MIT Study: Most Uber and Lyft drivers only make $3.37 Per Hour

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(Harry) #1

In a recent MIT ground shaking survey, most of all Uber and Lyft drivers only take home a net amount of $3.37 per hour. This means that most rideshare drivers earn well below State minimum, and in fact earn less than an illegal immigrant picking Oranges in California.

According to the research results, approximately 30% of all drivers are losing money, which means they don't make enough to cover their driving expenses and end up paying for driving other people.

This study was performed by researchers from the Massachusetts Institute of Technology (MIT), Center for Energy and Environmental Policy Research. They are; Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo.

The survey covered 1,100 drivers who were interviewed by the researchers and provided them with their income figures. The answers included the type of car, the insurance, maintenance, gas and depreciation factors that were supported by accepted sites such as Kelley Blue Book, Edmunds and the Environmental Protection Agency (EPA).

According to the study, drivers earned around $0.59 per mile, while expenses were set around $0.30 per mile, this means that the net income was only $0.29 per mile driven. (Remember that Uber only pays for the actual miles driven while transporting a passenger – period 3 miles).

We also looked at recent studies and found: Uber Driver Pay Averages $11 - $15 Per Hour

Drivers earning the median amount of revenue are getting $0.59 per mile driven, researchers say, but expenses work out to $0.30 per mile, meaning a driver makes a median profit of $0.29 for each mile.

Uber stated I response to the paper, which shines a very bad light on their operations, that they believe the paper is flawed and that the methodology is incorrect. Uber went on to state that they would be happy to work together with the researchers to refine the methodology and reach correct results.

Many studies have been performed on driver's income, even in this forum (RFS) there are plenty of different articles attesting to how much a driver receives, and in one of our articles we found similar results as MIT. In fact, we found that most calculations take into account every possible expense but forget to include the monthly payments on the car loan, as well as the miles incurred for periods 1 & 2. When you add these key figures into the mix, you end up finding that most drivers are working for Uber and paying Uber for the privilege of driving for them.

Another finding in the MIT paper is the possibility that the IRS loses billions of tax dollars due to the IRS standard mileage rate deduction which is set at $0.54. Since most drivers use this basic calculation as their expense, rather than calculating their actual expenses, the income, based on MIT figures means that drivers only earn on average $0.045 per mile! 5 cents a mile income!

Another section of the paper also stated that according to their findings and assuming "If drivers are fully able to capitalize on these losses for tax purposes, 73.5% of an estimated U.S. market $4.8B in annual ride-hailing driver profit is untaxed."

80% of the surveyed drivers told the MIT researchers that they work less than 40 hours a week, this fact falls into place when comparing it to an NPR/Marist poll performed in January 2018, which showed that 20% of all US jobs are held by contract workers, and many of them hold more than one part-time job, making a mix of incomes.

It is also a proven fact from other studies that Uber and Lyft have very high driver turn over rates, where the vast majority only drive for under 3 months. Only 4-7% drive for over a year.

Another important fact to note is that Uber only introduced them in-app tipping from July last year, and it is still hidden under the rating screen, which makes it still an ineffective tool for immediate tipping.

To conclude this article, the report shows that while drivers have been battling for years to become employees of Uber, the reality of their status is basically how Uber will work when introducing the driverless car. Since according to this report, they pay drivers so little, that the income only covers, and sometimes only partially covers the expenses of driving. Which is what would be the case with the AV's, where Uber would only need to pay for car maintenance and cleaning.


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(Kenneth Miller) #2

Hey, guess what: YOU CONTRIBUTE TO THIS EVERY TIME YOU DON’T TIP YOUR DRIVER!!!

You tip a waiter even if he’s not perfect. You tip your cabs. You tip your nail salon. You tip your bartender. You tip EVERY service job, except the one that the proprietor takes the MOST risk with: ride sharing.

PLEASE TIP YOUR DRIVER. You can help fix this with even a small amount. Don’t hold out.


(Brendan Halai) #3

Seems to me like it’s just highly nationalized. Drivers on here say this information is accurate, but Uber drivers I’ve spoken to, personally, usually claim to make somewhere between $20-30/hr.

For reference, I live in Atlanta.


(Haris_McMan) #4

What area were these people driving in? In the suburbs sure but not in Boston. 2. Their formula is after taking the mileage deduction which is somewhat misleading.

I do part-time Friday and Saturday night. Average between $25-$30 an hour gross. Subtract gas, and it’s closer to $22- $28 an hour. I’m paying car insurance regardless. Wear and tear will reduce that some more but if you play the game right you can keep that down.

I don’t doubt some dummies are not making any money because they drive all over the place to pick up any ride. Often wasting time and money to get a fare. You have to drive in a busy area to make money.

Full time I don’t think it’s worth it, but as a side hustle on the weekends, done right.


(Harold Young) #5

I don’t understand the point of those posts about Uber drivers’ wages.

If you are an Uber driver, then you know whether or not the money is good for you. They are grown-ups, independent contractors; they can make their own decision based on their real income (not some US-wide median). And considering those Uber/Lyft are growing, I think it works out OK.

If you are a rider, well what you care about is the money you pay vs. the service you get. Those drivers are not slaves, not even employees; they choose to drive people around. Supply and demand. Economy 101.


(Donna Harris) #6

Uber pays lots of money in driver incentives to encourage drivers to drive where they’re needed the most. This data is grossly misleading.

There are drivers in the suburbs that leave their app on while watching TV, waiting for the next ride. You can’t count that in “per hour” calculations.

This argument is pointless. Uber drivers are SELF EMPLOYED. If they are okay to make that much, then leave them be! If they feel that it’s not enough, then they will change jobs.
BTW the funny thing is that everyone is going off on Uber, but not on Amazon… Amazon contracts self-employed people to make their deliveries with vans Amazon owns and maintains (they are in horrible condition), and Amazon tells the drivers how much time they have to deliver. If they fail, they don’t get money for the delivery. Amazon and companies like it do exploit workers, and not Uber, which allows drivers to use the cars they want, work as much as they want, whenever they want.


(Mitchel) #7

I was making great money when it came to my city. Then Uber began playing the workforce of drivers and paying a little less to new drivers and lowering rates. Those who criticize drivers are missing out on the reality of large corporations having God-like control. Plus AI will be taking some of your jobs or large company control what you should make. There’s more to the story than a study.


(Harris Frank) #8

Why are these people working for them if they pay so low? Business have drastically underestimated the value people put on an easy job with FLEXIBLE hours.


(Jerry Hall) #9

The fact that there are plenty of drivers means that it is still a working solution to their life. It sounds sucks but it a healthy equilibrium for both drivers and passengers.


(Kenneth Miller) #10

Definitely not the case with me I sometimes bringing 22 to 25 an hour it all depends on where you are and what city you are, the best time to work is early in the morning 4 5 6 in the morning get all the airport runs all the people that need to go to work that’s where you make you money, this chart is not accurate at all


(Sharon Green) #11

It depends on the car they drive if you are driving a 30,000 dlls car for 5 years your car will lose 80% of its value need to add tires, oil changes, brakes, mechanical repairs, gas lets say you made 100 k in 5 years you need to deduct at least 45 k probably more than that, but average driver will make 13 to 16 k a year


(Eric Moore) #12

It’s THE OTHER WAY AROUND. Tipping culture is one of the key factors that allow this to happen. It shifts the RESPONSIBILITY to pay living wage from multi-billion dollars companies into ordinary people. As long as tipping culture exists, mega-corporations will continue to get away with paying peanuts while earning insanely big money.


(Kenneth Miller) #13

The fact that people like you feel this way is why people like me end up with less in our pockets. It’s a service job, we get paid sure… but you’ll mock the need for a tip, just like a taxi, because you want to take advantage of low ride sharing prices while feeling virtuous about blaming the company. Tipping is the most direct way you can make a difference. Otherwise, rides would just be more expensive and thus more goes to the company. You pay more, either way, the fact that you find a simple tip on rideshare is astounding.

I’m dumbfounded that you think the 5% Lyft gets would make a bigger difference. Either way, it’d come to higher prices (and more into Lyft’s pocket) or tipping more if you cared about driver wages. The fact that you’re laughing it off shows you don’t really care about the drivers in this case.

I’m sure you’re a dream to your waiters and drivers with an attitude like that :roll_eyes: (They probably all spit in your food if you’re a regular anywhere.)


(Eric Moore) #14

A very flawed counter-argument, but I will give you full respect for actually arguing my points rather than resorting to name calling (getting more and more common in social media lately).

First, I was not referring to the 5% or whatever’s percentages earned by the mega-corporation. I was referring to the business model that set the price low to attract customers but end up throwing the basic responsibility of a company to the customer: paying a living wage.

Have a look at economic models in other first world countries where tipping is not expected. It drives the prices a bit higher, but most people can still afford things and more because they earn living wage that doesn’t rely on tipping. Companies are forced to come up with a pricing model that allows them to pay living wages.

Such model works many examples. The US is just too stubborn to learn.


(Steve Mann) #15

The issue around Uber driver income is just another subject area to debate.

  1. Yes, Uber drivers do know if they earn and make a profit or not.
  2. No, not all Uber drivers are aware of all the expenses.
  3. Most Uber drivers do make above $20 an hour gross, but how much does your car cost, not the sundries, the actual car. When did you buy it, how did you buy it and when do you expect to sell it? This is the real kicker in the income factor.
  4. Even if you decide to discount all the car related costs and just take the IRS mileage fee, remember that Uber is only paying you for period 3. this means that you claim your expenses for periods 1 and 2.
  5. Conclusions; If only around 7% of drivers end up continuing for Uber year after year, it means that these drivers have worked out the balance between income and expense as well as how to drive. This means that Uber does work, but perhaps when the market is so highly saturated, only a small percentage of drivers actually get to enjoy the income as advertised.