Uber rubbishes MIT’s claims of drivers earning less than minimum wage

How much would you estimate the average Uber driver in the US earns per hour? $5? $10? $15? An MIT study published over the past few days (PDF) will have you believe they bring in median pretax profit was $3.37 per hour, or less than minimum wage in many states. Uber is rubbishing that claim, citing incorrect methodology – and so we might get fresh numbers from MIT this week.

The MIT study used 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 awfully low, with 74 percent of them earning less than the minimum wage in the states where they operate.

After MIT published its findings, Uber’s Chief Economist Jonathan Hall took to the company’s Medium blog to challenge the claims. He pointed to two other surveys conducted by Uber, one in partnership with Princeton, and another with Stanford; both reported significantly higher earnings for drivers (in the range of $19-$21 as gross hourly income).

MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing). @techreview report differs markedly from other academic studies and @TheRideshareGuy recent survey. Our analysis: https://t.co/S2aAqCuDR0

— dara khosrowshahi (@dkhos) March 3, 2018

Hall also pointed to flawed methodology by the researchers at MIT, and noted 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.

Now, Stephen Zoepf, who led the MIT study, has told Reuters that he agrees that the survey questions on revenue may have been interpreted differently by drivers who responded to them, leading to a discrepancy between the university’s findings and Uber’s reports. He’s promised to run the analysis once more and hopes to publish fresh figures on Monday.

It’ll be interesting to see what Zoepf comes up with, given that Uber’s business model relies on not formally employing drivers in an effort to keep operational costs low. That concept has helped the company scale rapidly across the globe, but also raised the question of the company’s responsibility towards the people behind the wheel that make its service possible – not to mention incited many a lawsuit over the issue.

We’ll update this post as more information becomes available.

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