A new study by Ridester, based on a survey of over 2600 drivers, comes up with findings that are consistent with, and if anything, a bit grimmer than earlier work.
A key difference between Ridester’s study and its predecessors is that Ridester asked drivers to send proof of their earnings, in the form of screenshots, which they got from 719 participants. The earnings data is for UberX drivers only, who represent 3/4 of all Uber drivers.
One interesting finding is that despite structuring their questions so as to help assure accurate responses about income, they found drivers overestimated their earnings. Getting the screenshots also allowed them to include tips, which averaged a bit over 7%.
Some of the highlights (emphasis original):
- Uber paid our uberX-driver respondents a median net income of just $13.70 per hour.When rider tips are added to what Uber pays, the median rises only to $14.73 per hour.
- Drivers self-report income that is 37.40% higher than they were able to show with screenshots of their earnings.
- 58.3% of our driver respondents are over 50 years old.
- 55.1% of our respondents reported having a college education. 10.7% reported having post-graduate degrees.
From Ridester’s discussion of driver costs:
Our survey adds to the mounting body of evidence that at least half of all Uber drivers earn less than $10 per hour after all car expenses are considered.
And car expenses must be taken into consideration because they are not optional for drivers….
If we split the difference between Triple A’s expense figures for medium-size and small sedans, we come up with an average figure of 45.80 cents per mile.
For drivers who rent vehicles to use in ride-hail work, the rental costs are very much tied to the real costs of car ownership for the rental company. uberX-qualified vehicles generally rent from around $200 to $400 per week – depending on the city. If you assume drivers drive an average of 40 hours per week, then they are looking at $5 to $10 per hour in vehicle expenses. And in a moment we’ll show that drivers who own their cars also incur somewhere between $5 and $10 per hour in vehicle expenses….all that is left to figure out is how many miles on average, drivers drive per hour.
To do this, we looked at infinitemonekycorps.net’s City Speed project…
For instance, in Philadelphia, we find the average speed of traffic is 20.3 miles per hour. So, a person who is driving continuously would be expected to travel 20.3 miles on average each hour. Since Uber drivers have to stop and wait for passengers though, we will assume they are completely stopped and waiting for a passenger 10% of each hour. That means the average Philadelphia driver would travel approximately 18.27 miles on average each hour.
Since our survey breaks out earnings by city, we can look and see that Philadelphia drivers earn more than the $13.70 national median, coming in at $17.62 per hour. But when we deduct the per-mile costs of $0.458 for the 18.27 miles we get an average hourly expense of $8.37. That means the average Philly driver earns a median income of just $9.25 per hour.
If you are simple-minded about it, you can simply take the $14.73 per hour median earnings and deduct $5 per hour for expenses, knowing that that’s favorable to Uber, and you wind up with $9.73 an hour. Ugh.
The survey found driver churn was somewhat lower than other research had found, with 46.4% reporting they’s worked a year or less for Uber. However, the survey also disproved the claim that Uber is a convenient source of extra income. 50.3% said Uber was their sole source of income.
New CEO Dara Khosrowshahi has only gotten a 11.8% net positive rating from drivers relative to Travis Kalanick. 22.8% said their perception of Uber leadership had improved since Khosrowshahi took the helm, while 10% said it had gotten worse.
I’m sure our Hubert Horan would agree with the general point the final section makes, but I wonder if he’d agree with the impact on driver earnings (and conversely, what the effect on sacrosanct Uber revenues would be). If I get a reaction by e-mail, I’ll update the post:
Considering that these drivers have no benefits whatsoever, no health insurance, no unemployment insurance, no disability insurance and no minimum wage protection, these drivers are risking everything to drive for the ride-hail giants.
These low earnings also put the public at risk in terms of safety. Drivers who are just barely scraping by in life are not likely to put the kind of money into maintaining their vehicles that is required to keep them in a tip-top safe driving condition….
Uber and Lyft could easily help drivers increase their earnings simply by putting a cap on the number of drivers they allow on the road at any one time and raising fares by a small percentage.
We agree with the conclusions of a study produced in July 2018 for the New York City Taxi & Limousine Commission which said, “Hourly pay is low in large part because the industry depends upon a ready availability of idle drivers to minimize passenger wait times.” In other words, Uber and Lyft knowingly put more drivers on the road than they need so that each passenger can get a quick pickup with minimal wait time.
The study proposed a 5% fare increase and a reduction in the number of drivers which would lead to only a 12 to 15 second increase in wait time for passengers. But these changes would also lead to a 22.5% increase in net earnings after expenses for drivers.