A new working paper reports that 30% of Uber drivers are losing money once car costs are accounted for. The report, which surveyed 1,100 drivers, comes from researchers at Massachusetts Institute of Technology Center for Energy and Environmental Policy Research.
The statistics are startling: Nearly three-quarters of drivers earn less than minimum wage; the median profit before taxes is $3.37/hour. Paying for a vehicle and making sure it’s in good working condition is a considerable expense. Per the paper, median gross driver revenue is estimated to be $0.59 per mile, while median driver profits are $0.29 per mile. The paper also looks at taxes. “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,” writes the study’s authors. It’s no wonder Uber has enormous attrition. In April of last year, The Information reported Uber was only retaining about 4% of drivers annually.
Uber counters that the MIT study doesn’t accurately portray driver earnings. “While the paper is certainly attention grabbing, its methodology and findings are deeply flawed. We’ve reached out to the paper’s authors to share our concerns and suggest ways we might work together to refine their approach.”
Independent studies on driver earnings are rare. Most studies concerning driver earnings have involved Uber. Existing surveys also tend to focus on hourly rates rather than per-mile rates; almost none of them look at driver costs. “In 16 of the 18 markets available, the median earnings per hour of Uber’s driver-partners exceeded the average hourly wage of taxi drivers and chauffeurs. Of course, Uber’s driver-partners are not reimbursed for driving expenses, such as gasoline, depreciation, or insurance, while employed drivers covered by the OES data may not have to cover those costs,” notes a 2015 study by Alan Hall and Jonathan Krueger. Their study says that between 2012 and 2014 drivers across five major metropolitan markets earned an average of $19 per hour. They also said that detailed driver costs should be the subject of future study.
We’ve reached out to the study’s researchers and will update as necessary.RR