MIT report says Uber, Lyft drivers earn less than minimum wage

Actual earnings for most Uber and Lyft drivers are so small that they are making less than minimum wage, according to a new study by the Massachusetts Institute of Technology.

How did the study determine this?

The study examined earnings and detailed vehicle cost information from more than 1,100 drivers.

According to the study, the median profit from driving is $3.37 per hour — before taxes — and 74 percent of drivers earn less than the minimum wage offered in their state. An average driver for Uber or Lyft generates income of about $0.59 per mile of driving and incurs expenses of $0.30 per mile, according to the study.

Thirty percent of drivers are actually losing money once vehicle expenses, including insurance, maintenance, repairs, fuel, and depreciation, are factored in, according to the study.

The numbers are even more striking when the number of rides given is considered.

Together, Uber and Lyft have “taken millions of customers on billions of rides since 2009,” the study states. “These rides are delivered by hundreds of thousands of independent contractors who face uncertain customer demand and bear the expenses of operating a vehicle.

Turnover among Uber and Lyft is said to be “notoriously high.” A report last year said just 4 percent of Uber drivers work for the company for at least a year.

Nearly all of the drivers surveyed indicated they use their vehicle for both ride-hailing and personal use. More than 80 percent of the drivers are working fewer than 40 hours.

What did Uber say about the study?

Uber responded by saying the methodology used by the study is “deeply flawed.”

"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."

Last year, Uber put an option to tip drivers into its app. Other perks have included 24-hour phone support, paid wait time, and payment for drivers if customers cancel after a certain amount of time.

Although there have been efforts to make Uber and Lyft drivers actual employees and not independent contractors, those efforts have failed, NPR reported.