Uber and Lyft drivers in the US make a median profit of $3.37 per hour before taxes, according to a new report that suggests a majority of ride-share workers make below minimum wage and that many actually lose money.
Researchers did 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.
The findings have raised fresh concerns about labor standards in the booming sharing economy as companies such as Uber and Lyft continue to face scrutiny over their treatment of drivers, who are classified as independent contractors and have few rights or protections.
“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.”
Drivers earn a median of 59 cents per mile while incurring a median cost of 30 cents per mile, the report said, adding that for nearly a third of drivers, the costs are ultimately higher than the revenue. The paper reported the average driver profit to be $661 per month.