A new study by Ridester, based on a survey of over 2600 drivers, comes up with findings that are consistent with, and if anything, a bit grimmer than earlier work.
A key difference between Ridester’s study and its predecessors is that Ridester asked drivers to send proof of their earnings, in the form of screenshots, which they got from 719 participants. The earnings data is for UberX drivers only, who represent 3/4 of all Uber drivers.
One interesting finding is that despite structuring their questions so as to help assure accurate responses about income, they found drivers overestimated their earnings. Getting the screenshots also allowed them to include tips, which averaged a bit over 7%.
Some of the highlights (emphasis original):
- Uber paid our uberX-driver respondents a median net income of just $13.70 per hour.When rider tips are added to what Uber pays, the median rises only to $14.73 per hour.
- Drivers self-report income that is 37.40% higher than they were able to show with screenshots of their earnings.
- 58.3% of our driver respondents are over 50 years old.
- 55.1% of our respondents reported having a college education. 10.7% reported having post-graduate degrees.
From Ridester’s discussion of driver costs:
Our survey adds to the mounting body of evidence that at least half of all Uber drivers earn less than $10 per hour after all car expenses are considered.
And car expenses must be taken into consideration because they are not optional for drivers….
If we split the difference between Triple A’s expense figures for medium-size and small sedans, we come up with an average figure of 45.80 cents per mile.
For drivers who rent vehicles to use in ride-hail work, the rental costs are very much tied to the real costs of car ownership for the rental company. uberX-qualified vehicles generally rent from around $200 to $400 per week – depending on the city. If you assume drivers drive an average of 40 hours per week, then they are looking at $5 to $10 per hour in vehicle expenses. And in a moment we’ll show that drivers who own their cars also incur somewhere between $5 and $10 per hour in vehicle expenses….all that is left to figure out is how many miles on average, drivers drive per hour.
To do this, we looked at infinitemonekycorps.net’s City Speed project…
For instance, in Philadelphia, we find the average speed of traffic is 20.3 miles per hour. So, a person who is driving continuously would be expected to travel 20.3 miles on average each hour. Since Uber drivers have to stop and wait for passengers though, we will assume they are completely stopped and waiting for a passenger 10% of each hour. That means the average Philadelphia driver would travel approximately 18.27 miles on average each hour.
Since our survey breaks out earnings by city, we can look and see that Philadelphia drivers earn more than the $13.70 national median, coming in at $17.62 per hour. But when we deduct the per-mile costs of $0.458 for the 18.27 miles we get an average hourly expense of $8.37. That means the average Philly driver earns a median income of just $9.25 per hour.
If you are simple-minded about it, you can simply take the $14.73 per hour median earnings and deduct $5 per hour for expenses, knowing that that’s favorable to Uber, and you wind up with $9.73 an hour. Ugh.
The survey found driver churn was somewhat lower than other research had found, with 46.4% reporting they’s worked a year or less for Uber. However, the survey also disproved the claim that Uber is a convenient source of extra income. 50.3% said Uber was their sole source of income.
New CEO Dara Khosrowshahi has only gotten a 11.8% net positive rating from drivers relative to Travis Kalanick. 22.8% said their perception of Uber leadership had improved since Khosrowshahi took the helm, while 10% said it had gotten worse.
I’m sure our Hubert Horan would agree with the general point the final section makes, but I wonder if he’d agree with the impact on driver earnings (and conversely, what the effect on sacrosanct Uber revenues would be). If I get a reaction by e-mail, I’ll update the post:
Considering that these drivers have no benefits whatsoever, no health insurance, no unemployment insurance, no disability insurance and no minimum wage protection, these drivers are risking everything to drive for the ride-hail giants.
These low earnings also put the public at risk in terms of safety. Drivers who are just barely scraping by in life are not likely to put the kind of money into maintaining their vehicles that is required to keep them in a tip-top safe driving condition….
Uber and Lyft could easily help drivers increase their earnings simply by putting a cap on the number of drivers they allow on the road at any one time and raising fares by a small percentage.
We agree with the conclusions of a study produced in July 2018 for the New York City Taxi & Limousine Commission which said, “Hourly pay is low in large part because the industry depends upon a ready availability of idle drivers to minimize passenger wait times.” In other words, Uber and Lyft knowingly put more drivers on the road than they need so that each passenger can get a quick pickup with minimal wait time.
The study proposed a 5% fare increase and a reduction in the number of drivers which would lead to only a 12 to 15 second increase in wait time for passengers. But these changes would also lead to a 22.5% increase in net earnings after expenses for drivers.
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Why, it’s almost as if Uber and Lyft need some third party to license and regulate this otherwise free for all marketplace. I wonder if cities have ever thought of setting something like that up?
Municipal taxi regulation was/is a disaster.
Pre-Uber: regulatory capture/government indifference in most cities. The medallion system winding up hurting rank-and-file taxi drivers (as institutions and big players scooped up medallions).
Post-Uber: willfully ignoring Uber as a jitney cab company in the early days. Now carving out special exemptions drafted by lobbyists just for Uber-Lyft when if it quacks like a cab, it’s a cab and should be regulated as such.
Bottom line: urban millenials and “Ted Talks intelligensia” love the quick service and cheap fares from Uber-Lyft. everything else is invisible collateral damage. Just like iPhones, they don’t care how it’s made. they just like the end product.
your mileage may vary.
The old system wasn’t a disaster, it worked. Driving was tough but it was a middle class profession. Today it’s a job where you barely scrape by. And it wasn’t like riders back then couldn’t get a ride when they needed one.
All Uber added was an app. Then they slashed fares — subsidized by investors explicitly hoping to achieve a monopoly — and flooded the streets, driving up congestion in urban cores. Investors haven’t even gotten an IPO. The only benefit to the whole scam was that it made a few dbags in management paper billionaires. I guess it was a plus for the surveillance state too, thanks to all the data they collected and journalists harassed.
Unfortunately, this was not always the case.
The taxis in New York often did practice discrimination against African Americans.
https://newsone.com/3786582/taxi-industry-demise-uber-discrimination-black-passengers/
https://www.telegraph.co.uk/news/2018/07/30/al-sharpton-backs-uber-battle-new-york-city/
I’ve heard stories of resentment from African Americans when I cross into the US first hand myself.
Uber is no angel, but the old system had its flaws too.
I think ill still take the “regulated service” over “unregulated fast-food-worker-driving-a-car”
Cause $9/hr is fast food worker wage. And they DONT have to keep their cars in top notch conditions.
It’s not like Uber couldnt do it. They could, but they are LAZY. Very very lazy. They dont screen, they dont check initial car conditions, they just, like all software giants, hide behind their software and obfuscate every debate that touches a little too close to home; that software obviously cant actually better the world directly, and paying your ‘contractors’ $9/hr is industrial era slave wages. And im pretty sure they probably got more benefits back then.
There seems to be no factoring in for maintenance downtime. A yellow cab driver can get a car for his shift, an Uber driver has to wait until his vehicle is serviceable again, at his own expense, out of his pocket imediately.
for self-care during our 3 weeks at the hospital, I’d walk down to a working class bar and grill…about 1/3 of a mile…for a burger and a few IPA’s.
But I’m still cripple, and a couple of these times, I decided that I couldn’t make the slog back up the hill.
First time, the place was full of uber/lyft drivers…drinking beer and talking sh&t about sports while waiting for a fare. One was happy to take cash to take me back.
Next time…thanks to earworms planted by Lambert and Yves…I decided to have them call me a cab.
Cab never showed up(waited an hour, on a monday night….ended up walking), so I couldn’t compare costs, etc.
One night I was there, and the uber/lyft crowd knew me by then…after listening to their woes(only minimally prompted…I’m good by now at subtle interrogation), I said “y’all should fu#$ing Unionise”
Guffaws all around. I pressed.
60+% had no clue what a union actually did, as evidenced by their explanations for the laughter.
maybe 10% were Republican, and/or Randian Libertarians…the rest knew enough, but were pretty hopeless about the utility of such endeavors in Texas.
I know from 2000 feet that cabs are regulated, and uber may as well not be.
what I don’t understand is how uber, et alia stay free from regs.
I’ve considered hanging a shingle way out here for rides home from the 2 bars…but haven’t pursued it. I don’t think uber, etc would work all that well in my far place, due to so many folks not having 4G.
and I expect that putting a flyer in a bar might get me scrutinised by the one city.
I didn’t see where paying your whole social security tax was included as an expense.
Right, that’s 7.65% that employers pay. If you are self-employed, you pay that.* And self-employment tax.
*Up to $128,400. At a generous rate of $17.62 an hour, that’s only 7,287 hours!
This survey doesnt seem to include dead miles. So if thats true the numbers would be wildly lower. Where I live it is 2 dead miles for every 1 mile driven.
As a former Chicago (and NY and SF) cab driver, I’ve always said that when the minimum wage reaches $15 that they would not be able to find anybody to drive taxi cabs.
PS. Between 1981 and 1996 Chicago allowed one 30 cent increase in the mile rate — at which 1990 midpoint Chicago began building subways to both airports, allowing unlimited livery (limo) licenses, putting on free trolleys between all the hot spots downtown (e.g., the Aquarium, was our second hottest after O’Hare — trolleys gone but Uber took up slack) — and 40% more taxicabs.
i’m surprised the adjusted wage was that high; as other posters suggest, it still is not realistic.
I’m probably in the minority, but I’ve always tipped Uber drivers in cash.
Did they take into consideration the $0.545 per mile that the IRS allows them to deduct? Or is that an inconvenient truth? Spoiler Alert: Looking at their methodologies, they don’t.
you’re assuming that that reduction in taxes amounts to much; people making low wages don’t get much relief from itemizing, if any. meanwhile the repair bills to their cars must be paid.
uber drivers take the deduction on Schedule C, not Schedule A.
ok, but if they aren’t making much, it’s not going to amount to much. at 9 bucks or so an hour, they don’t have much use for tax deductions.
I’ve done tax returns for a couple dozen Uber drivers. They don’t make poop
roughly .1575 a mile net tax effect
this goes under pretzelattack
assuming 10% fed and 6% state rate. SE 14% which it roughly is
I’m surprised there was no mention of insurance. Either the drivers pay for insurance which will cover them as commercial drivers, or they are are risking financial devastation for them and others. It is basically another externalized cost/risk.
I think we can view the industry as an ingenious way to get in and asset-strip the value from people’s cars out from under them, the car being one of the few major assets owned by the serfs.
It does so to an above average degree, but the average worker commuting 50 miles a day for a real job is also depreciating their car, just hopefully less and for a better wage.