Data collected in a brutal MIT study shows that 74 percent of drivers for Uber and Lyft are making less than minimum wage, with a median profit of $3.37 per hour before taxes. The findings further indicate that 30 percent of drivers are losing money when operating costs are taken into account.
Analysts from the university’s Center for Energy and Environmental Policy Research surveyed more than 1,100 ride-share drivers on their earnings, the specs of their vehicles, and the distances they drove. By coupling those findings with research on standard vehicle maintenance costs, based on estimates from the Environmental Protection Agency and Kelley Blue Book, the paper’s authors concluded that for every mile the median driver is earning $0.59 and expending $0.30. This works out to a $0.29 profit per mile.
The per mile figure has further implications for tax revenue, because the IRS allows drivers who make below $0.535 cents per mile to make a Standard Mileage Deduction and therefore report lower taxable profits. The researchers estimate that the gap is responsible for several billion dollars worth of untaxed income in the U.S.
The abysmal sums are sure to add to an already contentious debate over whether drivers—and other laborers in the gig economy for that matter—should be considered employees. Disgruntled drivers have raised a number of class-action lawsuits against Uber and Lyft, often resulting in multimillion-dollar payouts. For example, Uber said it would pay $100 million last April to settle a suit from drivers in California and Massachusetts if they agreed to remain contractors.
Uber has long argued that the flexibility that these gigs offer drivers, particularly the option to set one’s own work hours, makes up for the lack of benefits that are usually afforded to employees. The company has, however, been taking steps to cater more to its workforce as part of an effort to reform its public image, rolling out changes like adding a tipping function to the app along with a 24-hour hotline for drivers. It remains to be seen if these recent efforts will do anything to deal with high turnover rates—a report last year found that only 4 percent of people stay on as drivers at Uber after a year.
An Uber spokesperson wrote in a statement to the Guardian, “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.”
The Guardian also reports that studies from Stanford and others have in fact calculated higher hourly wages for Uber drivers, because there are different methods for determining these incomes and costs.