Uber says its drivers make $6 more than traditional cab drivers, but the devil is in the details.
Uber has long said its drivers get paid more than traditional cabbies. But do they really?
New data from the ridesharing service itself gives the clearest look into the company’s business—and that of its drivers—than ever before. On Thursday, Uber released two reports: an anonymous survey of 601 Uber drivers and an analysis of the Uber labor market co-authored by Princeton economics professor Alan B. Krueger and Jonathan Hall, Uber’s head of policy research. Together, they provide information on how drivers use Uber, how much they make, and how fast Uber’s business is growing.
The real scoop on wages
The big news in this latest report is wage data. Previously, Uber stated the median driver in New York City was making $90,000 a year in “business income,” but this number was criticized by many because business income doesn’t include costs like gasoline, maintenance, car insurance, health insurance, and, you know, the car itself. Another complaint was that the company wasn’t being clear about how many hours one had to drive in order to make said $90k.
This time around, Uber still isn’t including those costs when calculating drivers’ wages, but it has broken down earnings on a per-hour basis and compared them with government data on how much conventional taxi drivers take home. The results show an Uber driver makes an average of $6 per hour more than the average taxi/chauffeur/limo driver. (The Bureau of Labor Statistics lumps those professions together, which makes for a reasonably fair comparison to Uber’s grouping of commercially licensed Uber Black drivers—a premium service—and lower-paid UberX drivers.)
These numbers are impressive, but Uber acknowledges that its driver-partners “are not reimbursed for driving expenses, such as gasoline, depreciation, or insurance, while employed drivers covered by the OES [Occupational Employment Statistics] data may not have to cover those costs.” So how much do these drivers really make, including expenses? It’s still hard to say. Uber told finance writer Felix Salmon that fuel, gas, maintenance, depreciation, and insurance would add about $15,000 per year in New York City.
That works out to about $7.20 per hour (assuming a 40-hour work week), which would still leave New York Uber drivers ahead, but would seriously cut into Uber’s advantage across the board if costs in other cities are similar. It should also be noted that cab drivers likely share in many of those expenses. But cab drivers may not have to pay for their own vehicle, which drives Uber’s average net hourly wages even lower.
The takeaway from all this? We don’t know much more than before, but it would appear that an Uber driver’s salary is at least on par with that of a normal cab driver, and potentially more.
What kind of jobs is Uber providing?
The good news is that the vast majority of Uber drivers—78%—are satisfied working for the company. But the data also reveal that many drivers see the ride-sharing service as a stopgap measure until they find a better job. The survey results show 32% of drivers said the major reason for partnering with Uber was “to earn money while looking for a steady, full-time job.”
That makes sense considering nearly half of Uber’s drivers have a college degree or higher, well above the 18% of taxi drivers with similar credentials. Indeed, slightly more than half of Uber drivers became inactive one year after joining the service, suggesting they quit or found other work.
That isn’t necessarily a bad thing. One of Uber’s major selling points is that anyone can drive a car to earn a little extra money, and it has clearly succeeded in this regard. But the numbers demonstrate how Uber isn’t providing a career as much as an income supplement or temporary gig: Just 24% of Uber drivers say the company is their only source of personal income, and another 16% say Uber is their largest source of income but not the only one. Meanwhile, nearly 40% of drivers said Uber did not make up a significant source of their wages.
Ultimately, it’s up to drivers to choose whether Uber makes sense for them, and the results seem to speak for themselves. In the United States, Uber says, more than 160,000 drivers had partnered with the company by the end of 2014, and almost 40,000 new U.S. drivers provided their first trips in December of last year. Thanks to Uber’s new data release, prospective drivers will have more information than ever when making their decision.