Not only are the vast majority of Uber and Lyft drivers earning less than their state’s minimum wage — about a third of them are losing money by driving, researchers from the MIT Center for Energy and Environmental Policy claim. To arrive at their troubling results — that the median profit from driving is about $3.37 per hour before taxes — Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo paired results from a survey of over 1,100 drivers with detailed vehicle cost information gathered from Edmunds, Kelley Blue Book and the Environmental Protection Agency, according to NPR.
Drivers typically earn $0.59 per mile driven, according to the paper, but expenses shave off about $0.30 per mile, meaning a driver makes a median profit of $0.29.
An Uber spokesperson was deeply critical of the study in a recent statement to the Guardian.
“While the paper is certainly attention grabbing, its methodology and findings are deeply flawed,” the spokesperson said. “We’ve reached out to the paper’s authors to share our concerns and suggest ways we might work together to refine their approach.”
And as the study points out, it’s possible that billions of dollars in driver profits are simply untaxed because some drivers are able to write off some of the costs of using their care for business.
Perhaps, as another study from 2015 claimed, drivers actually earn considerably more than minimum wage (that research was co-authored by Jonathan Hall, now Uber’s chief economist). According to Reuters, the MIT team has agreed to re-run its analysis since being challenged by Hall.
But along with vehicle-related expenses, drivers also face challenges related to being classified as independent contractors, rather than employees. An EU court last year ruled that Uber drivers are, in fact, eligible for benefits and holiday pay, but no U.S. court has made such a statement. Drivers who have opted out of arbitration are mounting a legal challenge to the company, however, as well as unionizing around issues like workers’ comp.
Rachel Dovey is an award-winning freelance writer and former USC Annenberg fellow living at the northern tip of California’s Bay Area. She writes about infrastructure, water and climate change and has been published by Bust, Wired, Paste, SF Weekly, the East Bay Express and the North Bay Bohemian.