Uber, Lyft drivers actually earn less than minimum wage, MIT survey suggests
05 March, 2018, 00:07 | Author: Melinda Barton
The investigation, seeking to get a full picture of the economics of ride-sharing services beyond the companies' own numbers, combined self-reported revenue figures with driver surveys and vehicle maintenance information. In fact, many times it won't even net you a taxable income, according to this study. In 2017, courts in both North Carolina and NY ruled in Uber drivers' favor to be classified as employees, which could eventually entitle them to higher pay and more benefits.
Uber and Lyft drivers in the U.S. 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. "The companies are losing money. and the drivers are essentially subsidizing it by working for very low wages".
When accounting for vehicle expenses, the study also found that 30 percent of drivers actually lose money for each mile they drive.
According to a paper written by Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo at MIT's Center for Energy and Environmental Policy Research, the median pretax profit earned from driving is $3.37 per hour after taking expenses into account.
Although drivers have still expressed a need for more income, the low-priced alternative to taxis and auto ownership is making new inroads into other traditional transportation avenues.
As of 2017, both Uber and Lyft allow (but do not require) customers to tip their drivers through their respective mobile apps. "In 16 of the 18 markets available, the median earnings per hour of Uber's driver-partners exceeded the average hourly wage of taxi drivers and chauffeurs".
It was only previous year that Uber introduced the option to tip drivers into its app for customers. The tax deduction is higher than the actual cost-per-mile, facilitating an estimated $4.8 billion in untaxed income, the study said.
The MIT paper then incorporated the cost-per-mile for driving for Uber.
A Lyft spokesperson said that the company had not yet reviewed the study in detail, but suggested that the researchers had made "questionable assumptions". Minimum wage is $7.25 - more than double.
A spokesperson for Uber told The Guardian the study was "deeply flawed" and said they'd reached out to the authors.
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