"Gig Economy" Glut: Uber Drivers Make Less Than Minimum Wage

Coined shortly after the great financial crisis of 2007–2009, the so-called “gig economy” or “sharing economy” refers to the increasing list of companies like Airbnb, Doordash, Etsy, Lyft, Postmates, TaskRabbit, and Uber–platforms that hire temporary workers who provide an array of on-demand services: delivery, ridesharing, home rentals, and odd jobs.

The “gig economy” in an accurate representation of the state of the matured market [low producivity]; though the Bureau of Labor Statistics (BLS) has had difficulty counting the number of independent contractors and contingent workers, Intuit believes that “gig” workers are about 34 percent of the overall workforce, and could increase to 43 percent in the next few years.

While millions of millennials have embraced the “gig economy,” a new report reveals a shocking reality that the average income of Uber drivers is much lower than minimum wage in many cities across America.

The latest figures come from the Economic Policy Institute, a non-profit think tank based in Washington, D.C that provides research on economic policies. On Tuesday, the think tank published a report claiming Uber driver compensation is around $11.77 per hour after Uber deducts fees and expenses and $10.87 per hour once Social Security/Medicare taxes are deducted. According to the report,” the Uber driver “wage”—comparable to the wages (reported for employees on federal tax Form W-2) earned by regular W-2 employees—averages $9.21 an hour.”

In other words, Uber drivers bring home $9.21 per hour, after Uber deducts commissions/booking fee per trip and state/federal taxes are subtracted. That shifts Uber drivers into the 10th percentile of private-sector wages, indicating drivers make less than what 90 percent of Americans earn per hour.

“The Uber driver W-2 equivalent hourly wage is roughly at the 10th percentile of all wage and salary workers’ wages, meaning Uber drivers earn less than what 90 percent of workers earn. The Uber driver W-2 equivalent hourly wage falls below the mandated minimum wage in the majority of major Uber urban markets (13 of 20 major markets, which include 18 cities, a county, and a state). The Uber driver “no benefits” hourly wage or discretionary compensation—the hourly compensation adjusted for an assumption that Uber drivers pay the extra payroll taxes that the self-employed must pay but do not provide a standard benefits package for themselves—falls below the mandated minimum wage in nine of 20 major markets, including the three largest (Chicago, Los Angeles, and New York).”

Uber drivers make less than minimum wage in several cities, including Seattle, San Francisco, and New York City, as the graph below shows:

“I have long been skeptical that Uber or “gig work” represents the ‘future of work’ ever since it was clearly established that most Uber drivers do not drive as their main source of income, but rather do so to supplement other income sources,” wrote Lawrence Mishel, a labor economist and former EPI president who authored the report.

“It’s more low wage than I thought, to tell you the truth,” Mishel told Quartz. “My sense is that taxi driving used to be an occupation that provided a very modest middle-class income, and that just doesn’t seem to be the case anymore.”

Mishel notes that the role of the “gig economy” is commonly exaggerated, and indicates “there is no basis for saying the gig economy is a major driver of economic trends.”

This could be more bad news for heavily indebted millennials, where structural shifts in the economy are leading to a productivity slowdown due to a reallocation of production to service/ “gig economy” with low productivity growth. That said, with the evidence of what Uber drives make (located above), we can now dismiss the idea that Uber driving in the “gig economy” is a lucrative job.

Millions of millennials situated in the “gig economy,” drowning in debt and wage stagnation are about to discover that the American dream evaporated a long time ago…

Comments

ebworthen Sat, 05/19/2018 - 18:32 Permalink

Dumbest thing ever.

One of two things: 

"I'm going to get into a complete stranger's car".

"I'm going to let a complete stranger into my car".

And Mom and Dad told us to never hitch a ride, or pick up a hitch-hiker.

Automatic Choke Pol Pot Sat, 05/19/2018 - 18:49 Permalink

i miss hitch-hiking.

 

(edit)  2 upvotes:   ok, for you, my fellow nostalgiacs, i will relate a cute story.

 

a decade and a half ago, two buddies and i drove our kayaks down from MA to FL, put boats in the water in Key Largo, and paddled six days to Key West (stopping at nearly every bar along the way).  fun times.  i volunteered to go back and get the car.

 

i hitched up the highway....a 40-something bearded, smelly, dirty, white male in salt-encrusted old clothes.  the trip consisted of about half a dozen legs, being a long trip.  each time was the same...somebody would pass me, then suddenly slam on their brakes and pull over.  i'd jog up to the car.  they'd say something along the lines of "how nostalgic, i haven't picked up a hitch-hiker since the '70s".  (i'd always reply something like "nostalgic for me too, i haven't hitched since the '70s".)

 

 

In reply to by Pol Pot

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In reply to by toady

gdpetti toady Sun, 05/20/2018 - 10:37 Permalink

Yes, they didn't mention the increase car costs... and whether their insurance will cover their use of their vehicle for this side business,.... most likely not, unless you are up front and pay for it.... so best not to have any accidents, but that's always the case, but now your insurance won't be paying the bill when they find out you were at 'work'.

In reply to by toady

Escrava Isaura Fish Gone Bad Sat, 05/19/2018 - 19:58 Permalink

edotabin The only problem is that we know how socialism ends

 

Fish Gone Bad: Marx was a pompous narcissistic……

For a second there I thought you were talking about Trump.

 

Anyway, socialism is the next economic system AFTER capitalism where there is no employee/employer relationship. Socialism has NOTHING to do with governments. If we had an economy with 100% worker cooperatives like Mondragon then we would have socialism. Marxism is the study of capitalism. If you don’t know these things then that shows you that the right wing has won against their war on economic education, just like the right had a war on biological Science (evolution) but they lost that war.

The right also consistently wins the war on historical education this is why we do not read People’s History of the United States by Howard Zinn.

US is a State Capitalist country, the government is the employer. Peace. Join the left, stop being a liberal or conservative, capitalism can not be “fixed” nor should it be. Capitalism is inherently an IMMORAL system where people who don’t work live off of the labor of others.

 

Ed and fish, people to learn from:

Richard Wolff of Economic Update

Glen Ford of The Black Agenda Report

Noam Chomsky

Chris Hedges



In reply to by Fish Gone Bad

Escrava Isaura Ahmeexnal Sun, 05/20/2018 - 04:40 Permalink

Lula started on the left, like Lenin, but he then changed what's normal in a capitalist society.

State capitalism is what you see around the world. You're mixing state capitalism WELFARE such as rescuing the banks, Obamacare that's low-tech jobs, defense what's high-tech jobs, food-stamps, and this list is long with socialism. These are totally opposite of socialism.

The satellite that we Hedgers use to communicate is a byproduct of state capitalism welfare system because, if left to the private sector, we wouldn't have the transistor even less a computer. It takes decades to develop these, meaning that the real economy could never do it because these technological advancements would require savings that they could never earn in a real free market economy. 

It is what it is. 

  

In reply to by Ahmeexnal

jmack Escrava Isaura Sat, 05/19/2018 - 22:08 Permalink

lol, what a moron.

 

   I love your explanation of socialism being the next step after capitalism though, much like death is the next step after life. 

 

      I am sure all those workers for samsung in south korea are just soooo jealous of their starving brothers in north korea who are not forced to work for those awful samsung absentee owners!

 

        Here is a little factoid for you moron.  In a capitalist society, you are free to conduct your affairs in a socialist manner, much like ben and jerry's ice cream limits how much the execs get paid over the lowest paid worker.  The inverse is not true in socialist countries.

 

     This is why anyone advocating for socialism or marxist ideas of any type are morons at best, and at worst should be exterminated with extreme prejudice before they can inflict genocide and famine on their fellow man.  

In reply to by Escrava Isaura

Escrava Isaura jmack Sun, 05/20/2018 - 04:50 Permalink

North Korea is not socialist, moron.

I could care less about NK but it seems to me that NK functions like a cult. One family runs the whole nation.

On the other hand South Korea is state capitalism even that some hedgers called SK socialist because of its welfare programs, meaning jobs that the real SK economy could never supply to its population.

 

In reply to by jmack

edotabin Escrava Isaura Sun, 05/20/2018 - 04:03 Permalink

I follow the old saying of "The truth lies somewhere in the middle".

Sure, there are some immoral aspects to capitalism but I'd much rather see a "restrained" capitalist system as opposed to a socialist model.  There is no book that can change my mind. I have lived in a socialist model and have seen the devastating results firsthand.

The socialist model uses "compassion" (whether genuine or contrived) by the leaders who promise a utopia but are forced to appeal to lowest common denominator. You cannot build something successful by appealing to the lowest common denominator. On a long enough timeline the product created by socialism will return to ........ the lowest common denominator. It simply drags everything down.

On the other hand, capitalism simply devours those that can't keep up. Yes, it is heartless and quite brutal but it also creates excellence. I realize this excellence is created and shared by a shrinking percentage of the population as more and more people fall behind but corrections and adjustments are still possible.

 

 

 

In reply to by Escrava Isaura

Escrava Isaura edotabin Sun, 05/20/2018 - 05:04 Permalink

On the other hand, capitalism simply devours those that can't keep up.

Exactly, the snowflakes conservatives because capitalism doesn't have boarders and doesn't care about nationalities.

Third world are very familiar of how capitalism work. Americans are finding out now.

“America’s elites know that capitalism is totally unworkable. We try to impose it in the 3rd world so we can destroy them” — Noam Chomsky

 

In reply to by edotabin

HRH of Aquitaine 2.0 grunk Sat, 05/19/2018 - 19:51 Permalink

I agree! It is a small local lottery and those are the rules. Not a bad return for $1!

Even after paying taxes I could pay off my car and buy a nice Class C or Class B. I want to do what Investature is doing, live in an RV full time and travel around. If I won I wouldn't have to rent out my house. I have found out that downsizing is a lot of work and a pain in the butt.

In reply to by grunk

HRH of Aquitaine 2.0 An Shrubbery Sat, 05/19/2018 - 19:55 Permalink

Whatever. I call it cheap entertainment. There are worse things to do than buy a $1 lotto ticket.

I don't go to the movie theatre every week (easily costs $20 with ticket, popcorn, and soda for one) or to sports stadiums (parking at the nearest one costs $20-and-higher depending on how close you want to park to the stadium plus a ticket is between $80 to $400 depending on the seat). I don't go to concerts or amusement parks or golf or own a boat.

FFS if I am entertained by a $1 ticket that is my fucking business asshole!

In reply to by An Shrubbery

jmack An Shrubbery Sat, 05/19/2018 - 22:13 Permalink

   There were some state run lotteries in new york and michigan that actually had positive odds if you bought like $10,000 in tickets.  A guy gave a math talk on it at oxford I think, its on youtube somewhere.  The state knew the case, but didnt care because those tickets sold so well from all the morons buying just 1-100 and losing, you couldnt get positive expectancy unless you put in $10k to $15k if I remember correctly.   There were a few guys that could do basic maths in both states that made several hundred thousand dollars multiple times per year off those games.

 

   The same talk discussed a syndicate that bought like $4 million in an irish sweepstakes, I think, or tried to, they got blocked after they had bought like $2.9 million,  They won the lotto, but so did two other people so they ended up just breaking even.

In reply to by An Shrubbery