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.
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:
Because the ridesharing industry is so new, and laws regulating it so patchwork, official figures are tough to come by, and the big companies don’t share specifics about incidents their drivers report. Still, online forums for drivers brim with descriptions of attacks on drivers by passengers, both verbal and physical, such as a driver posted a video of being spit on and punched.
You might think ridesharing companies would be doing everything they can to ensure driver safety. But it turns out what they can do is limited by the kind of businesses they are. Because drivers operate as independent contractors instead of employees, the companies can’t offer true safety training. Under federal law, training is a signifier that someone is an employee, and both Uber and Lyft have fought bitterly against re-classifying drivers as employees. By the very nature of how on-demand businesses operate today, drivers in many ways have to go it alone…
Still, if ridesharing companies don’t make their figures public, federal regulators do. “Taxi drivers are over 20 times more likely to be murdered on the job than other workers,” the US Occupational Safety and Health Administration said in 2010. In a 2014 report, the Bureau of Labor Statistics found that of 3,200 3,200 taxi drivers who were hurt or killed on the job, 180 sustained injuries caused by a violent person—about 5.6 percent.
As if oh so charitable Uber would actually want to spend money on driver safety training….but you get the point.
The CEEPR study also points out that the fact that so many drivers lose money also means governments lose out on tax revenues:
For tax purposes the $0.54/mile standard mileage deduction in 2016 means that nearly half of drivers can declare a loss on their taxes. If drivers are fully able to capitalize on these losses for tax purposes, 73.5% of an estimated U.S. market $4.8B in annual ride-hailing driver profit is untaxed.
More than 80% of the drivers work less than full time. That means most are doing badly despite presumably focusing on peak hours when they can benefit from surge pricing. It’s hard to see how anyone makes anything approaching a living or even an adequate supplemental income: “On a monthly basis, mean profit is $661/month (median $310).”
As Lambert pointed out, this looks an awful lot like Marx’s immiseration of the proletariat. From Das Kapital:
Within the capitalist system all methods for raising the social productivity of labour are put into effect at the cost of the individual worker […] All means for the development of production undergo a dialectical inversion so that they become a means of domination and exploitation of the producers; they distort the worker into a fragment of a man, they degrade him to the level of an appendage of a machine, they destroy the actual content of his labour by turning it into a torment, they alienate from him the intellectual potentialities of the labour process […], they transform his life into working-time…
If you are using either Uber or Lyft, stop. Now. You are contributing directly to the growth of the precariat and the debasement of work. The fact that you use an app to distance yourself from the exploitation of desperate and not very savvy drivers doesn’t change the nature of what you are doing. Old fashioned cabs have embraced apps without Uber-esque spying on you even its app is off and trying to get you to turn over your contact list to them.
But as one colleague pointed out, the people who seem keenest about Uber are the affluenza and high-end professionals who can easily afford to pay more for car service. Her take was that this was another manifestation that they now see it as a matter of right to have a servant class at their beck and call. And not even a well treated servant class.