(EDITOR’S NOTE, 5/30/18, 6:30 PM ET: The MIT researchers who published the report cited in this article have taken down their findings after their methodology was questioned. Ridester’s driver earnings calculator is a more accurate method of determining how much an Uber or Lyft driver will make depending on which app they’re using and how many trips they plan on doing in an hour.)

The “gig economy” is eating Uber and Lyft drivers alive, according to a new report released by the Massachusetts Institute of Technology (MIT).

MIT’s Center for Energy and Environmental Policy Research found that after taking various expenses into account — like gas, oil changes, and wear and tear on tires and brakes — drivers who use the Uber and Lyft ridesharing apps make just $3.37 an hour before taxes. Additionally, roughly three out of four drivers make less than the minimum wage in their state, and 30 percent of drivers actually lose more money than make after expenses.

“This business model is not currently sustainable,” co-author Stephen Zoepf, executive director of the Center for Automotive Research at Stanford University, told The Guardian. “The companies are losing money. The businesses are being subsidized by [venture capital] money … And the drivers are essentially subsidizing it by working for very low wages.”

When taking sky-high rent prices in San Francisco into account, where both companies are headquartered, the incredibly low wages that Uber and Lyft drivers earn quickly evaporate. Apartment rental search engine Rent Jungle calculates that the average monthly rent for a one-bedroom apartment in San Francisco is $3405 per month, meaning a rideshare driver would have to work 1,010 hours just to afford rent (there are only 720 hours in a 30-day month).

By October of 2017, Uber and Lyft cars outnumbered New York City’s iconic yellow cabs. While the median rent for a one-bedroom in New York varies by borough and neighborhood, a one-bedroom apartment in the trendy neighborhood of Williamsburg is approximately $3,081, according to real estate website Zumper. This means a rideshare driver would have to work 914 hours to afford rent.

Uber and Lyft
Even for a one-bedroom, rent in Brooklyn is far more than what the average Uber and Lyft driver can afford. (Image by Zumper)

Meanwhile, Uber CEO Dara Khosrowshahi — the former CEO of Expedia — has a net worth exceeding $70 million, according to Fortune. Khosrowshahi took over after the departure of former Uber CEO Travis Kalanick, who has a net worth of more than $4 billion. Lyft CEO Logan Green is worth a hefty $300 million. As of October 2017, Lyft was valued at roughly $11 billion, while Uber is worth approximately $70 billion. As of 2016, there were nearly 400,000 Uber drivers and 315,000 Lyft drivers. This means Uber could give every driver $150,000 and still be worth $10 billion.


Logan Espinoza is a freelance contributor specializing in economic issues. He lives in Phoenix, Arizona with his wife and daughter. Contact him at logan DOT espinoza AT yahoo DOT com.


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