The economics of ride-hailing: Driver revenue, expenses and taxes

We perform a detailed analysis of Uber and Lyft ride-hailing driver economics by pairing results from a survey of over 1100 drivers with detailed vehicle cost information. Results show that per hour worked, median profit from driving is $3.37/hour before taxes, and 74% of drivers earn less than the minimum wage in their state. 30% of drivers are actually losing money once vehicle expenses are included. On a per-mile basis, median gross driver revenue is $0.59/mile but vehicle operating expenses reduce real driver profit to a median of $0.29/mile. For tax purposes the $0.54/mile standard mileage deduction in 2016 means that nearly half of drivers can declare a loss on their taxes. If drivers are fully able to capitalize on these losses for tax purposes, 73.5% of an estimated U.S. market $4.8B in annual ride-hailing driver profit is untaxed. Ride-hailing operators such as Uber and Lyft have collectively taken millions of customers on billions of rides since 2009. These rides are delivered by hundreds of thousands of independent contractors who face uncertain customer demand and bear the expenses of operating a vehicle. This profession is less than a decade old with few established norms and enormous turnover, estimated between 50% and 96% per year. (Rosenblat and Stark, 2016; McGee, 2017) Little comprehensive work has been done to establish population-level statistics on the profitability of ride-hail driving. Ride-hailing operators know what they pay each driver but do not know whether drivers earn additional wages from a competitor nor what drivers actually spend to operate their vehicles. An individual driver can precisely observe his or her own operational revenue and costs, but does not know whether these are representative of other drivers or other vehicles. This paper provides one of the first detailed estimates of ride-hailing profit. We combine the self-reported revenue, mileage and vehicle choices from over 1,100 Uber and Lyft drivers with detailed vehicle operational cost parameters for insurance, maintenance, repairs, fuel and depreciation, using a combination of estimates from Edmunds and data from the U.S. EPA and Kelly Blue Book.

Zoepf, S., Chen, S., Adu, P. and Pozo, G. (2018), The economics of ride-hailing: Driver revenue, expenses and taxes, MIT CEEPR (Center for Energy and Environmental Policy Research), United States.

Metadata

  • Research publication, Case study-worker
  • United States
  • Yes
  • transport
  • On-location platform-determined routine work
  • Uber, Lyft
  • income, worker demographics, work intensity, working time quality, work-life balance
  • English
  • MIT CEEPR (Center for Energy and Environmental Policy Research) (Research institute)
  • Quantitative research
  • 2018
  • Open access
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