An Uber ride might cost you more than ever before, but workers aren't seeing all of the benefits, researchers say.
According to a report published by the UCLA Labor Center, Uber and Lyft have been increasing the cost of their rides in order to maintain continuous profitability, but their drivers are not receiving a comparable share of the profits. The analysis revealed that the ride-hailing companies have been siphoning off an increasing share of drivers' revenue as fares have increased.
The report examined data from 50 million journeys between February 2019 and April 2022. The median passenger fare climbed by 50% during the same time as the median driver pay rose by 31%. The High Volume For-Hire Car trip database of the New York City Taxi & Limousine Commission provided the researchers with the information, which Uber and Lyft are required to submit to the TLC. The study looked at monthly data for the months of February 2019, October 2019, April 2020 and April 2022, and omitted certain ride types with wide fare ranges.
According to the research, the median trip fee for passengers was $12.22 in February 2019 while the median trip fare for drivers was $10.99. By April 2022, the difference between the median driver pay per trip and the median fare – $18.39 – had grown. According to the analysts, Uber and Lyft now receive 20.7% more of the proceeds from each ride than they did in April 2022, up from 9% in 2019.
New York City adopted a minimal base wage of $17.22 per hour in 2018 for drivers of for-hire vehicles that utilize ride-hailing applications. This choice was taken in response to a city-commissioned analysis that showed 85% of these drivers were making less than the $15 minimum hourly pay. In February 2022 and again in February 2023, the minimum base pay – which includes rates for travel and time – was raised by 5.3%, and there are still plans to raise it even more to account for the rising price of petrol.
Uber and Lyft were against this base compensation when it was first suggested. According to the UCLA Labor Center report, the businesses have experienced an increase in sales and profits after the regulations were put in place. In a statement to Motherboard, Uber representative Freddi Goldstein contested the report's conclusions and suggested that the researchers had made mistakes in their investigation.
Vivek Ramakrishnan, one of the report's authors, explained that government-mandated costs, such as congestion surcharges, were not included in the data because they were not considered in the methodology of the study. The base pay and passenger fare were the only topics covered by the UCLA investigation. Ramakrishnan claimed that the UCLA academics and the New York City Taxi & Limousine Commission both looked at the same dataset and reached similar results. The authors of the research acknowledge that the data analysis had certain constraints. The study, for instance, was unable to distinguish between rides in various kinds of vehicles, such as Uber XL or Lyft XL.
In response to the UCLA report, Lyft said that since early 2021, driver earnings have regularly exceeded $1,100 per week, and that now that high gas prices are beginning to decline, drivers are now keeping even more. One of the report's authors explained that the study looked at the percentage of earnings from passenger fares that the companies were taking rather than disputing that drivers being paid more.
The research urges for enhanced transparency from the businesses and suggests measures to guarantee that driver pay rises proportionately to fare hikes. Due to the data being de-identified, the report's authors were unable to determine the number of trips each driver takes or the total profits per day or hour, therefore they have asked the companies for more specific data.
A recent study that indicated for-hire vehicle drivers frequently felt like they were "gambling" due to arbitrary variations in compensation also brought attention to the lack of pay transparency. According to the analysis, efforts to raise driver compensation would not have a negative financial impact on Uber and Lyft because their revenues have improved since wage floor legislation were put into place.