Uber drivers are earning 53% less than they did in 2013
- A new report suggests earnings have been steadily falling for drivers with companies like Uber and Lyft.
- Uber suggests the results are misleading because they don't examine hourly earnings.
- However, other reports suggest that even hourly earnings for ride-sharing drivers are often comparable to minimum wage.
Drivers for apps like Uber and Lyft are, as a whole, earning significantly less money compared to a few years ago, according to a new study from the JPMorgan Chase Institute.
The study examined 38 million payments made through 128 online platforms, which also included leasing apps like Airbnb, to 2.3 million distinct Chase checking accounts between October 2012 and March 2018.
It showed that, between 2013 to 2017, the average monthly payments to drivers who worked for a transportation app in a given month declined from $1,469 to $783, a decrease of 53 percent.
Why are driver wages apparently declining? The study offers several reasons, including drivers working fewer hours, lower trip prices, decreased rider demand and increased driver supply, and platforms paying drivers lower rates.
However, the study didn’t examine hourly wages, but rather looked at “only their product, earnings.”
A different perspective from Uber and Lyft
Uber says this makes the results misleading.
In a blog post, Libby Mishkin, a senior economist at Uber, notes that the number of total drivers with the company increased from 160,000 in 2014 to 900,000 in 2018. Most of those drivers only work part time. In fact, the study found that, among people paid by ride-sharing services in a given year, 58 percent of drivers earned money in just three or fewer months.
Uber says the number of its occasional drivers is growing, which lowers total monthly earnings statistics.
“The distinction between monthly and hourly average earnings in this context is an important one: if the share of our partners who drive only occasionally has increased over time, as it has, it stands to reason that the average of every driver’s monthly (or, for that matter, weekly or yearly) earnings would decrease,” wrote Mishkin.
“In our view, a more appropriate metric for evaluating earnings among the diverse and evolving group of drivers would be average hourly earnings, which according to academic research produced in partnership with Professor Alan Krueger of Princeton and John Horton of NYU have remained stable over time.”
A spokesperson for Lyft echoed a similar sentiment.
“The fact that this study did not examine hourly earnings, the metric that drivers care most about, has resulted in misleading headlines,” the spokesperson said. “Many more drivers are choosing to earn with Lyft on a part-time basis, often fewer than ten hours per week, and they tell us they truly value the flexibility Lyft provides.”
How much do Uber drivers earn hourly?
A pair of studies from 2018 provide an idea of how much an Uber driver earns by the hour.
One study, published in February from researchers at the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research, found that the median profit of Uber drivers was $8.55 to $10 an hour. (Note: The study authors arrived at this figure after revising their findings.)
Another study, from the Economic Policy Institute, a left-leaning think tank in Washington, D.C., showed that Uber drivers earn 24.77 in hourly passenger fares. However, after accounting for vehicle expenses, health insurance and Uber’s commissions and fees, drivers earn just $9.21 in hourly wages–an amount comparable to the minimum wage of many states.
Again, Uber criticized the report, suggesting it doesn’t factor in “the flexibility drivers tell us they value and cannot find in traditional jobs.”
In any case, both Uber and the recent JPMorgan Chase study seem to agree that most drivers for ride-sharing companies are working to supplement a more traditional income.
“…we do not find evidence that the Online Platform Economy is replacing traditional sources of income for most families,” reads the JPMorgan Chase study. “Taken together, our findings indicate that regardless of whether or not platform work could in principle represent the “future of work,” most participants are not putting it to the type of use that would usher in that future.”