My week as a Lyft driver: a long, fascinating drive to Southern Maryland

You could teach an entire economics seminar based on this 1 hour, 12 minute ride.

At 10 PM last night, I was driving toward DC’s Adams Morgan neighborhood to pick up what I hoped would be my last passenger of the night. A typical Lyft trip takes 10 or 15 minutes, so I hoped to be home by 10:30. As it turned out, I didn’t get home until after midnight.

I picked up a young black man with dreadlocks and ample facial hair who asked if he could play some music from his phone on my car’s speakers. I was willing to listen to the music, but we struggled to make it work technically. I couldn’t plug my iPhone charging cable into his Android phone. I didn’t think we could safely do Bluetooth pairing while I was driving. He asked if he could text me a link, but I didn’t feel comfortable doing that.

Finally I realized that I could bring up Alexa on my phone and ask her to play the music. It turned out my passenger was the rapper Sir E.U, and he wanted me to listen to his music during our trip.

This was a shared ride, and the Lyft app directed me to pick up another passenger from DC’s Children’s Hospital.

“How’s your evening going?” I asked the man, who I’ll call Michael, as he got into the car. “Not great,” he responded.

Michael’s one-year-old daughter had an unusual growth on her neck and had just begun surgery to remove it. He said the doctors portrayed it as a routine procedure, but Michael was understandably nervous. But he had to leave his daughter with her mother so he could go home and be ready for work the next morning.

His home was far away. We rode south for 24 minutes, listening to Sir E.U’s music, and dropped the rapper off. Then we continued south for another half hour to get to Michael’s house in Waldorf, a majority-black DC suburb in Southern Maryland.

Michael is 21 years old, and during the ride he told me he had been working as a plumber’s apprentice until his car broke down. He tried to get by with Lyft rides, spending $800 in one month, he couldn’t afford to keep doing that. So he was forced to put his plumbing ambitions on hold and take a retail job within walking distance of his home. But he planned to get back into plumbing as soon as his car was fixed.

This seems like a waste. I didn’t ask him how much money he needed to fix his car, but I’m sure it’s trivial compared to the amount he’d boost his earnings as a plumber. Research has shown that giving relatively small sums to poor people in the developing world can have a big impact, as they often spend it on capital goods that improve their earning power. It sounded like the same would be true for Michael.

Not a fan of the monthly child tax credit

Since Michael had a kid, I asked him what he thought about the expanded child tax credit the Democrats passed last year as part of the American Rescue Plan. For six months, it provided parents of young children monthly checks of around $300 each. Michael said he’d gotten the payments but he regretted doing so, since he had to pay the money back when he filed his taxes earlier this year.

That surprised me because I was pretty sure that’s not how the law works. For parents of young children, the ARP raised the child tax credit from $2,000 to $3,600, and it provided for parents to get half the money in six monthly installments of $300. So instead of getting $2,000 back at tax time, Michael should have gotten $300 per month during 2021 and then another $1,800 in the spring of 2022.

Michael told me he’d gotten a tax refund around $8,000 in the spring of 2021, and had gotten several thousand dollars less in the spring of 2022. And of course, it’s true that if Michael hadn’t gotten those monthly payments, his tax refund would have been $1,800 higher at tax time—but that’s different from saying he had to “pay back” the money.

I asked Daniel Hemel, a tax law expert at NYU, about this.

“Monthly payments seem to be more popular among policy wonks than among actual recipients,” he told me. “And the empirical evidence from studies of the EITC, the Alaska dividend, and the tribal casino payments suggests that annual lump sums still accomplish a ton of good.”

Who knows, maybe an extra $1,800 would have allowed Michael to get his car fixed.

This story also made me wonder if confusion about this kind of thing was one reason the expanded child tax credit wasn’t as popular as Democrats expected. In 2021, Democrats passed the credit for one year in hopes that it would be so popular that there would be pressure to extend it—and eventually make it permanent—in subsequent years. Instead, it was one of several programs that got discarded as Joe Manchin slimmed down the Build Back Better Act to become the Inflation Reduction Act.

In early 2021, Mitt Romney had been pushing an alternative child benefit that would have been administered by the Social Security Administration rather than the Internal Revenue Service. While this might seem like a narrow technocratic difference, I think it might have had an impact on public perception of the program, since there would be less confusion among recipients about how much money they got and whether they’d have to pay it back at tax time.

“That sounds like a scam”

Later in the trip, I told Michael that there is sometimes a big gap between how much Lyft riders pay and how much drivers get for a particular ride. I told him that at one point on Saturday night, at the peak of Halloween party craziness, I picked up a woman near the Convention Center and drove her to her home in Arlington, Virginia. She told me Lyft charged her $59 for the trip. I got $16.52, while Lyft kept the other $42.

“That sounds like a scam,” Michael said.

I wouldn’t put it that strongly. After all, Lyft posted a net loss of $377 million last quarter. But I think it does raise questions about Lyft’s (and Uber’s) claims that its drivers are independent contractors. Theoretically, when I drive for Lyft I’m acting a self-employed entrepreneur who is directly providing a service to my passengers, with Lyft merely acting as a matchmaker. But that seems hard to square with Lyft keeping more than 70 percent of the revenue on some rides.

Michael said he’d paid $61 for his ride out to Waldorf. I told him that if he wanted he could stick around for a minute after I dropped him off to see how much of that $61 I got. When the ride was over, we learned that I’d earned $38.72 total for driving both Sir E.U and Michael to their homes.

I don’t know how much Sir E.U paid; his trip was shorter so it was probably less than $61. But I think it’s safe to say I got less than half the combined fares paid by my two passengers.

“That’s outrageous,” Michael said as he got out of my car. “You should expose them.”