MIT gives one-star review to Lyft, Uber over abysmal '$3.37/hr' pay

Gig economy serfs make less than min wage, on average, according to uni study

Confused lost-looking driver with map. Photo by SHutterstock

Updated An analysis published by MIT has found that Uber and Lyft drivers in the US only net around $3.37 per hour on average, and nearly a third are probably losing money after car costs.

A study [PDF] put out this week, and carried out by Stanford researchers Stephen Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo, has found that nearly half of all drivers could actually claim that for tax purposes their work was a net loss.

The investigation, seeking to get a full picture of the economics of ride-sharing services beyond the companies' own numbers, combined self-reported revenue figures with driver surveys and vehicle maintenance information.

The conclusion: driving for Lyft or Uber doesn't always pay. In fact, many times it won't even net you a taxable income, according to this study.

The researchers said that with the median income of $3.37 per hour, some 74 per cent of drivers make less than their state's minimum wage.

What's worse, with a median income of $0.59 per mile and expenses of $0.30 per mile, the researchers estimate that for as many as 30 per cent of people who drive, the fares aren't even enough to cover the insurance, vehicle maintenance, and fuel costs.

The report helps to explain why many drivers see underwhelming returns from their gig economy jobs. While the work does allow for flexible hours and the freedom to choose when to work, multiple studies have shown a "side hustle" with Uber or Lyft isn't all it's cracked up to be.

Silver, er, aluminum-foil lining

There are some benefits, however. The researchers say that with earnings per-mile being so low, most of the cyber-serfs will not have to pay any tax on the money they do make from ride-share driving.

"Drivers are eligible to use a Standard Mileage Deduction for tax purposes ($0.54/mile in 2016) which far exceeds median costs per mile of $0.30/mile. Because of this deduction, most ride-hailing drivers are able to declare profits that are substantially lower," the paper stated.

"Mean drivers who use a Standard Mileage Deduction would declare taxable profit of $175 rather than the $661 earned. These numbers suggest that approximately 74 per cent of driver profit is untaxed."

For what it's worth, neither Uber nor Lyft is making any money on this stuff either.

We asked Uber and Lyft for comment. A spokesperson for Lyft told us:

Drivers are an integral part of Lyft’s success. An ever-growing number of individuals around the country are using Lyft as a flexible way to earn income, and we will continue to engage with our driver community to help them succeed. We have not yet reviewed this study in detail, but an initial review shows some questionable assumptions.

Uber could not be reached at time of writing, although earlier a spokesperson told The Guardian it reckoned the study's methodology and findings were "deeply flawed." ®

Updated to add

Uber's CEO Dara Khosrowshahi has hit back...

And the study's lead author Zoepf has upgraded his numbers following criticism from Uber.

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