Uber and Lyft have significantly changed how people with money get around crowded cities. But they’ve also changed how people can earn a living giving other people rides, and not in a good way.
A new study from MIT shows that the median income for Uber and Lyft drivers once costs are included is just $3.37 per hour. Uber has previously advertised a typical wage of between $16 and $30 per hour, but even compared to the federal minimum wage of $7.25 an hour, ride-hailing drivers are getting short shrift.
The $3.37-per-hour wage comes from a working paper written by Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo at MIT’s Center for Energy and Environmental Policy Research. The authors surveyed 1,100 drivers and collected information on revenue, how many miles they drove and what type of car was used. The researchers combined that information with typical costs for gas, maintenance and depreciation, figures which are widely studied, to calculate the real profit that drivers take home.
According to their data, the median pretax profit was $3.37. 74% of drivers were taking home less than their state’s minimum wage, and 30% of drivers were losing money for every mile they drove. The median driver generated $0.59 per mile driven, with a typical per-mile cost of $0.30.
Much of that cost is likely to be depreciation, which explains why drivers are still willing to drive for the ride-sharing services while technically losing money. Drivers don’t lose money due to depreciation until they sell their car, so driving for Uber can work like a cash advance in some cases.
Uber disagreed with the results of the study (shocker!), saying in a statement that “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.”