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Uber and Lyft Drivers Are Probably Making More Than $3.37 an Hour, But That's a Real Low Bar

Illustration for article titled Uber and Lyft Drivers Are Probably Making More Than $3.37 an Hour, But Thats a Real Low Bar
Photo: AP

Last week, researchers with MIT’s Center for Energy and Environmental Policy released a working paper with survey data from 1,100 Uber and Lyft drivers, saying the “detailed vehicle cost information” provided showed that after accounting for expenses those drivers were making a median profit of $3.37 per hour. If true, that would mean the average driver was making just $661 in profit a month—and that 74 percent of them are making less than minimum wage in the states they operate.

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Both companies are pushing back on the findings, and this weekend, Uber’s chief economist Jonathan Hall challenged the paper’s methodology. Per Reuters, Hall claimed that a misleading survey question and “inconsistent logic” meant that the “earnings figures suggested in the paper are less than half the hourly earnings numbers reported in the very survey the paper derives its data from.” The MIT paper’s lead author Stephen Zoepf agreed and said he’d look to see whether re-running the analysis with different assumptions would result in different data—and on Monday, he tweeted a statement showing that using two different methodologies suggested by Hall resulted in median wages between $8.55–$10 an hour after expenses.

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This revised version still finds that between 41 to 54 percent of drivers make below the 2016 minimum wage in their state after expenses, while somewhere between four to eight percent of rideshare drivers are losing money. This $8.55-10 an hour range, though, comes in at wildly below MIT estimates that the living wage (enough to cover basic needs) for a family of four in the US comes to slightly over $15 an hour—though the living wage in metropolitan areas, which Uber and Lyft are increasingly flooding with cars, is way higher than $15 an hour.

Ten dollars an hour comes to $20,000 a year assuming two weeks unpaid vacation and a 40 hour work week (though drivers may be working more than that, given Uber recently restricted them to 12-hour continuous shifts).

While a few analyses have found that the median Uber driver is making money somewhere in the teens an hour after expenses, it’s worth nothing that the MIT team came to the revised $8.55-10 figure using changes suggested by Uber’s own economist. In any case, Motherboard reported on Tuesday that Uber drivers themselves seem split on the issue, and on the Uber drivers subreddit, “some agreed that wages are extremely low, while others said they can earn upwards of $30 an hour.” As Motherboard noted, the discrepancy can be explained by a number of factors, including variable price structure between cities and how drivers calculate vehicular expenses, though also by the fact Uber keeps referring to average wages while the MIT study reported median wages.

In any case, Uber has a history of advertising the contract driver positions in major metro areas at very, very optimistic rates: anywhere from $15-29 an hour. In January 2018, it had to agree to pay a $20 million Federal Trade Commission fine when the agency cracked down on how inaccurate Uber’s Craigslist posts advertising driver positions were:

A chart from the FTC’s complaint.
A chart from the FTC’s complaint.
Image: FTC
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While surveys have shown drivers tend to be happier with Lyft than Uber, the reality is that the median driver for either service probably isn’t making all that much money. It may not be $3.37 an hour, but that’s a pretty low bar to clear.

"... An upperclassman who had been researching terrorist groups online." - Washington Post

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DISCUSSION

Two weeks ago I was on a work trip and taking an Uber to a meeting. My Uber driver and I were talking and he was telling me how Uber just does the software and everything else is on him- the car, the insurance, etc. Literally seconds after he said that, we got in a car accident and the front bumper of his car was torn off. We were both OK- but he was a bit shaken up and opted to go to the hospital to be checked out (probably a wise thing to cover his bases with Uber). I felt awful for him and told him I was very sorry it happened. I also think he was going to be at fault since he was turning left in slow traffic (people were letting him through, but a guy came flying through the 3rd lane and nailed him). He cancelled our trip while we were waiting for the police and ambulance to arrive; I couldn’t even tip him. Anyway, I guess my point of the story is that for some of these folks’, it is their job and there’s a lot of expenses and risk in what they do. It would be nice if they got a bit more.