James Doubek for NPR:

The vast majority of Uber and Lyft drivers are earning less than minimum wage and almost a third of them are actually losing money by driving, according to researchers at the Massachusetts Institute of Technology.

A working paper by Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo at MIT’s Center for Energy and Environmental Policy Research says the median pretax profit earned from driving is $3.37 per hour after taking expenses into account. Seventy-four percent of drivers earn less than their state’s minimum wage, the researchers say.

I’ve been thinking for a while that Lyft-like services only work because drivers have limited information about their true operating costs (gas, vehicle depreciation, car insurance, etc.). Uber says the methods in this paper are flawed, but they don’t say how.

Doubek continues:

Uber and Lyft both have “notoriously high” turnover rates among drivers. A report last year said just 4 percent of Uber drivers work for the company for at least a year.

If it’s such a great deal for drivers, why the high turnover?

Max Masnick, PhD @max

© Max Masnick. Views expressed here are mine alone.