According to a new report, Uber and Lyft drivers in the United States earn a median profit of just $3.37 per hour. And that’s before taxes.
The findings also suggest that not only are these drivers making less than minimum wage – many of them are potentially losing money as well.
The report – published by MIT’s Center For Energy and Environmental Policy Research – is based an analysis of vehicle cost data, as well as surveys of over 1,100 Uber and Lyft drivers.
When they factored in costs such as insurance, maintenance, repairs, and fuel, they found that 30% of rideshare workers are losing money due to their overhead. Moreover, 74% earn less than the minimum wage in their states.
Survey Results Raise Serious Concerns About Shared Economy World
Shared economy gigs are increasing in popularity every day.
But survey results and research analysis like this raise serious concerns about the labor standards those jobs promote.
In fact, ridesharing services have been criticized before for their treatment of laborers. Both Uber and Lyft drivers classify their drivers as independent contractors, and thus have few rights and protections in place.
Stephen Zoepf – executive director of the Center for Automotive Research at Stanford University -co-authored the paper.
“This business model is not currently sustainable,” he said. “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.”
Here’s a closer look at the numbers…
The data analysis and survey results found that Uber and Lyft drivers:
- Earn a median of 59 cents per mile.
- Incur a median cost of 30 cents per mile.
- Almost one third of drivers suffer greater costs than the amount they earn.
- The average driver makes a profit of just $661 per month.
Get paid to share your opinion. Click here to take a survey today.
These drivers are using their vehicles for person reason as well. But when it gets down to it, most of the miles they’re putting on their cars are for work.
As Zoepf points out, this means they’re essentially “borrowing against the value” of their cars. “It’s quite possible that divers don’t realize quite how much they are spending.”
Other surveys and studies report higher hourly earnings for Uber drivers. This is partially because there are multiple ways to report income and calculate factors like costs, time, and miles spent working.
Harry Campbell founder of the Rideshare Guy, partnered with Zoepf on the surveys used in the paper. Campbell has conducted numerous surveys of ridesharing services on his website, and said that the $3.37 median hourly wage seemed a bit low.
But he did note that new drivers were often surprised by their earnings.
“The most common feedback we hear from drivers is they end up earning lot less than they expects,” he said. “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.”
He noted that even Uber has struggled to accurately calculate vehicle costs. Just last year, the company has to shut down its US auto-leasing business when they discovered it was losing 18 times more money than they thought.
Both Uber and Lyft have spoken out against the report’s findings, saying that they seem both “deeply flawed” and “questionable.”
“While the paper is certainly attention grabbing, its methodology and findings are deeply flawed,” said an Uber spokesperson. “We’ve reached out to the paper’s authors to share our concerns and suggest ways we might work together to refine their approach.”
Meanwhile, a Lyft spokesperson briefly addressed the report in an email: “We have not yet reviewed this study in detail, but an initial review shows some questionable assumptions.”
Companies need one crucial thing to make sure they’re meeting expectations: your opinion. Sign up for Survey Junkie and get paid to give your feedback on the products and services that are shaping today’s world.
Data Source: theguardian.com