New study from MIT reveals 74 per cent of rideshare drivers making less than minimum wage
03 March 2018
A new study from researchers at MIT reveals that with the inclusion of costs, 74 per cent of rideshare drivers are making less than minimum wage and many are losing money.
According to the paper from MIT's Center for Energy and Environmental Policy Research, which compared a survey of over 1,100 drivers for Uber and Lyft with ''detailed vehicle cost information'', 30 per cent of the workforce is actually paying to work after vehicle expenses are taken into account. Their findings point to a rather bleak picture - the median profit for drivers came out to just $3.37 per hour before taxes.
The researchers made use of data from Edmunds, Kelly Blue Book, and the Environmental Protection Agency to determine the cost of insurance, maintenance, gas, and depreciation for various vehicle models.
When the data is cross-referenced with drivers' self-reported revenue, mileage, and vehicle models, that information yielded discouraging results. Stephen Zoepf, a co-author of the paper, told The Guardian that ''it's quite possible that drivers don't realize quite how much they are spending.''
He added that many drivers were effectively borrowing money against the value of their cars and subsidising the ridesharing companies by working for low wages. When the billions of dollars in venture capital that these companies are losing each year is factored in, Zoepf concludes that ''this business model is not currently sustainable.''
The study, titled The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes which was conducted by the MIT Center for Energy and Environmental Policy Research. It surveyed over 1,100 Uber and Lyft ride-hailing drivers and factored in vehicle cost information such as fuel, insurance, maintenance and repairs to come up with a median profit per hour worked.
The study further revealed that a median driver generates $0.59 per mile of driving but incurs costs of $0.30 per mile. It also found that almost a third (30 per cent) of drivers incur expenses exceeding their revenue or lose money for every mile they drive.