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Uber and Lyft drivers’ median hourly wage is just $3.37, report finds
Majority of drivers make less than minimum wage and many end up losing money, according to study published by MIT
The ride-sharing app business model ‘is not currently sustainable’, says an author of the paper. Photograph: Seth Wenig/AP
Uber and Lyft drivers in the US make a median profit of $3.37 per hour before taxes, according to a new report that suggests a majority of ride-share workers make below minimum wage and that many actually lose money.
Researchers did an analysis of vehicle cost data and a survey of more than 1,100 drivers for the ride-hailing companies for the paper published by the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research. The report – which factored in insurance, maintenance, repairs, fuel and other costs – found that 30% of drivers are losing money on the job and that 74% earn less than the minimum wage in their states.
The findings have raised fresh concerns about labor standards in the booming sharing economy as companies such as Uber and Lyft continue to face scrutiny over their treatment of drivers, who are classified as independent contractors and have few rights or protections.
“This business model is not currently sustainable,” said Stephen Zoepf, executive director of the Center for Automotive Research at Stanford University and co-author of the paper. “The companies are losing money. The businesses are being subsidized by [venture capital] money … And the drivers are essentially subsidizing it by working for very low wages.”
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Drivers earn a median of 59 cents per mile while incurring a median cost of 30 cents per mile, the report said, adding that for nearly a third of drivers, the costs are ultimately higher than the revenue. The paper reported the average driver profit to be $661 per month.
While most drivers employ vehicles for personal use and ride-hailing services, the bulk of the miles they drive are for work, which can lead to significant short-term and long-term costs, the paper said.
Given inevitable costs of maintenance, repair and depreciation, “effectively what you’re doing as a driver is borrowing against the value of your car,” Zoepf said, adding: “It’s quite possible that drivers don’t realize quite how much they are spending.”
Other studies and surveys have found higher hourly earnings for Uber drivers, in part because there are numerous ways to report income and to calculate costs and time and miles spent on the job.
Harry Campbell, founder of the Rideshare Guy, a website that has conducted surveys of drivers, said the finding of a $3.37 median hourly profit seemed a bit low, but noted that new drivers were often surprised by the wages.
“The most common feedback we hear from drivers is they end up earning a lot less than they expected,” said Campbell, who partnered with Zoepf on the surveys used in the paper. “There is a lot of turnover in the industry, and that’s the number one reason I hear from drivers why they are quitting – they are not making enough.”
Campbell pointed out that Uber itself had struggled to properly consider vehicle costs. Last year, the company shut down its US auto-leasing business after discovering it was losing 18 times more money per vehicle than it had previously understood. Some drivers claimed that the leasing program trapped them in debt.
An Uber spokesperson broadly criticized the research in a statement: “While the paper is certainly attention grabbing, its methodology and findings are deeply flawed. We’ve reached out to the paper’s authors to share our concerns and suggest ways we might work together to refine their approach.”
A Lyft spokesperson said in an email, “We have not yet reviewed this study in detail, but an initial review shows some questionable assumptions.”