Vehicle Costs May Put Some Uber and Lyft Drivers in the Red
The ride-sharing drivers earn just $3.37 per hour on average, according to an MIT study.
Uber and Lyft drivers in the United States make a median profit of just $3.37 per hour (before taxes), according to a new study from the Massachusetts Institute of Technology's Center for Energy and Environmental Policy Research. Drivers may actually lose money once vehicle costs are factored in, the study said.
Researchers surveyed more than 1,100 drivers, who provided information on their revenue, how many miles they drive, and what kind of car they have. Knowing the type of car allowed researchers to estimate the cost of things like fuel, maintenance, insurance, and depreciation by looking at data from Edmunds, Kelley Blue Book, and the Environmental Protection Agency.
Based on that data, researchers concluded that 74 percent of drivers are earning less than their states' minimum wage, and 30 percent may be losing money based on vehicle costs.
The median amount of hourly pretax revenue works out to $0.59 per mile driven, according to the study, but expenses add up to $0.30 per mile. That means drivers earn a median profit of just $0.29 per mile. The study reported that the average monthly profit for drivers is $661. In a statement to The Guardian, an Uber spokesperson questioned the findings:
"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."
The Guardian also noted that, "Other studies and surveys have found higher hourly earnings for Uber drivers, in part because there are numerous ways to report income and to calculate costs and time and miles spent on the job."
Furthermore, NPR noted that drivers can use the IRS standard mileage rate deduction to write off some of the costs of using their cars for Uber or Lyft. In 2016, the rate was $0.54 per mile. The MIT study's authors said this deduction allows most ride-sharing drivers to "declare profits that are substantially lower," estimating that $4.8 billion in annual ride-sharing profit is untaxed.
Of the drivers surveyed in the MIT study, 80 percent said they work less than 40 hours per week. That might help alleviate concerns that ride-share drivers are working dangerously long hours, and bolsters Uber's argument that most drivers are part-timers, but compensation and working conditions for ride-sharing drivers remain controversial. Another recent study found that female Uber drivers earn significantly less than their male counterparts. A class-action lawsuit claims Uber underpaid New York City drivers, and falsely advertised guaranteed compensation.