The Economic Policy Institute (EPI), a DC non-profit think tank, recently released a study showing the average Uber driver earns $11.77 per hour after expenses.
The study - Uber and the Labor Market - is based on a detailed analysis of driver income and expenses.
The study's key findings include:
- Uber drivers average $24.77 per hour in passenger fares
- Uber takes an average of $8.33 in commissions and fees
- Average driving expenses are $4.87 per hour
- This leaves the average driver with $11.77 per hour.
Trying to figure out how much rideshare drivers earn is much more complicated than it sounds. It's so complicated that even a group of very smart people at MIT got it wrong.
The reasons it's complicated include:
- Uber and Lyft fares and pay rates vary by city
- Drivers get a variety of bonuses and incentive pay
- Uber and Lyft change their pay and bonuses often
- Driver expenses vary substantially
For these reasons and others, it's very hard to calculate earnings for an average rideshare driver.
Their pay rates vary by geography, the types of rides they provide and how effective they are at earning incentive pay. Their costs also vary because they drive different types of vehicles and pay different amounts for gas, oil, maintenance, insurance and taxes (all of which tend to vary by geography).
The EPI study, in our opinion, has done the best job we've seen so far in working through all these complications. Because of this, we think their $11.77 per hour is a pretty solid number.
Having said that, driver earnings are clearly variable (statistically speaking, it's highly likely the standard deviation of driver earnings is quite large). This means individual drivers may do much better or worse, depending on a wide range of factors such as the ones listed above.
Another issue is tipping. Uber only fairly recently started allowing tipping on their platform. The EPI study appears to use Uber data on driver compensation prior to tipping (we need to double check this).
So far we've seen little data on the level of tips Uber or Lyft drivers are getting. If tipping is averaging 10%, for example, it would raise the average driver's hourly income by $2.70, or to $14.47.
It's also important to note that many drivers aren't focused on maximizing their after-cost earnings per hour.
Many are driving to help get through financial shocks, to earn money for a planned purchase and/or because they need the high degree of flexibility rideshare driving provides.
In these cases, rideshare driving is often their best employment option, even if there are other jobs that pay better.
We should add that about 18 months ago we tried to do an estimate of average driver earnings. Our analysis showed average earnings after expenses of $12-$14 dollars per hour. We chose not to publish our findings because we simply weren't confident enough in our data or results.
We were thinking it was time to try again. But thanks to EPI's hard work, we don't have to.
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