By Levi Sumagaysay
The Mercury News
WWR Article Summary (tl;dr) A new study reveals the average Uber driver makes $9.21 per hour. That $9.21 figure puts Uber drivers at the bottom 10 percent of wage earners. Also, it “falls below the mandated minimum wage in nine of 20 major markets.”
The Mercury News
A new analysis about Uber drivers’ wages finds that they take home about $9.21 an hour, or less than minimum wage in many of the biggest markets where the ride-hailing service operates.
The analysis, by the pro-labor think tank Economic Policy Institute, builds on a recent MIT study that at first said that Uber drivers made an average of $3.37 an hour, then revised that figure to a median $8.55 an hour.
Uber’s chief economist, Jonathan Hall, rejected the MIT study’s findings in March, and released the San Francisco company’s own per-hour figure after expenses: $13.04.
The new calculations released this week are derived from the MIT study plus newly available administrative data from Uber, according to Lawrence Michel, former EPI president and now a distinguished fellow at the institute.
“The low pay and small economic weight of Uber and the gig economy overall, coupled with the fact that Uber drivers and other gig workers are mostly working on a part-time basis as a way to earn supplementary income, argue for a change in perspective,” Mishel said in a press release for his analysis on Tuesday. “There is a lot of hype around Uber and the gig economy. But in any conference on the future of work, Uber and the gig economy deserve at most a workshop, not a plenary.”
Among his other findings:
Uber drivers’ wages break down this way: After deducting fees and expenses, they make an average of $11.77 an hour.
After deducting mandatory Social Security and Medicare taxes, that figure goes down to $10.87 an hour. After additional deductions that are explained this way, “We calculate this W-2 equivalent wage by deducting the following in order, from passenger payments: all Uber fees, such as booking fees and commissions; vehicle expenses; and the cost of a modest benefits package, including mandatory employer-side payroll taxes. Our estimate also takes into account expense and benefit interactions with the federal tax code”, Mishel arrives at the final figure of $9.21 an hour.
About a third of what passengers pay goes to Uber for commissions and booking fees.
The $9.21 figure puts Uber drivers at the bottom 10 percent of wage earners. Also, it “falls below the mandated
minimum wage in nine of 20 major markets, including the three largest (Chicago, Los Angeles, and New York).”
Because of Uber drivers’ part-time status, the 833,000 Uber drivers in a year is equivalent to 90,521 full-time employees. That “accounts for just 0.1 percent of national FTE employment.”
Uber has said that more than half of its drivers in the United States drive for the service less than 10 hours a week.
“While we appreciate EPI’s contribution to this important topic of research, the paper makes several questionable claims and assumptions while altogether ignoring the flexibility drivers tell us they value and cannot find in traditional jobs,” an Uber spokesman said Thursday.