Earlier this year, Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research released the first draft of a paper analyzing the wages of Uber drivers. The finding, of that particular draft, said that the average Uber driver made $3.37 in hourly profit. Which, uh, isn’t great. After backlash — including a paper from Jonathan Hall, Uber’s chief economist published on Medium — MIT released another draft of the study. This one found a median profit of $8.55 — which is a bad look for MIT, but also not a great look for Uber, given its entire business model is predicated on convincing people that driving for Uber is a lucrative gig.
The study initially went wrong due to two questions in its driver survey. Question No. 14: “How much money do you make in the average month? Combine the income from all your on-demand activities.” And question No. 15: “How much of your total monthly income comes from driving?” While 14 appears to ask about how much money a person makes from all, not just Uber or ride-share driving, work done in a month, question 15 is strictly about driving. Which means if a person answered question 14 entirely about their Uber income, but then said in question 15 that driving only made up a fraction of their income … the final sum would be lower than it actually is.
From Hall’s Medium piece:
For example: if a driver answered $1,000 to $2,000 to Q14, the authors would interpret that as $1,420.63 according to their methodology. If the respondent then answered “Around half” to Q15, the authors conclude this driver made $710.32 driving — half what they actually earned from driving with ridesharing platforms.
On Twitter, Uber CEO Dara Khosrowshahi, joked that MIT was short for “Mathematically Incompetent Theories.” Which, in this case, was true given MIT has since revisited its research to provide a more accurate figure. Still, under the new survey numbers, just over half — 54 percent — of Uber drivers make less than the minimum wage, and 8 percent of drivers are losing money as Uber drivers. (A different methodology in the updated survey found drivers make $10 an hour. In that survey, 41 percent of drivers made under minimum wage and 4 percent were losing money. Also not great.) Which means, yes, Uber was right to call out MIT’s study as false, but in doing so it pointed a giant, blinking arrow to the low, if slightly higher than previously reported, wages its drivers are taking home.
