every shape and size.
Although you do need to sign a contract to drive with Uber, it is essentially just a standard driver agreement, says Campbell.
“You’re actually an independent contractor with Uber, so you’re free to work for other rideshare companies if you’d like,” he said, such as competitor Lyft. “Many drivers do just that.”
What Are the Benefits of Driving for Uber?
“The best thing about working for Uber is the ability to make a decent wage on your own schedule,” explained Campbell, who has driven for Uber since shortly after it launched in his home state of California.
In fact, the flexibility extends far beyond the hours you choose to work on any given week. Since you don’t have to make any sort of commitment, you can easily take time off for the big moments in your life as well, such as vacations, a wedding, the birth of a child, and more.
“There aren’t many jobs that will let you take a month off if you’d like and then come back and start working again,” he explained. “Alternatively, if I need some extra cash, I can just ramp up my hours.”
How Do You Let Uber Know You’re Available?
According to Campbell, Uber drivers notify the company of their availability through the mobile app. Bored? Turn on your app. Too busy or sick of driving? Turn it off.
Just remembered that you need to earn a little extra this week? Turn your app on, for heaven’s sake, and keep it on.
“You can log on any time you want, log off if you’re tired, take breaks or even do a long lunch if you want,” says Campbell.
Obviously you won’t make any money when you’re not working, but the fact that you can opt in and out as your schedule permits makes driving for Uber a unique gig. And if you want to earn more, you have that choice. With Uber, you decide when you are available and ready for business.
For the sake of comparison, let’s first look at the average salary of a taxi driver or chauffeur. According to the Bureau of Labor Statistics, taxi drivers and chauffeurs earned a median annual wage of $26,070 in 2015, or an hourly rate of $12.53. Even the top 10% of earners in the country didn’t do that much better. BLS data shows that the top earners in the industry made an average of $37,970, or $18.25 an hour, that same year. Ouch.
Contrastingly, Uber drivers tend to make more than that. According to one interview Uber executives did with the Washington Post, UberX drivers in New York City can earn upwards of $90,000 a year. San Francisco drivers earned a cool $74,191 for a 40-hour work week.
However, Uber has backpedaled on those estimates somewhat, and now claims that the average wage for its drivers in New York City is closer to $25 an hour. Some UberX drivers contend that, after gas and tolls are factored in, they are barely making minimum wage. Other surveys and reports suggest Uber drivers earn about $19 to $21 an hour before gas and wear and tear on the vehicle are considered.
Campbell, who drives near his home in Southern California, says he’s pretty happy to make $20 to $30 an hour on average, although he has managed to make as much as $500 per night at times. But those big money nights aren’t really typical, says Harry.
“Driving off-peak hours isn’t quite as lucrative due to some recent fare cuts, but there is still plenty of opportunity for part-time drivers like myself.”
With plenty of years of experience under his belt, Campbell now coaches other Uber drivers on how to maximize earnings with his second site, MaximumRidesharingProfits.com.
How Do You Get Paid?
One of the ways Uber simplifies the rideshare process is by making the transaction cash-free. In fact, Uber users are required to register with a credit card when they sign up and use that card to pay for all of their rides — no exceptions allowed.
But that money doesn’t go directly into the driver’s pocket immediately. The Uber app keeps track of each of its drivers’ earnings and pays them on a weekly basis via direct deposit.
So while Uber drivers may not get paid in cash on a daily basis like some taxi drivers, they are still making their wages nonetheless. In fact, many people may see this feature as a benefit since the weekly payment is more likely to mimic a regular paycheck, and it eliminates any potential disagreements or awkwardness that could arise when money changes hands between passenger and driver.
What Are the Drawbacks of Driving for Uber?
Of course, no job is perfect, and that sentiment is true when it comes to being a rideshare driver as well.
Unfortunately, one of the biggest drawbacks of working in this industry is the relentless wear and tear on your vehicle that comes with driving strangers around at all hours of the day and night. And since Uber drivers work as independent contractors, many of their expenses, such as gas and maintenance, need to be paid for out of their profits. But that’s not all.
“The worst part about working for Uber is the pukers,” says Campbell, who does much of his driving late at night when you can typically make the most money. “During those times, you have a lot of intoxicated people that you’re transporting,” he explains.
And not everyone can hold their liquor. “I haven’t had anyone puke in my car yet but it does happen more often than you might think.”
Campbell keeps vomit bags in the back for those who need them and a trigger finger on the back window just in case, he says.
There is also personal safety to consider: You’re allowing strangers to get into your car. However, you are in control of whether you want to pick up a customer. Riders must register through the app with personal and credit card information, and Uber asks drivers to rate passengers just as riders rate their drivers; passengers with complaints get barred from the service.
Thanks to the app’s cashless transactions, drivers aren’t carrying wads of cash and so aren’t typically prime theft targets. But some Uber drivers have been ambushed and robbed — after all, thieves know, drivers will at least have a smartphone on them.
Ridesharing: The Perfect Part-Time Job?
Is driving for Uber perfect? Of course not. All part-time jobs come with their share of unfortunate details and events, and anyone who works for someone else has to accept the fact that things don’t always go as planned.
Still, it’s hard to think of another part-time gig that allows you to choose your own hours, work as much (or as little) as you want, take weeks off at a time without asking permission, and easily pull in decent money.
Even better, rideshare companies like Uber will likely always be hiring. And since you can pop in and out of the scene as your schedule allows, it seems like a shame to count out Uber if you’re looking for a way to earn extra money. According to Harry Campbell, a.k.a. the Rideshare Guy, you literally have nothing to lose if you decide to give Uber a try.
“One of the best parts is that there really is no risk. You can get signed up very easily and be out on the road within a week or two picking up your first passenger,” he says. “If you end up hating it, there’s no obligation and very little initial investment.”
In that respect, being a rideshare driver might just be the best part-time gig out there.
Just remember to watch out for the pukers.
Have you ever considered driving for Uber or Lyft? Do you think ridesharing is a good way to pull in some part-time cash? Let us know in the comments.
Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.