Most Uber, Lyft drivers paid under minimum wage


Specifically, their median hourly wage is a whopping $3.37, according to a a paper published by MIT's Center for Energy and Environmental Policy Research, which compiled over 1,100 drivers' data from the United States Environmental Protection Agency and Kelly Blue Book, and estimates from Edmunds. Around three-quarters of drivers made less than their state's minimum wage, the study found, and about 30 per cent were losing money after deducting expenses.

"Ride-hailing operators know what they pay each driver, but do not know whether drivers earn additional wages from a competitor nor what drivers actually spend to operate their vehicles", the researchers wrote. "For tax purposes the $0.54/mile standard mileage deduction in 2016 means that almost half of drivers can declare a loss on their taxes", writes the study's authors. Zoepf says that many drivers are resorting to borrowing money in order to work for these rideshare companies, effectively subsidizing them by working for low wages.

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.

For tax purposes, the government allows drivers to take a standard deduction of $0.54 per mile.

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Notably, 80 percent of the drivers surveyed said they worked fewer than 40 hours a week. "This untaxed profit represents a social subsidy for the ride-hailing business model". The MIT paper then incorporated the cost-per-mile for driving for Uber.

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 ways we might work together to refine their approach, ' they added.

Using the same data, Campbell came up with an average hourly rate of around $16 an hour, not taking drivers' operational costs into account. Stephen Zoepf, a co-author of the paper, told The Guardian that "it's quite possible that drivers don't realize quite how much they are spending". "There is a lot of turnover in the industry, and that's the No. 1 reason I hear from drivers why they are quitting - they are not making enough".