MIT Study Finds Uber and Lyft Median Hourly Wage is $3.37
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
According to a study published by MIT, a majority of drivers for Uber and Lyft in the United States make less than minimum wage — some drivers even lose money as they work for the ride-hailing companies.
For the study, MIT researchers surveyed more than 1,100 drivers at either company and found that the median profit was $3.37 per hour before taxes, less than half the federal minimum wage set at $7.25 per hour. The report factored in insurance, maintenance, repairs, fuel and other costs and found that 74% of drivers earn less than the minimum wage in their respective state and that 30% of drivers are losing money on the job.
The study found that drivers earn a median of 59 cents per mile while incurring a median cost of 30 cents per mile, and that for nearly a third of the drivers, the costs are higher than the revenue. That equates to be $661 per month.
The findings have raised new concerns as ride-hailing companies continue to grow. Uber and Lyft drivers are classified as independent contractors so they have fewer rights and protections than full-time employees — both companies are facing scrutiny over how they treat their drivers.
“This business model is not currently sustainable,” Stephen Zoepf, executive director of the Center for Automotive Research at Stanford University and co-author of the paper said to The Guardian. “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.”
The report went on to say that drivers can incur significant short-term and long-term costs because they use their personal vehicles for the ride-hailing service. Zoepf said that with this model, drivers are borrowing against the value of their own car. “It’s quite possible that drivers don’t realize quite how much they are spending.”
A representative for Uber reached out to the Center for Energy and Environmental Policy Research — the department that conducted the study at MIT — to share their “concerns and suggest ways we might work together to refine their approach.” The representative added that Uber believes that the center’s methodology and findings are “deeply flawed.”
A representative for Lyft told The Guardian that they “have not yet reviewed this study in detail, but an initial review shows some questionable assumptions.”
H/T: The Guardian
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,650
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
- Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.