RSG220: Harry calls BS on Study that says Uber Drivers Earn $6.20 per hour!

New Study Suggests Drivers Earn $6.20/Hour

  • Catchy description, but is it correct?
  • I haven’t seen many mainstream media cover this study well

Refuting the ‘Prop 22 Depresses Wages and Deepens Inequities for California Workers’ ‘Study’

1. “Drivers’ median net take-home earnings are just $6.20 per hour under Prop 22.” 

That doesn’t sound like much, but the report also says that drivers’ gross earnings were $26/hour. But if you take out all the expenses and benefits that drivers would have gotten if they were employees, they only earn $6.20/hr. Ok…the only issue is that they’re not employees!

If anything, driver earnings have actually gone up over the past two years, but it has nothing to do with Prop 22. Remember the global pandemic that hit in March 2020 and caused a two-year driver shortage and a huge spike in earnings?

Simple example: If average earnings pre-pandemic were $20/hour and expenses were $5/hour, this comes out to a net of $15/hour. During the pandemic, drivers earned closer to $30/hour in major cities (lots of data from Uber on this).

Let’s say expenses conservatively doubled – that’s still net earnings of $20/hour. So driver pay went up, yet I see quotes from drivers who somehow earn less? Doesn’t add up.

This is one area where Uber doesn’t do themselves any favors, though since they selectively release confusing earnings data, so they don’t have a lot of credibility to push back here.

2. 21 drivers participated in this survey. 

Say what now? I don’t think a high school newspaper would even publish a survey based on this small of a data set, given there are 1.3 million gig workers in California (as the report itself claims). Not to mention the huge bias, since RDU is basically a union organization for drivers (all for them doing what they do but not if it’s to say drivers earn $6.20/hr, which is false), so this puts a huge slant on the type of drivers they attract, and who would participate.

I’m not sure why Uber always gets skewered when they pay for a survey that shows favorable numbers, but the same level of scrutiny doesn’t apply to their opponents.

Either way, Uber routinely reported that drivers were earning $31/hour gross in cities like Los Angeles during this same period, so that’s $5/hr more than this report found. That would mean closer to $11.20/hr net (still way too low, but better than $6.20/hr).

We posted screenshots of RSG contributors in LA earning $50-60/hour during this same time. As I’ve highlighted over and over, there’s a ton of variability in income in the gig economy, so sample size is important.

1-200 drivers would have been the bare minimum for this type of analysis and at least make an effort to diversify the sources (for example, RDU members, recruited in person via taking rides, FB groups/ads, etc.).

3. Driver Expenses.

I won’t rehash the expense debate as I’ve covered it extensively with the City of Seattle vs Cornell studies on my podcast, but the gist is that this study looked at earnings and added on a bunch of ’employee expenses’, as I mentioned. Drivers aren’t employees, though, so this seems like a moot analysis.

If you want to hear from the Show Me the Money Club YouTube contributors, take a look at this conversation between Sergio and Chris: Uber Drivers Make $6.20 Per Hour?!?! Upfront Fares – Show Me The Money Club

Even if you dig into their assumptions on the expense side of things, there is a lot up for debate. For a part-time driver that already has insurance and a phone, there is no marginal expense there. But for a full-time driver, maybe 90% of that would apply to your expenses.

Don’t forget that independent contractor drivers get to deduct all the miles they drive, so you can easily get your net earnings on your Schedule C cut in half or even close to 0 if you’re aggressive.

So when we talk about rideshare earnings, we talk about our profit after tax, and in the ‘real job’ world, we talk about our earnings before tax. You can read more about driver expenses and how to calculate your cost per mile here, but basically, an $18/hour ‘real job’ wage is the same as a $15/hour rideshare wage once you factor in the taxable deductions.

4. “Rideshare work has become less flexible and more controlled by rideshare companies under Prop 22.” 

What do these guys think would happen if drivers became employees? It would become 10x more restrictive and less flexible… as we’ve seen in NYC with just a minimum wage. I’m a fan of the NYC minimum wage floor, but yes, there are strings attached. You can’t log in wherever and wherever you want any more in NYC.

Ok, I will stop there and give you a chance to respond – what do you think of this study that says drivers have less flexibility and only take home $6.20? What do you think of my rebuttals? Share your thoughts in the comments below!

California Voted for Cheaper Uber Rides. It May Have Hurt Drivers
See Chris and Sergio discuss this on SMTMC Live
RSG137 – Louis Hyman on What Uber and Lyft Drivers Really Make in Seattle
How to Calculate Per Mile Earnings Instead of Per Hour