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Uber Drivers Might Earn More Than Traditional Taxi Drivers, But Is That Enough?

When Uber enters a market, taxis lose money but Uber revenue more than makes up the difference. But at what cost to the Uber drivers?

Uber Drivers Might Earn More Than Traditional Taxi Drivers, But Is That Enough?
[Photo: Evelyn Hockstein/For The Washington Post/Getty Images]

Uber has faced a lot of criticism from people who say it’s destroying traditional jobs, driving down incomes, and reducing labor protections. Uber–which treats drivers as self-contractors rather than employees–has become a verb among labor advocates. An “Uberized” industry is one where workers face a more precarious future, even as they get to work when and where they want.

Is this criticism fair? Perhaps not entirely, according to a new study of the “Uber effect” across 50 U.S. cities. It finds that, even though salaried taxi drivers earn less after Uber enters a new market, Uber drivers tend to earn more than traditional drivers, offsetting that impact (though stories of Uber drivers sleeping in parking lots in order to drive enough to make enough money makes you wonder what it takes to earn that offset). Moreover, Uber tends to increase the number of overall taxis in circulation, the paper finds, which is good for consumers.

“Total employment expanded in cities where the Uber platform was adopted, and earnings reductions among wage employed workers were in part offset by increases in hourly incomes among self-employed drivers,” says the working paper from Carl Benedikt Frey, Thor Berger, and Chinchih Chen, three researchers from the University of Oxford.

The research, based on data from the large-scale American Community Survey and from the company, covers the period 2009 to 2015. The number of people self-employed as taxi drivers rose by 50% on average after Uber set up shop, and in many cases, the number of salaried drivers increased as well (though this might be related more to an improving economy at the time than the introduction of Uber as such).

Given Uber’s apparently positive income effects, the authors say cities should rethink efforts to ban or restrict the service.

[Photo: LSP1982/iStock]

“Since past research reveals that Uber has created a substantial consumer surplus, and we find that it has led to a rapid expansion of employment, there seems not to be a solid case for restricting its diffusion,” Frey says in an email. “Although Uber has come with negative income effects for some drivers, that is what happens when employment expands and competition increases.”

But then income isn’t the only question. Arguably, the company should be doing more for its drivers in other ways, including helping them set up their own benefit schemes. More to the point, Uber doesn’t always pay as well as it says. Reporters are still looking for the seemingly mythical Uber drivers who earn six figures, though the company once claimed such people exist, even in the median.

About the author

Ben Schiller is a New York staff writer for Co.Exist. He edited a European management magazine and was a reporter in San Francisco, Prague and Brussels.

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