Cheap Drivers

Seth Sandronsky

Ride-hailing firms Uber and Lyft contract with drivers, who after paying their expenses, get a median hourly pay of $3.37 an hour (half above and below), according to a draft paper by researchers at the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research. That sum is less than half of the federal minimum wage of $7.25 an hour

The MIT paper by Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo surveyed 1,100 drivers for the two firms. “Results show that per hour worked, median profit from driving is $3.37/hour before taxes, and 74 percent of drivers earn less than the minimum wage in their state. 30 percent of drivers are actually losing money once vehicle expenses are included.”

Riders use mobile phone apps to hail Uber or Lyft drivers, whose work expenses include insurance, maintenance, repairs, fuel, and depreciation. Such drivers are self-employed independent contractors, responsible for these expenses. They are not company employees.

Drivers have their own formula, as some own vehicles while and others lease them, according to Ari, of Los Angeles, a former Uber driver who asked to use his first name only.

Uber’s CEO Dara Khosrowshahi took to Twitter to knock the MIT research on ride-hailing drivers’ pay. “MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing).” The MIT lead author, Stephen Zoepf, executive director of the Center for Automotive Research at Stanford University, concurred with certain criticisms of the paper about drivers for ride-hailing firms.

Recalculating the MIT methodology that Uber’s top economist differed with, delivered different results. On one hand, income of median drivers was $8.55 an hour, while 8 percent lost money and 54 percent earned under the state minimum wage. On the other hand, $10 an hour was median driver pay, and 41 percent earned under their state’s minimum wage, while 4 percent lost money.

Let us be clear. An hourly wage rate of $15.00 per hour nets one an annual income of $30,000. This is not living large.

Turning from economics, we look at the politics of ride-hailing firms. “Over the past four years, transportation network companies (TNCs), primarily Uber and Lyft, have convinced legislators in the vast majority of states to overrule and preempt local regulations and strip drivers of rights,” according to a recent report from the National Employment Law Project and Partnership for Working Families. The American Legislative Exchange Council, with funding from the billionaire Kochs, is involved.

“TNCs have successfully adopted state interference, an antidemocratic legislative practice favored by the gun and tobacco industries and popularized by the ultraconservative ALEC, in order to rewrite the law,” according to the NELP and PWF report. This “political strategy pioneered by the tobacco industry and the National Rifle Association” is also a favorite of the National Restaurant Association and, more recently, TNCs Uber and Lyft.”

Deregulation of airlines and trucking grew during the late 1970s on the watch of Democratic President Jimmy Carter. In part, unionized truck drivers became independent contractors who unlike them did not collectively bargain for pay and benefits with employers. This group of non-company workers resemble the union-free Uber and Lyft drivers, the independent contractors of 2018. The present is history.