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. While consumers are getting a good deal, the drivers behind the wheel are making considerably less than minimum wage after factoring in expenses.
Culled from interviews conducted with over 1,100 Uber and Lyft drivers, the analysis "provides one of the first detailed estimates of ride-hailing profit", its authors wrote. The paper also looks at taxes. The paper found almost half of all drivers can declare a loss for tax purposes at the federal tax deduction rate of roughly $0.54 per mile. It's no wonder Uber has enormous attrition.
Companies like Uber have pushed back on those criticisms, arguing that the appeal of on-demand work lies in its flexibility and noting that many gig workers have multiple different sources of income.
In June, Uber added a tipping feature for drivers in the U.S. Since then, it introduced an initiative called "180 days of change" to focus on increasing drivers' earnings.
'While the paper is certainly attention grabbing, its methodology and findings are deeply flawed, ' an Uber spokesperson told the Guardian. "We've reached out to the paper's authors to share our concerns and suggest ways we might work together to refine their approach", an Uber spokesperson said.
As of 2017, both Uber and Lyft allow (but do not require) customers to tip their drivers through their respective mobile apps.
"The most common feedback we hear from drivers is they end up earning a lot less than they expected", said Campbell, who partnered with Zoepf on the surveys used in the paper. A National Bureau of Economic Research study in November 2016 found drivers in six major metropolitan areas earned around $18 an hour, not taking into account hourly costs varying from $2.94 to $6.46 per hour depending on the hours they worked and the vehicle they drove.
The Massachusetts Institute of Technology study analyzed fiscal data from about 1,100 independent contractor drivers and was performed by the MIT Center for Energy and Environmental Policy Research. Their study says that between 2012 and 2014 drivers across five major metropolitan markets earned an average of $19 per hour.
Given inevitable costs of maintenance, fix and depreciation, "effectively, what you're doing as a driver is borrowing against the value of your vehicle", Zoepf said.