By Ryan Velez
It’s a common notion among gig workers that when calculating rates, it’s important not to think about the total you make, but how that breaks down in dollars per hour. The Guardian reports that when it comes to that metric, many ride-sharing workers are making abysmal wages overall, to the tune of a median $3.37 an hour for Uber and Lyft workers before taxes.
How does this come to pass? The data was based on an analysis of vehicle cost data and a survey of more than 1,100 drivers for the ride-hailing companies for the paper published by the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research. The report – which factored in insurance, maintenance, repairs, fuel and other costs – found that 30% of drivers are losing money on the job and that 74% earn less than the minimum wage in their states.
This adds to the scrutiny of these companies, which treat their drivers as independent contractors and don’t give them much in the way of security or protection.
“This business model is not currently sustainable,” said Stephen Zoepf, executive director of the Center for Automotive Research at Stanford University and co-author of the paper. “The companies are losing money. The businesses are being subsidized by [venture capital] money … And the drivers are essentially subsidizing it by working for very low wages.”
According to the report, drivers earn a median of .59 cents per mile while incurring a median cost of .30 cents per mile. In addition, one needs to think about long-term costs, like maintenance, repair, and depreciation on the vehicle they use for their services. Some people go to the troubles to buy and maintain cars specifically to use for ridesharing.
Harry Campbell, founder of the Rideshare Guy, a website that has conducted surveys of drivers, said the finding of a $3.37 median hourly profit seemed a bit low, but noted that new drivers were often surprised by the wages.
“The most common feedback we hear from drivers is they end up earning a lot less than they expected,” said Campbell, who partnered with Zoepf on the surveys used in the paper. “There is a lot of turnover in the industry, and that’s the number one reason I hear from drivers why they are quitting – they are not making enough.”