Uber Drivers Earn Significantly More Than Classic Taxi Drivers

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Posted by Laurens ten Cate on Wednesday, December 7th, 2016, 2:23 PM PERMALINK

Economists Jonathan V. Hall and Alan B. Krueger recently released an updated version of their 2015 paper, An Analysis of the Labor Market for Uber’s Driver-Partners in the United States. They updated the work with additional data obtained in 2015.

Especially interesting is the renewed finding that even though the cost of using Uber as a consumer has gone down, the hourly earnings of Uber drivers have stayed the same.

The paper analyzes various driver characteristics such as hours worked, demographics, reasons for partnering with the Uber platform, and hourly earnings.

For instance, in Boston the average hourly earnings are $20.86, in New York $23.69 and in San Francisco $23.87.

Some luminaries on the Left have aggressively criticized independent contractors and the sharing economy. Hillary Clinton said she: “will crack down on bosses that exploit employees by misclassifying them as contractors or even steal their wages.” Sen. Bernie Sanders (I-Vt.) said: "I am not a great fan of Uber—you can quote me on that."

Meanwhile, the Bureau of Labor Statistics reports that taxi drivers only earn on average $13.00 an hour working for classic taxi companies.

Enemies of the sharing economy will say that this $7.00 an hour difference doesn’t matter because some taxi drivers don’t have to pay for gasoline, vehicle maintenance and depreciation. However, they conveniently forget the fact that ridesharing drivers are independent contractors who submit 1040s and Schedule Cs to the IRS, on which they can deduct expenses made during business operations. Such as, you guessed it, expenses for gasoline, vehicle maintenance and depreciation.

Hall and Krueger use figures calculated annually by the AAA to estimate per hour driver expenses. For a full time driver with insurance and registration in a sedan this averages to $4.29, all deductible of course.

In the short summary of the paper, Hall and Krueger shy away from mentioning that expenses incurred when driving on a ridesharing platform are deductible. In the full report they do mention this, saying: “Note also that drivers may partially offset their costs by deducting work-related expenses from their income for tax purposes, including depreciation or leasing fees, gasoline, maintenance, insurance, mobile device and data fees, and license and registration fees.”

Another huge reason for people to partner with ridesharing platforms is flexibility, the ability to set your own hour’s week-to-week. This is again confirmed by the report: “In any given week, well more than half (65 percent) of driver-partners drive 25 percent more, or 25 percent less, than the amount they drove in the previous week.”

The report also notes that 53 percent of the people that are uberX Driver-Partners only work 1 to 15 hours a week and another 30 percent only 16 to 34 hours a week. Of the remaining 17 percent, 12 percent works 35 to 49 hours and 5 percent works 50 hours or more.

Just because politicians beholden to entrenched interests prefer people to punch a clock every day and cough up union dues (which end up as campaign donations) should not mean that the hardworking people of the America are worse off.

The research shows it again and again: the sharing economy makes everyone better off. Let’s stop this absurd movement back to the 1930s. 

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