The rapidly growing technology company Uber released internal data on Thursday arguing that drivers who use the app to give rides-for-hire in their personal cars are making more money as chauffeurs than professional taxi drivers do — as much as $17 an hour in Washington and Los Angeles, $23 in San Francisco and $30 in New York.
Those numbers, released as part of the most extensive peek yet into its business model, have only inflamed debate about what companies like Uber mean for the economy and whether the kind of work they offer is sustainable for the tens of thousands of people who’ve signed up.
The company last year launched its UberX service in Portland, which allows drivers who clear a background check to log in to the app and pick up fares.
Uber and its boosters say those driver earnings — and the breakneck pace at which drivers are joining its ranks — offer proof that the company is creating new kinds of opportunity for workers who want neither a 9-to-5 job nor a boss. But some of its drivers and the taxi industry counter that Uber’s earnings data leave out a critical piece of the equation: the steep costs people must pay to operate their own cars as modern-day taxis.
Uber released the new data in a report co-authored by Princeton economist Alan Krueger, a former chairman of President Barack Obama’s Council of Economic Advisors. The analysis, which includes a survey of 601 drivers, suggests that Uber’s drivers look notably different from your typical cabbie: Nearly half of the Uber drivers surveyed had at least a college degree, compared to 19 percent for taxi drivers and chauffeurs as reflected in government occupational data.
The analysis also reveals for the first time the size of Uber’s driver pool in the U.S. and the rate at which it’s rapidly expanding. In December, 162,037 “active drivers” completed at least four or more trips for the service. The number of new drivers signing up has doubled every six months for the past two years.
“The more I looked into it, the more I thought this rapid growth is really not a result of a weak job market, but the result of a new opportunity,” says Krueger, who was contracted by Uber to conduct the study.
As Uber has grown into a tech giant valued by investors at more than $40 billion, it has become something of an economic Rorschach test. Some see in it the hopeful future of work in a digital age, where anyone with a car (or a home, or a service to offer) can be his own boss, choosing hours and determining income with a flexibility that makes other pursuits — like raising children or going back to school — more feasible.
Critics, meanwhile, see in Uber something more bleak, a sign that people who can’t find better jobs in a bad economy must settle instead for work as part-time “independent contractors” with a tech company that offers them no benefits. For these critics, the numbers Uber released Thursday did little to dispel that skepticism.
“This report is designed to impress American mayors and disguise the predatory nature of Uber’s relationship to its drivers_the company collects money, while the drivers accept all of the risk,” said Dave Sutton, the spokesman for a public campaign warning against services like Uber from the Taxicab, Limousine & Paratransit Association.
Uber’s earnings data suggested that drivers in its biggest markets are making about $6 an hour more than local taxi drivers and chauffeurs. But Sutton countered that the comparison is unfair given that Uber drivers must deduct from their earnings the costs of gas, car insurance and vehicle maintenance.
Increasingly, drivers have organized protests against the company in U.S. cities, objecting to fare cuts that have lured new passengers to the service at the expense of driver pay.
Fernando Chiara, a 26-year-old working full-time in the insurance industry in Los Angeles, began driving nights and weekends for Uber to make extra cash in the summer of 2013. At the time, he said he regularly made $700-$900 a week, before expenses, working 20 to 30 hours.
“It was great — there were not a lot of fares, but the prices were a lot higher, and that compensated,” said Chiara, who gave rides in his Toyota RAV4. As Uber has done in many cities, it then began to lower fares and the rate drivers earn per mile. “A fare that used to be 40 bucks started to be 30 bucks, then 28 bucks and 25 bucks. Now you can do the same fare in 15-16 dollars. For me, it’s not worth it for that.”
Chiara stopped driving for the service in December, at a time when Uber says 40,000 other new drivers in the U.S. signed on.
Uber’s driver survey reflected few of these concerns: 71 percent of respondents said they had boosted their income and financial security since joining the service. And 73 percent said they prefer a job where they choose their hours and work as their own boss, relative to a 9-to-5 job with a set salary and some benefits.
As Uber continues to expand, it will face multiple pressures to keep those drivers happy and their wages up. It must drive down prices to lure new passengers without pushing more drivers like Chiara away, all while keeping up the explosive growth that has prompted investors to pour billions into the company.
“Looking forward, these [earnings] may go down in the short run even further as Uber tries to generate the numbers that it needs leading up to its IPO,” said NYU Stern School of Business professor Arun Sundararajan, referring to the broad expectation that Uber will become a public company in the coming years. “But I think that over time what will happen is that wages are going to go up.”