How much do Uber drivers earn? A new study looks at the gig economy

Finally! Some proper information about the gig economy and who is part of it. It has been a huge and embarrassing national blind spot. The big problem with the gig economy – okay, a big problems — is that we know almost nothing about it. It’s a slippery thing – and what makes it even more like clinging to a barramundi while standing upright in a small dinghy is that the country’s sluggish statistical agencies haven’t bothered to measure it.

Do Uber drivers make $10 an hour? $50 an hour? Do they hold two jobs at the same time? Do they feel exploited? Do they stick around for years? We had our intuitions but we weren’t sure, until now.

How are you going to try to make effective labor market laws that protect workers if you don’t know who they are, where they work, how much they earn, etc.? You can not. But now, into the breach, enter a team of heroes. A large, detailed academic study of Uber drivers was published in the latest australian economic review. It has four authors:

  • Andrew Charlton, former economic adviser to Kevin Rudd. He started a very good economic consulting firm which was acquired by Accenture;
  • Jeff Borland, my former economics professor and the nation’s top labor market economist;
  • Oliver Alexander, a junior who works for the consulting firm that was acquired by Accenture (which, realistically, probably did 90% of the work); and
  • Amit Singh, a senior who works for the same consulting firm (and probably made Oliver Alexander work very late nights at the office).

They looked at 11,000 Uber drivers, or one in eight of all Uber drivers who worked during the study period, in 2017-2018.

Money, money, money?

The most shocking finding is how bad the pay is. Uber drivers earned $29.46 for every hour they spent online. It should appear ok if you forget they have to bring their own wheels. The study calculates the cost of driving at $8.46 per hour, including “GST, fuel, maintenance, vehicle depreciation and the additional cost of comprehensive insurance for Uber drivers “.

What’s left is a paltry $21 an hour – below the reward for the lowest rank of passenger vehicle operator, which is $21.93 an hour, and very close to the minimum wage of $20.33 per hour for any worker not covered by an award. The average hourly wage for casual workers in the road and rail industry is $26.82 per hour.

Uber driver hourly rate compared

Source: Jason Murphy

Uber is clearly less financially rewarding than these other businesses. The fact that Uber can compete with these salaries suggests that there are likely plenty of other jobs out there that don’t pay the price either. It’s convenient for our political classes to ignore those jobs I suspect – the Conservatives, because it helps business; Labor because their constituency is made up of union members, which these workers are not.

Nice flexibility

Uber is not all scarcity and exploitation. One thing drivers get is flexibility. They can start when they want, finish when they want. Uber drivers exploit this flexibility ruthlessly.

Drivers who typically only work zero to nine hours a week on Uber? They sometimes throw away a week by doing 20 to 34 hours. Meanwhile, drivers who usually work 45 hours a week on Uber sometimes work a zero to nine hour week. Drivers also vary their working hours. Some weeks they can drive during the day, other weeks not during the day at all. This is perhaps the way driving Uber differs the most from most jobs.

It’s the love of flexibility that determines whether people love driving for Uber. Job satisfaction for Uber drivers who like flexibility was significantly higher than for drivers who wish it felt more like a regular job. They got eight points on an 11-point scale, compared to around six to six and a half for the group that wanted stability. (Satisfaction with pay, however, was around five to six on the 11-point scale for all groups.)

Degrees of separation

Half of all Uber drivers have another job at the same time, while 11% are studying and 18% are looking for a job. Often, the Uber driver is more qualified than their passengers, the study reveals:

“Nearly 50% of Uber drivers have a bachelor’s degree or higher as their highest qualification, compared to just over 30% for all employed people and 25% for car drivers.”

What can Uber drivers do to make more money?

Working Friday and Saturday nights is the best way for drivers to earn money. Drivers who worked 10% of their hours on weekend evenings earned 5% more money than drivers who only worked weekdays. Drivers who stop outside pubs and clubs on Saturday night get more fares and higher fares (they are also probably the most likely to vomit on their padding).

Uber uses a system called surge pricing, where prices increase when demand is highest. Drivers who work 10% of their hours during surges earn 7.2% more money than those who do not drive during surges.

The other trick to making money with Uber is to stick around. About half of all drivers drop out within the first six months, but the more weeks they work on the platform, the more money drivers earn. The explanation is that it takes time for drivers to learn Uber’s algorithm as well as the geography of their city. — especially knowing where to hide to win the best rates.

The future of the gig economy

Will Labor tackle the gig economy if it wins power? Their small target strategy is actually not that small in this regard. They plan to give the Fair Work Commission power over the gig economy, which would go a long way to making the gig economy work more like an employee.

The economic and political conditions have probably never been better for this kind of policy change, as unemployment is at its lowest in decades, underemployment is at its lowest in eight years and the number of migrant workers in the he economy is at a very low level. very low level. Such a change would be much more difficult to achieve in an environment of high unemployment. Moreover, this study allows Labor to make the changes with at least some knowledge of who is in the gig economy, what they regulate and what might happen next.

Changing the rules around the gig economy would of course render the conclusions of this study obsolete. I look forward to presenting the results of a follow-up survey to you in a few years.

This article was first published by Crikey.

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