Income Inequality: The Uber Driver and the Patent Litigators

Yesterday I was deposed as an expert witness in a patent case. The deposition was held at a law firm in the Seaport and started early in the morning so I decided to treat myself to an Uber (“black car” version, not the discount UberX). A Lincoln that could have been magnificently comfortable appeared. However, it was 40 degrees Fahrenheit outside and the driver, an immigrant from Ethiopia, had not elected to run on the climate control system. When I asked him if he would consider adding some heat, he used the touch screen on the dashboard to set the “front zone” (where he was sitting) to 80 degrees while leaving the rear zone (where I was sitting) off. I am always interested when people use technology in this manner so I asked him “Do you set the thermostat in your house at 80?”

I spent the rest of the day sitting with the attorneys who’d hired me. These native-born Americans with engineering undergraduate degrees and three years of law school behind them understood the technology of the patent plus all of the legal rules that apply to fights in Federal District Court, patent offer reexaminations, the new PTAB administrative law court within the patent office, the International Trade Commission, etc. Winning or losing a case will nearly always mean tens of millions of dollars changing hands if not hundreds of millions. The attorneys were able to keep an astonishing array of facts alive in their heads simultaneously and apply those facts.

What’s the income difference between these folks? This Reuters article says that New York taxi drivers earn about $150 per day driving their $1 million assets (the medallion!). That’s about what a law firm senior associate earns in one hour, so that’s maybe a 10:1 income ratio. This BLS page says taxi drivers earn closer to $12 per hour, a 12:1 ratio. Uber apparently does not gather statistics on what drivers actually earn, but has claimed at least once that it may be as much as $70,000 per year. Let’s call that $25 per hour or a 6:1 ratio.

[Note that all of these ratios would be smaller if we considered the fact that the law firm senior associate probably ends up working a lot more than 40 hours per week, so his or her $200-300,000/year income needs to be divided by 3000 hours instead of 2000 and works out to less than $100 per hour.]

8 Comments

  1. E. Rekshun

    April 10, 2014 @ 10:53 am

    1

    And the patent attorney also incurred significant tuition and opportunity costs to earn the undergraduate engineering degree and the law degree. That’s seven years at, say, $50K per year, or $350K as an entry fee into the patent attorney field. Still, much cheaper than a NYC taxi medallion, and when people ask, “what do you do?” you can say “I’m an attorney.”

  2. Gregory Close

    April 11, 2014 @ 3:06 pm

    2

    This was an interesting post, but I’m not sure what the point is. There is a difference in pay between patent attorneys and taxi drivers? Not trying to be cute, I just am not sure what to make of this.

  3. sambaiah kilaru

    April 12, 2014 @ 1:21 am

    3

    Cab drivers might put more hours to earn enough not only patent lawyers. I know in Bangalore cab drivers put continuous hours having break 3-5 hours in between.

  4. philg

    April 13, 2014 @ 8:34 pm

    4

    Gregory: Why are these numbers interesting? We are starting with polar opposites in terms of skill and education and seeing how that affects income.

  5. Anonymous

    April 13, 2014 @ 11:39 pm

    5

    According to the BLS, the median wage for a taxi driver went from 7.89 to 10.98 from 1999 to 2013 whereas the median wage for a lawyer went from 30.95 to 54.95 during the same time period. This seems to support the idea that income inequality increased over that time period.

  6. George

    April 14, 2014 @ 2:37 pm

    6

    @Anonymous: While the % difference of median wage increase for the cab driver is lower compared to the lawyer, the lawyer’s income put him/her in such position that s/he gets virtually 0 benefits from the government to help him out. One simple example is the cab driver’s income puts him in a position that his kids will get great benefits and subsidies for attending college, the lawyer’s kids will get virtually nothing from the government.

    Chances are good that the lawyer will struggle to pay off his kids college debt while still paying his own; something the cab driver is most likely won’t have to deal with.

  7. Mark Lutton

    April 15, 2014 @ 3:15 pm

    7

    Is it training and experience, or is it supply and demand, or is it marketing that sets the prices?

    Training and experience: Someone with a Ph. D. in Elizabethan Literature probably spent more time and money on his degrees than your attorneys did, and may be driving a cab right now waiting for a teaching position to open up and knowing that the teaching position will mean a pay cut.

    Supply and demand: There are a limited number of medallions so you have to be willing to pay a lot for a taxi ride, but there are plenty of people willing and able to drive taxis (almost as many as there are people willing and able to teach Renaissance Literature) so the medallion holder does not have to pay them much.

    Marketing: You went for the “black car”, not the UberX. Regardless of the supply of engineer / attorneys, I’ll bet that whoever hired those attorneys paid the highest possible rate just to get “the best in the business” and would have paid twice as much if any more-expensive and therefore better attorneys were available.

  8. Yossi Kreinin

    April 16, 2014 @ 6:47 am

    8

    It’s interesting to see how skill and income correlate; I think another dimension worth looking at is utility. It seems obvious that the availability of taxi drivers somewhat raises the general standard of living. It is not at all obvious that the existence of patent attorneys does. (I’m listed as an inventor in a US patent and a number of US patent applications, and I had the pleasure to communicate with patent attorneys on numerous occasions.)

    If in fact taxis are a service and patents are a disservice, doesn’t it make the income ratio look “wrong”? In an ideal world (and I’m not quite sure how to get there), perhaps there should be a minus sign in there (as in, -6:1 – legal advice to a party attempting to create a monopoly results in fines 6x above what a taxi driver makes).

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