Uber Drivers and Other Gig Economy Workers Are Earning Half What They Did Five Years Ago (recode.net)

According to a new study by the JPMorgan Chase Instittue, drivers who transport people via apps (e.g. Uber, Lyft, Uber Eats, Postmates) made 53 percent less in 2017 than they did in 2013. Recode reports: The average monthly payments to those who worked for a transportation app in a given month declined to $783 from $1,469. Meanwhile, people working for leasing apps -- Airbnb, Turo, Parklee and other apps that let you rent assets like your home, car or parking space -- saw their incomes from those platforms rise 69 percent to $1,736 on average.

This is happening as online gig work has become more popular, thanks in large part to the growth in the number of transportation jobs. The share of the working population that has participated in the online gig economy at any point in a year rose from less than 2 percent in 2013 to nearly 5 percent in 2018. There are a number of potential reasons why the average pay for gig economy drivers has gone down. It could be any or all of the below, according to JPMorgan: drivers on average are working fewer hours; demand hasn't increased to meet the increased number of drivers; trip prices have fallen; or platforms are paying drivers lower rates.

Comments

No shit

[viperidaenz]

It's a race to the bottom. The more "gig economy workers" there are, the lower the rates will be.
Instead of the traditional impact being company profit margins, it's peoples wages that are shrinking.

Re:No shit

[ShanghaiBill]

The more "gig economy workers" there are, the lower the rates will be.

Not necessarily. You are only looking at one side. As the "gig economy" grows, there will be more "sellers" (workers) but also more buyers of their services.

The number of Uber drivers has gone up, but so has the number of riders.

Re:No shit

[viperidaenz]

I somehow doubt an industry fueled by the likes of Uber who supported it for the sole reason of skirting minimum wage laws is going to generate higher wages.

Re:It was clear from the start they were burning c

[b0s0z0ku]

They're trying to undercut taxis and public transportation, then jack prices sky-high after they kill the competition. Hope they epically fail, crash, and burn.

Re:Well, Duh!

[ShanghaiBill]

The headline is VERY misleading. They are talking about MONTHLY income and NOT hourly income. So what is happening is that new Uber drivers are far more likely to be part timers, putting in a few hours of driving at the end of the day to earn some extra income.

About 80% of Uber drivers drive for less than 35 hours per week. Over 60% have another job that is their main income.

So what?

[demonlapin]

Five years ago, the average Uber driver was more likely to be a professional driver. They had no presence in smaller cities, they had a lot less UberX and a lot more Uber Black. Today, in my home town, it's still just UberX - no fancy options, the best you can get is UberXL so you can have some luggage space. But we do have Uber...

As I've said elsewhere, I'm happy to burn VC money for cheap rides, but I'd use Uber or Lyft even if they weren't cheaper than official taxis. I know what I'm getting and who drives it, I never have to worry about bullshit claims that the credit card machine doesn't work, I don't have to carry cash at all. All of those are very valuable qualities. Do they screw drivers over? Probably so, but traditional cab companies are little if any better under ideal conditions.

Re:So what?

[swb]

Uber may be a horrible company, but the taxi system here was borderline unusable unless you were at the airport or had an hour to burn waiting for one at your house.

The convenience of Uber/Lyft is astonishing. You can actually get a ride nearly anywhere in very short order. It's hard not to believe their success isn't a function of breaking all the rules but because they actually provide a really good service compared to taxis.

That's not necessarily true either

[rsilvergun]

nobody knows since the data is _only_ monthly. It's just as likely that there are so many Uber drivers now that they're crowding each other out and nobody can make a living. Well, strike that, it's more likely. That's why medallion systems were created in the first place, e.g. to make sure the streets weren't flooded with drivers every time the economy dipped.

Re:That's not necessarily true either

[ShanghaiBill]

nobody knows since the data is _only_ monthly.

No it isn't. One article written by one lazy journalist is not the only data available.

Uber has said that the reason for the decline is drivers working fewer hours. According to Uber, more than 50% of their drivers now work less than 10 hours per week.

The job market today is stronger than it was 4 years ago, and it makes no sense for workers to accept half the pay they did then for the same job. People are not that stupid, and that is NOT happening.

Re:That's not necessarily true either

[Anonymous Coward]

The study mentions that:

These declines in monthly earnings among drivers may reflect the fact that the growth in the number of drivers could have put downward pressure on hourly wages; they may also reflect a potential decline in the number of hours drivers are driving. In our data, we do not observe wages and hours separately; we see only their product, earnings.

However, other research provides some clues. Some calculations of hourly wages
on a very large transportation platform—Uber—indicate that trip prices fell between 2014 and 2016, but the number of trips per hour increased, resulting in stable hourly wages (Hall et al, 2017; Hall, 2018).

To our knowledge, there is no published time series information on average hours worked among drivers on any single platform or across all platforms. However, research into tax reporting indicates that self-reported costs by new drivers fell 41 percent between 2013
and 2015, whereas self-reported earnings fell 46 percent (Abraham et al, 2018). Since a significant fraction of these costs is likely to comprise variable costs (vehicle maintenance and fuel), the decline could reflect a reduction in hours, as well as the decline in fuel prices that occurred during this period. The fact that earnings declined more than costs, however, suggests that effective wages also fell.

Re:That's not necessarily true either

[Rob Y.]

Corruption aside, the fact that the medallion is 'worth' $500K in the first place attests to its scarcity - which is, mostly, the point. Medallions were created to keep the city streets from being overcrowded with taxis. I suppose the reduced hours of Uber drivers could be attributed at least in part to the fact that the streets are again overcrowded - due to Uber's skirting of the medallion system. Not much profit in driving an empty car around the city - or charging a flat rate for a trip that ends up taking too long due to excessive traffic.

So, medallions are a form of market manipulation that has the effect of 1) increasing the value of a taxi, 2) reducing overall city traffic and yes, 3) opening up a new channel for payola. But 3 is certainly not the primary purpose - and could be shut down by effective law enforcement. And if you think 1) and 2) are important, but 3) is inevitable - and assuming your not some hardcore anarchist, how do you distinguish between enforceable and unenforceable laws before you decide to give up on them.

Re:End result: looking good

[b0s0z0ku]

At least I can pay good, old-fashioned, cash for a taxi and not have my CC info, email, name, and other ID info in a database for eternity. Uber/Lyft/the rest of the "rideshare" techbro firms = no privacy.

Yeah, yeah, taxis have cameras, but facial recognition is still a lot harder than ID from an account "verified" with CC info. F Uber, Lyft, Via, and the rest of them.

Re:It was clear from the start they were burning c

[SethJohnson]

I'm not even sure why they would think they'll be able to replace taxis and occupy a Monopoly position that would allow them to increase rates. Are they blind to the fact that their very own model could be used to unseat them if they were to try to act like a city taxi service

You're assuming the business model was not flawed from the outset and because of that, you're interpreting their motive to be more brilliant than it appears to be. Please review the venture capital, and stock market dumpster fire (fueled by investor hundreds of $millions) called MoviePass.

There are a lot of business people who think by sheer force of money, they can disrupt an industry and eventually own the kingdom. In the case of Uber, their investors were racing in a land rush to become such an immense 900lb gorilla that no other competitors could challenge them... they expected to own the consumers and the service providers. As you point out, the free market has stepped in and eliminated the opportunity for Uber.

You'd expect the price of rides to go up

[rsilvergun]

and as far as I know they haven't. You'd also expect Uber drive's to see higher hourly pay, but it's around $9 bucks/hr. But that looks to be in line with the figures from 2016. Maybe a little less if inflation is taken into account (remember inflation is higher for low paid employees since big ticket items like new cars have less inflation than food/rent/healthcare or even used cars).

I love my gig

[FeelGood314]

I make double what I was making as a salaried employee. I take uber fairly often and the drivers all have said they make more driving for Uber (duh) than they did at there last job. One even shown me spread sheets of his expenses and his strategies for being available when the fairs are higher. I don't see anyone in the gig economy complaining, so I have no idea where these articles are coming from.

Disclaimer:I'm in Ontario, Canada - minimum wage is $14/hr.

Re:End result: looking good

[b0s0z0ku]

Crime is the price we have to pay for living in a free society. If cash enables crime, so be it. Better less safety than total control and surveillance.

Want to really fix crime? (a) stop criminalizing victimless crimes like personal drug use and sex between consenting adults. (b) don't create an economic environment with lack of opportunity that doesn't allow people other options.

Re:Well, Duh!

[whoever57]

It's also measuring revenue, not profit.

The driver still needs to pay the costs of running the vehicle, which will not have reduced in 5 years, so the impact on real incomes is far more than a halving.

Uber Eats?

[93 Escort Wagon]

“... drivers who transport people via apps (e.g. Uber, Lyft, Uber Eats, Postmates) ...”

I take it Uber Eats is trying to gain a foothold in that important, but underserved, cannibal market?

Re:Well, Duh!

[ShanghaiBill]

The driver still needs to pay the costs of running the vehicle, which will not have reduced in 5 years

Actually, running costs have reduced. The biggest cost is gas, which was $3.65 per gallon 5 years ago, and is $2.90 today.

Re:two-sticker cars

[ShanghaiBill]

I've been seeing a lot of parked cars with both Lyft and Uber stickers. I worry that after they work their 10 hour shift for oee company they move on and work another 10 hour shift at the other.

No. That is not what they do. They work for both at the same time. They have both apps, and take whichever ride comes first and then remove themselves from the queue in the other app.

Re:It was clear from the start they were burning c

[hairyfeet]

Actually MoviePass? If you look at its history it started out making a modest profit but its a classic case of because something worked LOCALLY does NOT mean it would work nationwide.

MoviePass originally started out in San Francisco where with the sky high costs of...well frankly being in San Fran at all, made a lot of movie theaters seriously hurt for butts in seats. The guys that started MP noticed this and made deals with several local theaters to offer them deeply discounted seats because...well having SOME money is better than NO money and it costs the theater the same to show the movie to 10 people or 100 and the duo had a reasonable price for the service, closer to what Amazon Prime costs. These two factors made them a modest if not "VC worthy" profit.

But then came a new CEO who thought he could "pull an Amazon" and went nationwide with NO deals with the theaters AND at a price so low that even if they had the same deal the original duo had (who IIRC wisely cashed out when they heard the "new business plan") would never make a red cent and...yeah surprise surprise dumb business plan? Is dumb.

The sad part is if they kept the original model and simply expanded to other cities with high costs of living and a glut of movie theaters? They could have had a modestly successful little franchise, but that model simply wouldn't work in places where theaters have no issue getting customers.

Re:It was clear from the start they were burning c

[uvajed_ekil]

Their other competition is DUI lawyers and airport parking lots. I know a lot of people who use Uber for nights out because they want to drink a little but refuse to drive drunk. And even my 70 year-old mom has used Uber for a lift home from the airport when I was unable to pick her up. She's definitely no luddite or technophobe though she is a bit of a Nervous Nellie, and even she said it was fine and complimented "Big Al" for helping her with her suitcase.

I don't use Uber or Lyft a lot because I can easily drive most places I go, but I find them to be very convenient when travelling, in urban areas particularly. Being able to call for a cheap ride in a few minutes on a whim whether you're in Denver, Nashville, or Boston, and only needing to know one app rather than multiple companies and phone numbers, is incredibly convenient. The simplicity adds to the obvious convenience.

Re:Well, Duh!

[stephanruby]

About 80% of Uber drivers drive for less than 35 hours per week.

I'm an Uber/Lyft driver. And another misleading statistic is the number of hours they tell us we've worked.

And that's because both companies do not count the waiting time we take to wait for rides to accept, nor the time we use to get back to a location without getting a ride request. So if the app tells me I've worked 35 hours or 45 hours this week and done my 130 rides for the week, it usually means I've actually worked roughly 50+ to 60+ hours a week. It's all very misleading.

And to some of you wondering how this is possible. Why aren't drivers quitting? Well, I'd say 99% of drivers did quit three or four years ago. Me, I am part of the new batch of replacement drivers. I've seen my income slowly get reduced overtime, but definitely not as much as the drivers did four years ago when they went through a massive price cut.

What did you expect...

[overlook77]

It's a low skill, low barrier-to-entry job. If you can drive a car and use a GPS app, you can be an Uber/Lyft driver. These jobs (whatever they are, be it fast food employee, Wal-Mart greeter, etc.) don't pay a lot. If that's the only type of job you can do, that sucks. If you can do something that maybe is a little more challenging or specialized, you'll make more money. I'm getting a little worn out seeing these 'my bullshit easy job doesn't pay enough' news stories personally.

Re: Labor vs Capital

[swb]

This artificial scarcity of housing thing gets brought up here, mostly blaming owners of single family homes for engaging in zoning restrictions so they can get rich on housing price increases.

I watch the sale prices for houses in my neighborhood and if I extrapolate those prices out 10 years when my mortgage is paid off and I sell, the price I will get for my house isn't even a profit compared to what I paid in principal, interest, taxes and insurance and maintenance costs.

It's feels like a windfall because it's a giant lump sum run up by inflation, but it's more or less break even at best. I literally would have been much better off had I rented cheap suburban apartments and put the difference in some stock index fund.

I think the complaints about artificial scarcity are kind of accident-of-history. Up until not that long ago, most people didn't *want* to live in the city. Old housing stock, bad schools, crime, high taxes. The US spent decades migrating to the suburbs. In the last 20-some years, many cities have seen a renaissance, including suburban boomers retiring and moving back into core cities.

Since so much development focus at a macroeconomic level was focused on the suburbs, the cities were underdeveloped. Now that everybody wants to live there -- young people, retirees, etc, the housing growth is lagging the demand, and the demand is driving prices way up.