Okay, that's my bad. But if you assume an effective tax rate of 15% (combined federal + state + SS + Medicare), which sounds about right for an Uber driver making 40k/year, 0.58 * 15% * 75k mi/year is an $6525 tax reduction. A quick look at an income tax calculator says someone in California making 40k pays about 6k in tax, so your credit per mile is 6k / 75k = 8 cents/mile.
Depending on your costs that could put you under 20 cents/mile in cost. And you get paid over $1/mile in practice, even on delivery orders. Really the only party getting screwed by gig apps is the government, because they get 0 tax revenue from these guys.
I made some comments below, the devil is in the details. It is not theoretical, I tried to Uber to challenge my notions about this.
Circa 2021:
The main point I would like to make is that in my market at the time, the mileage was getting paid was .76 a mile, as I look back in the app. At the time additionally was getting .11 per a minute fare. The main issue is that the mileage rate is for time that passengers are in the car.
But about half the time it was driving to a pickup location. So you are looking at an average of .38 per mile + .11 per minute. These were city miles, not quick highway miles.
So to pull one random example from my actual history.
I did a 6 minute and 57 second trip that paid 2.86. The distance was about 2.5 miles. So by your calculations we subtract .75. This leaves 2.11 profit. The issue is it pulled me 2.5 miles from my next fare, so you need to subtract another .75 to get back. So we are at 1.36. We also have another ~7 minutes of driving.
So in 14 minutes I made 1.36... So we are talking $5.80 an hour. This is pretty poor pay for the service provided. I might quibble about your numbers in my case because it was a 2020 traverse, that was about 35k and worse gas mileage. So I was probably doing worse...
HOWEVER, that's only part of the story. Uber has bonuses, so there will be a deal where for a particular weekend, if you do 40 trips (no matter the length of each trip, which was strange to me), they might pay an additional $80 bonus. So that adds an extra $2.00 for that particular trip, if you meet the quota. And is nearly as much as the base rate. So that will push the earnings to ~$10 an hour. Significantly better!
And that is where the VC money criticism comes in claiming the subsidization is what makes it work.
TLDR;
If you are very economical about the bonuses and surge rates (which the example was not) you can make better than minimum wage income, it is not a loss. But you have to be very savvy and strategic. But the bottom line is the base rates, at the time were a bit over break even, and very low if you had any down time. But the bonuses and incentives made it reasonable.
> And that is where the VC money criticism comes in claiming the subsidization is what makes it work.
It might seem like that, but +$2/ride still puts Uber in the black here. A ride is minimum $8-9 so they're making at least $5 on that ride.
Also, I think your example is not too great because low fare/short rides disproportionately screw you because Uber takes a flat $3 per ride as a "marketplace fee" in addition to their 25% cut. If that ride was 5 miles instead of 2.5, you'd make a lot more than double 2.86.
Depending on your costs that could put you under 20 cents/mile in cost. And you get paid over $1/mile in practice, even on delivery orders. Really the only party getting screwed by gig apps is the government, because they get 0 tax revenue from these guys.