Despite promises of better-earning potential, research results reveal that Uber and Lyft drivers are actually earning less than minimum wage and even lose money.
The survey, which was taken from more than 1,100 drivers, apparently had surprising results. A team from the Center for Energy and Environmental Policy Research of Massachusetts Institute of Technology published the findings.
The numbers generated from the study appear to discredit previously reported cases in which drivers supposedly earned more profit from the service. Promises of better compensation than minimum wage jobs prompted people to join the ride-hailing business as independent contractors.
The Numbers Say It All
The research results from MIT declared, however, that Uber and Lyft drivers earn an estimated $3.37 per hour. Moreover, according to the paper, the given value excludes taxes.
The team likewise noted that about one-third of drivers incurred losses from expenses related to their vehicle. Around 74 percent of drivers receive less-than-minimum profits in their respective state.
Details taken into consideration during the survey include repairs, fuel, maintenance, insurance, vehicle types, depreciation, mileage, and self-reported revenue. Even though there is a chance the information regarding revenue might be underdeclared for tax reasons, the numbers were still used to come up with the figures posted by the study.
Company Representatives Speak Up
The team behind the research might have the numbers to back up their reports, but the ride-hailing firms believe that some of the data might be inaccurate and therefore, should be taken with a grain of salt.
"We will continue to engage with our driver community to help them succeed. We have not yet reviewed this study in detail, but an initial review shows some questionable assumptions," stated Alexandra LaManna, a spokesperson for Lyft.
"While the paper is certainly attention grabbing, its methodology and findings are deeply flawed. We've reached out to the paper's authors to share our concerns and suggest ways we might work together to refine their approach," said Michael Amodeo, a representative for Uber.
Challenges With The Work Environment
Last year, one report focused on the speculated high rates of employee turnover for both Uber and Lyft. It was recognized as notoriously high with an estimated 4 percent of contractors who stay employed for more than a year.
Since drivers for ride-hailing services are evidently considered as independent contractors by the companies, they are not eligible to receive benefits like paid leaves and health care. Initiatives to reclassify drivers as employees have been met with legal action for the past few years.