Ridesharing

Uber Disputes Claims It Pays Less Than Minimum Wage

Uber

It's not wise fighting about math with MIT students, but the gang at Uber is giving it a go.

An MIT study released last week indicates that Uber drivers, on average, are making less than minimum wage. Like, a lot less — the median pretax profit was $3.37 per hour, according to the survey. According to reporting, this is a claim that Uber strong disagrees with, citing incorrect methodology.

The MIT report tapped into data from a survey of 1,150 drivers published by gig economy blog The Rideshare Guy, and found that drivers’ profits, after calculating vehicle and fuel expenses, were low.

Specifically, the study found that with all expenses factored in, 74 percent of Uber drivers are making less than a minimum wage amount.

Uber’s Chief Economist Jonathan Hall argued back, noting that their own surveys — one in partnership with Princeton and another with Stanford — both found the opposite: Uber drviers make much more than the minimum wage (in the $19-$21 as gross hourly income). Hall went on to point out that MIT’s methods were flawed, writing on Uber’s Medium blog that “the earnings figures suggested in the paper are less than half the hourly earnings numbers reported in the very survey the paper derives its data from.”

Going back to The Rideshare Guy’s survey, average hourly earnings were reported to be $15.68.

Stephen Zoepf, who led the MIT study, has told Reuters that he agrees that the survey questions may have confused drivers, who responded to them in such a way as to create a discrepancy between MIT’s findings and the other reports.  He also promised to run the analysis once more and hopes to publish fresh version early this week.

The results will be important, as fuel in a long-term running debate about whether Uber (which employs its drivers as contractors, not employees) is offering flexibility and a chance to out-earn the normal economy — or exploitation and a chance to under-earn the regular wage economy with a clever model.

We'll keep you posted as data emerges.

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