The problem with ride sharing’s business model is that service providers (drivers) have not considered the long-run costs of their work. It is very likely that Uber/Lyft’s business model charges rates that are at or below a driver’s cost. The only reason that drivers are willing to accept wages that are below cost is that they do not properly account for their non-cash expenses. (caveat: some professional Uber drivers, in certain markets, are likely making money. This idea considers the average driver, not specific ones)
In an unprofessional or casual environment, service providers are less likely to properly allocate their fixed costs against their revenue. Uber is effectively providing an instrument for drivers to liquidate the equity in their car. Because costs are greater than revenue, drivers are pulling $1 of equity out of their car for $0.80. ROI on the capital used to buy the productive asset is negative. Drivers are cash flow positive in the short run, giving the illusion of making money. In the long-run, the job destroys value as drivers must recapitalize their fixed costs by replacing their car.
All considered, Uber may continue to attract drivers. Drivers may never learn because they have blended income. Many Uber drivers have multiple jobs. Therefore, it is possible that drivers will not realize working for Uber is a value-destroying activity because the value of their blended personal bank account will rise in objective value. The rising effect would be attributable to their primary source of income, not driving for Uber.
This idea should not be overlooked as miss-allocation of fixed costs against revenue even plagues large manufacturers. For example, a diversified manufacturer, such as Foxconn, may manufacture an energy-intensive widget. The true cost of making the widget may not be realized because fixed costs are understated. It is possible that the internal mis-pricing is never caught because cash-flow and income on the entire manufacturing facility is healthy.