$3.37! That's the paltry median hourly profit for Uber and Lyft drivers—after expenses are factored in—according to a new study.
The paper, from the MIT Center for Energy and Environmental Policy Research, is based on a survey of over 1,100 rideshare drivers. The results indicate that the "median profit from driving is $3.37 per hour before taxes, and 74% of drivers earn less than the minimum wage in their state."
[UPDATE: After the working paper was published, Uber's chief economist John Hall published a response stating that there was "a major error in the authors’ methodology." Stephen Zoepf, one of the paper's authors, then responded by saying that "Hall's specific criticism is valid," and acknowledged that the "survey questions could and should have been worded more clearly."
If he followed the advice in Hall's criticism, Zoepf explained, median profit would rise to somewhere between $8.55 to $10 per hour for Uber and Lyft drivers, not $3.37 as initially indicated in working paper. Zoepf said he would be "conducting a thorough revision of the paper and will update it" in the next few weeks.
After Zoepf released his response to Uber's Hall, Lyft also issued a statement: “When an academic study changes so dramatically in just a matter of days, that’s a real flag. While the revised results are not as inaccurate as the original findings, driver earnings are still understated. MIT’s study has fundamental methodology problems."]
Median gross driver revenues are $0.59 per mile, the study found, but after expenses, median driver profit is only $0.29 per mile. What's more, 30% of Uber and Lyft drivers are actually losing money once expenses like gas, insurance, vehicle repairs, and depreciation are included, according to the paper.
Pay varies widely for Uber and Lyft drivers due to a number of factors, including the local level of pay and ride demand, when a driver works, how many hours a driver is on the road and personal expenses. Uber and Lyft do not say how much their drivers actually make, perhaps because it is impossible to come up with definitive figures. Uber says, simply, "You can drive and earn as much as you want. And, the more you drive, the more you’ll make." Lyft offers the same vague insight: "The more you drive, the more you earn."
Uber disputes the findings in the MIT report. In a statement sent to the Guardian, Uber said that the report's "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."
Money has reached out to Lyft in the past, and it has not offered any estimates for how much drivers earn. After originally publishing our story, Lyft sent us the following statement: "Drivers are an integral part of Lyft’s success. An ever-growing number of individuals around the country are using Lyft as a flexible way to earn income, and 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."
Previous studies have indicated that pay is significantly higher for Uber and Lyft drivers than the numbers cited in the MIT study. A 2017 survey by RideShareGuy blog found that drivers earned an average of $15.68 and $17.50 per hour at Uber and Lyft, respectively. But these are gross earnings, and it's unclear what a driver's real profits would be after expenses are factored in.
Another study—this one funded by Uber in 2015 and leaked to Buzzfeed—found that drivers earned roughly $8.77 per hour in profit in Detroit after including expenses. In Houston, the hourly profit for Uber drivers was approximately $13.17. It's worth noting that Uber added tipping as an option in its app only last summer, which obviously increases the opportunity for drivers to earn more money.
But why do the estimates for Uber and Lyft pay vary so widely from study to study? It's because there are different ways to gather information from drivers, as well as different ways to calculate driver expenses and how many hours a driver is truly "working."