We’ve said for some time that Uber and Lyft are exploiting the fact that their drivers don’t understand their own economics and don’t factor in the wear and tear on their vehicles. One former Uber driver did a back of the envelope work up and argued that you’d make more than minimum wage only if your car was more than six years old. The fact that only 4% of Uber drivers continue for more than a year suggests that working for these ride-sharing companies is an unattractive proposition.
A large-scale study confirms these doubts about driver pay, and then some. A team from Stanford, Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo, under the auspices of MIT’s Center for Energy and Environmental Policy Research obtained information from 1100 Uber and Lyft drivers using questionnaires and information about vehicle-specific operating costs, such as insurance, maintenance, repairs, fuel and depreciation.
Their main finding:
Results show that per hour worked, median profit from driving is $3.37/hour before taxes, and 74% of drivers earn less than the minimum wage in their state. 30% of drivers are actually losing money once vehicle expenses are included. On a per-mile basis, median gross driver revenue is $0.59/mile but vehicle operating expenses reduce real driver profit to a median of $0.29/mile.
If you gross up the median hourly profit to gross revenue, using the same ratio for gross revenue versus net profit per mile, median gross revenue is only $6.86 an hour, still below minimum wage. These drivers would be better off doing almost anything else. Consider the safety risks. From Wired: