Researcher Admits Study That Claimed Uber Drivers Earn $3.37 An Hour Was Not Correct (fortune.com) 101
Last week, an MIT study using data from more than 1,100 Uber and Lyft drivers concluded they're earning a median pretax profit of just $3.37 per hour. Uber was less than pleased by their findings and used a blog post to highlight problems with the researchers' methodology. "Now the lead researcher behind the draft paper has admitted that Uber's criticism was actually pretty valid -- while also asking Uber and Lyft to make more data available, in order to improve his analysis," reports Fortune. From the report: The issue with the draft paper from MIT's Center for Energy and Environmental Policy Research (CEEPR), Uber's chief economist Jonathan Hall said, was this: The researchers asked drivers how much money they made on average each week from such services, but then asked "How much of your total monthly income comes from driving" -- without specifying that such income must relate to on-demand services. Of course, many people driving for Uber and Lyft also earn money from regular jobs and other income sources. And this, Hall alleged, skewed the researchers' results.
"Hall's specific criticism is valid," wrote Stephen Zoepf, the executive director of Stanford's Center for Automotive Research, who led the MIT study, on Monday. "In re-reading the wording of the two questions, I can see how respondents could have interpreted the two questions in the manner Hall describes." Zoepf said he would be updating the CEEPR paper, but in the meantime he recalculated the figures using a methodology suggested by Hall, and found that the median profit was $8.55 per hour, rather than $3.37, and only 8% of drivers lose money on on-demand platforms. Using another methodology, he added, the median rises to $10 per hour and only 4% of drivers lose money.
"Hall's specific criticism is valid," wrote Stephen Zoepf, the executive director of Stanford's Center for Automotive Research, who led the MIT study, on Monday. "In re-reading the wording of the two questions, I can see how respondents could have interpreted the two questions in the manner Hall describes." Zoepf said he would be updating the CEEPR paper, but in the meantime he recalculated the figures using a methodology suggested by Hall, and found that the median profit was $8.55 per hour, rather than $3.37, and only 8% of drivers lose money on on-demand platforms. Using another methodology, he added, the median rises to $10 per hour and only 4% of drivers lose money.
Take home net versus gross before expenses (Score:1)
Obviously there's a difference.
And you have to add in the 50 percent skimmed off for Uber execs too.
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"Profit" means after expenses, not before.
They're getting somewhere between $18 and $20 an hour before expenses.
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For me,
Last year, fare income alone was about $27/hour
Add in driver referral bonuses, takes it to $59/hour
Then take out Uber's fees, vehicle expenses (mileage based), and other related expenses, $2/hour
Without referral bonuses (and remove the expenses of getting those bonuses): -$14/hour
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So you only made $2/hour, net? How many hours did you work for Uber last year?
Offhand, I'd say 'too many.' I'm a bit curious as to how expenses are being calculated here, too--has the whole problem of it costing more to license and insure a for-hire vehicle somehow vanished without anybody mentioning it in the news? Or is the cost of getting all the legal paperwork perfect (proper tags, proper insurance) included in the math here?
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Thank you for posting this. I hadn't heard of it before, and after looking at it briefly it seems like I should have.
Hmm, I wonder why the media isn't running with this story?
QAnon is a hero.
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Nice to see (Score:5, Insightful)
Nice to see a researcher as well as Uber being respectful and honest about their results. Everyone benefits from this type of transparency.
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Everyone benefits from this type of transparency.
Apple has not fared as well with transparency lately. [arstechnica.com]
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That's the Hatorade talking. A phone that randomly shuts off is far more unusable than one that keeps working. It would also force more people into buying new phones or paying for battery replacements.
While Apple screwed up in not telling people what was going on or making it an optional setting, throttling old phones made them more usable, not less, and prolonged their life.
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Perhaps he just used the tried and true Slashdot method of investigation: instead of asking questions that no one answers ("meh, someone else will bother to answer this guy"), post an obviously wrong answer himself so people who actually knows the data he needs gets offended with his ignorance and write a rebuttal that has the data he actually needed..
What? Me? No, I've never done this on Slashdot. Nothing to see here, please move along.
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I wouldn't say respectful. I am willing to be cynical, and say the Researcher tried to slander Uber (because we are suppose to hate Uber) and Uber called them out on it. Chances are Uber was like, your numbers do not match to what we have, I recommend that you recalculate your numbers and apologize, Because we can eat you alive in court.
It looks like aggressive posturing on both sides. Where one side won.
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That's how science works. Someone writes a paper, someone else reads it and points out problems such as here where 2 questions weren't clear, paper gets adjusted, repeat. Not much different then software development where you write code, someone else reviews it and you fix (or argue that you're correct) any problems the reviewer found.
Not everyone is perfect and mistakes aren't fake news.
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But since it pushed a desired narrative, it wasn't questioned.
It's being questioned now. Isn't that good enough for you?
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But since it pushed a desired narrative, it wasn't questioned.
It's being questioned now. Isn't that good enough for you?
It already has been questioned (by Uber), the researchers issued a me culpa, and they're re-doing their analysis to fix it. And yes, that's good enough for anyone -- except the OP.
Fake news is written by fake reporters. It is a deliberate fabrication, intended to cause fear, anger, or confusion. It is never (well, rarely) retracted by its author after it is debunked. It is not the same as editorial commentary. It is not the same as news with errors that get corrected. It is not even the same as news reporte
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But since it pushed a desired narrative, it wasn't questioned.
What was a real hoot was seeing the Hatorade drinkers try to argue a contradiction: that Uber pays so little that nobody will drive for the company, while at the same time being so dominant that it's driving mass transit systems out of business.
Clearly it was a typo (Score:2)
Re:Clearly it was a typo (Score:5, Funny)
They actually make $13.37 per hour.
That's the f'leet average?
This is bullshit (Score:5, Interesting)
Least important: they claimed that the causes of the error were that the respondents misread "income from on demand activities" as "income from all activities." The lead researcher admitted that could be misread and recomputed the numbers assuming his subjects were idiots.
Most important: The lead economist for Uber then made a bunch of assumptions when recalculating data. But the thing is Uber knows exactly how much each driver makes, how long each driver is working, exactly where they are, etc. If he wanted to correct the record, he could have. That he elected to use alternate assumptions to argue for a result indicates that result is overly optimistic.
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Absolutely true.
They have the data. They know what the values are. Why bother making ridiculous assumptions about a model?
I'd be very surprised if drivers are making minimum wage after factoring in costs.
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> "Why bother making ridiculous assumptions" immediately followed by "I'd be surprised if drivers are making minimum wage". Classic Slashdot!
Classic Slashdot would say:
1. Why bother making ridiculous assumptions
2. I'd be surprised if drivers are making minimum wage
3. ???
4. Profit
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Bullshit. Uber does not have complete knowledge of the expenses incurred as a result of the myriad decisions of individual drivers. Uber is under no obligation to satisfy either you
Legitimate points, well made.
these half-ass "researchers"
I'm not sure if this is trolling or just flat out actionable defamation. It's clearly not grounded in reality.
This is a debunked fake news hit-job
No, this is academic study done with integrity. That you can't see the difference reflects poorly on you.
one of the media's favorite punching bags
The media spent years going, "Uber is so great" then found out all of the company practices that range from illegal to abusive and back again. If Uber is a media punchbag then it's because they have a history of acting illegally.
your agenda driven mental gymnastics
Anybody got a mop? We have an overflow
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Yup!
Re:This is bullshit (Score:5, Insightful)
Exactly, I'd mod you up if I had points. The fact that the lead economist of the company is performing "estimations" instead of providing even ball-park figures that they must know of because they're at the core of their business should be a clear enough indication that this is a smokescreen and nothing else.
I get that they do not want to give out detailed numbers due to competition being so tight, but it's ridiculous to read the man playing guessing game instead of giving even a range inside which the actual median and average hourly incomes falls. I can bet you the guy has these numbers memorised, because they're directly tied to how much the company is making.
And that tells you the true reason he's doing this. He saw the study pushed out and, like any good tactician, saw an opportunity to use it against their competition. Even though what he's really said is only 'Our drivers maybe making as much as this, the signal he's sending to their competitors is 'Look at how much more money than you we are making.", while also simultaneously trying to lure drivers to switch from the competition to their service. And instead of doing any actual journalism and confronting them about this, Fortune plays directly into their hands giving them essentially free advertising space by running his claims without any criticism of his motivation for not providing any actual numbers.
Uber doesn't have half of the important numbers (Score:2)
Uber knows the amount they sent to the drivers. That's only one of several important numbers. Most importantly, they don't know what the drivers' expenses were.
Since we're trying to get a "per hour" figure, the "hours worked" is critical, and Uber doesn't have that information. I can log into Uber and click for it to let me know when there are riders in the area. While I sit in my living room watching TV. That doesn't look much like working. Other people may wait at a gas station until a rider is ready
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Both Uber's lead economist and the lead author of this study agree on an estimate for driver's expenses. While not a known value, there is an accepted approximation.
Uber knows when you're logged in, when you have the app open, when you're standing still vs. driving around, where you're standing still. They can (and had a program to) deduce if you're driving for Lyf
Why would they divulge exact numbers? (Score:2)
But the thing is Uber knows exactly how much each driver makes, how long each driver is working, exactly where they are, etc. If he wanted to correct the record, he could have.
He did, using generalities, instead of the HIGHLY PROPRIETARY information no other company would give away in detail either.
Also providing some kind of "average income" for a service like Uber is absolute nonsense, with such a mix of workers - some are just doing it here and there for fun, some are serious professional drivers who kno
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No, he worked off the same surveyed data as the researcher. If Uber drivers made, say, $10/hr, he could have said a lot of things that indicated it was for-sure wrong. For instance, "Your numbers underestimate the real values by at least a third." Or similar.
Heck, he even could say "our internal calculations show these numbers are multiples off of the real values"
I thought information wanted to be free?
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Least important: they claimed that the causes of the error were that the respondents misread
Yes, least important. But not unimportant. Giant swaths of the social sciences rely on surveys, and considering how ill funded they often are, you would think they'd send *much* more time crafting the language of such important questions. Heck even medical shit often relies on a survey, which is why anyone who has a brain gets totally stressed every time they see all the stupid questions that could be interpreted five ways that are being used to determine the course of their treatment.
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There are whole courses about designing survey questions. I have no idea how valuable they are, or how much flex there still is. I know that the questions asked on this Uber survey wouldn't confuse me. On the other hand, I know I've answered questions where I knew that, because of their assumptions, their question was probably not what they intended.
There's really only one sane methodology... (Score:2)
1) What were your hours?
2) What was your income?
3) What were your costs?
Ta da!
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People are very bad at figuring out their real costs, especially when that includes depreciation.
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Straight up fault in analysis, 'what were your hours', so hours driving or hours waiting, all waiting and how about hours lost whilst car serviced. "what was you income' is also tricky, total income or income per hour, income when driving and income when waiting and income when driving to pick up and income when driving post pick up. 'What were your costs' is also not that straight forward, investment in the motor vehicle, yes or no or part time. Reality is, as an uber driver, your are probably working your
Body part (Score:2)
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So does that mean... (Score:2)
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Well not really. The new interpretation gives a model at $8.55 an hour. That's barely minimum wage or under minimum wage. Note that it is pointed out by the researcher themselves, ~40% of the workers made below the minimum wage in their state.
What I remember are slashdotters saying they don't see how you make a living out of it. The numbers seem to line up in their favor. Below $2000 a month, you are not quite making it in most cities (where uber is likely to actually work). That about 8 hours of working fo
Jumped the gun (Score:3)
Having said that, if the researcher found the earning to be at $3.xx per hour, he should have gone back and done extensive revisions to make sure his data wasn't lying. I suspect that the number of drivers participating in his research, and their full/part time status combined may have caused his analysis to go way too low. Best example would be a driver who only drives on the weekend, 4 hours each day. This driver's earnings, if used to describe his only income, then of course the study has gone wrong.
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heh.. executive in jail..
He just re-ran his numbers with Ubers assumptions (Score:3)
I'm assuming you don't live in America. If you do you're kind of naive. There is virtually no one enforcing labor law in this country. If there was this MIT study wouldn't exist. Uber w
The problem is that it was very obvious bullshit. (Score:4, Interesting)
There seems to be a thing among the progressive / neo-liberal camp that requires them to screech down at any occupation or practice that they, from their loftier economic perch, would not personally engage in. Hey, I don't want to be an Uber driver either. It's fine. I have several friends who do it for extra cash (or, in one case, because they actually enjoy it - weird, but that's their thing), and none of them are anywhere near dumb enough to do it for a net of $3 and change. That number should, literally, be unbelievable, and yet many people believed it anyway because it fit a highly (absurdly) hyperbolic narrative. There are two problems here: 1) that these people need to be more skeptical (especially when such strong confirmation bias is involved), and 2) they need to check their fucking privilege. Not everybody has the immediate option of an awesome job, has good spending / saving habits, etc. Just because you wouldn't do something doesn't mean that nobody else should, and fabricating evidence to the contrary is both dishonest and cruel.
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except uber claims $16/hr while this study concluded $8.55
With all the effort and expense that Uber drivers put into their vehicles, we can either look at "studies" to gauge earnings, or presume that most Uber drivers are not irrational self-deluded actors driving themselves into poverty by working for less than a Walmart stock-boy.
Sure, there's more flexibility with Uber than Walmart, but only those who do it as a hobby would do it for $3 or $8 an hour (as a median of the curve from $0 upwards - there will
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A much more likely scenario is that, since not all costs are immediately visible, the drivers are simply bad at estimating their real costs.
Re:The problem is that it was very obvious bullshi (Score:5, Insightful)
I have several friends who do it for extra cash (or, in one case, because they actually enjoy it - weird, but that's their thing), and none of them are anywhere near dumb enough to do it for a net of $3 and change. That number should, literally, be unbelievable, and yet many people believed it anyway because it fit a highly (absurdly) hyperbolic narrative.
We'll no one would work for a check that comes out to $3/hr, but lots of people work for net N dollars where they get paid P dollars and have to incur E incidental expenses, where E is on the order of N. Because the expenses are incurred at a different time and not necessarily for direct expenses, they may not be considered in the true earnings equation. Uber is one example. How many drivers actually sit down to calculate their total profit after expenses on a spreadsheet? Working, married moms are another example, where the taxes at the husband's high marginal rate coupled with child care expenses often yield surprisingly low net true earnings.
Re:The problem is that it was very obvious bullshi (Score:4, Insightful)
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There seems to be a thing among the progressive / neo-liberal camp that requires them to screech down at any occupation or practice that they, from their loftier economic perch, would not personally engage in. Hey, I don't want to be an Uber driver either. It's fine. I have several friends who do it for extra cash (or, in one case, because they actually enjoy it - weird, but that's their thing), and none of them are anywhere near dumb enough to do it for a net of $3 and change. That number should, literally, be unbelievable, and yet many people believed it anyway because it fit a highly (absurdly) hyperbolic narrative. There are two problems here: 1) that these people need to be more skeptical (especially when such strong confirmation bias is involved),
I, like many others, were very skeptical of the figure, but thought it could be possible if a) the expenses were not obvious, and b) the median Uber driver didn't stick around long after they figured out the full cost, and/or c) a lot of people didn't mind working for a pittance (or they worked in such a way that a pittance was fine).
and 2) they need to check their fucking privilege. Not everybody has the immediate option of an awesome job, has good spending / saving habits, etc. Just because you wouldn't do something doesn't mean that nobody else should, and fabricating evidence to the contrary is both dishonest and cruel.
Doesn't #2 contradict the supposed implausibility of the $3.37 figure?
Besides, I think this shows a great advantage of the "progressive / neo-liberal camp". If you come to us w
With Uber's best numbers 41% (Score:2)
Also if you're not willing to abandon 41% of the population to abject poverty that raises my taxes (to subsidize the low
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41% still make less than minimum wage. That drives my wages down (and yours too). These Uber drivers aren't dumb, they're desperate and unlucky. They know they're getting screwed and the first chance they get they'll take a real job with real benefits.
Right, because their alternative of being unemployed is soooo much better and won't make them desperate in any way.
The problem is that you drastically overestimate.. (Score:2)
...the human condition. If everyone was aware of risks and costs than pyramid schemes like Amway never would have existed, much less be going strong after 60 years. Uber isn't a pyramid scheme, but Uber-fart sniffers need to remember that there will always be a pool of desperate people willing to to take what Uber gives them if they lose their job or simply need to make more money.
Uber-fart sniffers like to bitch about traditional taxi companies, but said taxi companies need to make a profit. Whereas Uber
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While probably no one would work at USD $3 if told beforehand (and now that the $3.37 is largely of suspect...) I wonder if many that dropped out of share-riding earn significantly less because they performed much poorer than they thought they can, probably through misjudging their map reading or driving skills.
Purely an personal anedote : One of the more "memorably horrible" driver that I hailed through Grab (a competitor of Uber around here) was just In later conversations in the car, it's clear that th
So with Uber's best case scenario (Score:3)
So even if you game the numbers (by changing the survey questions, which is how Uber got those numbers) you still get a shit sandwich...
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2. Some money is better than no money. Earning a small amount is better than earning none. Earning a small amount (i.e. $3 per hour) is better than earning a miniscule amount (i.e. $0.50 per hour). And so it's better to have a job than to not have a job; it's better (probably) to have a crap job th
They aren't making any money really (Score:2)
So instead of $3.37 the Uber drivers are averaging $10.00. Big fucking deal. Long again in a different life I worked as a "self-employed contractor" doing delivery/pickup of airfreight & the money sucked. However, there was a lot of work & when I put in the hours & busted my ass I made decent money. Not paying my taxes made it seem life even more money. That, of course, caught up with me.
So if an Uber driver busts their ass they might make some scratch. But after a year of that their car
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Pretty sure the 3-10/hour already has new car money removed.
Also, one needs to save payroll tax, but the miles driven deduction takes care of most of the income tax (the number deducted is $0.25/mile over true TCO according to this study).
If the $10/hour number is fairly accurate, it's not a terrible option, not big money, but I can certainly see why people would do it. Of course I imagine it varies a lot regionally too (tipping culture varies a lot).
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If I understand correctly,
The 'study' comes out to $8-10 net taxable profit, assuming the maximum per-mile deductible.
So yeah the per-mile includes depreciation meaning a replacement vehicle is in already included in the expenses.
Also the longer you can keep the car in good condition the better you profit margin gets.
Ex: $0.53 / mile * 100k miles -> $53k in expenses (including fuel [10k at 30 mpg] and maintenance, taxes, insurance [Say another 10K or so, worst case]).
If you can keep the ve
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The study doesn't assume $.53/mile in vehicle costs. Instead, it estimates and uses $0.30/mile as the cost.
So for most drivers, there isn't this mythical large fund available to buy a replacement vehicle.
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That wasn't my under from the initial article.
One of the criticisms levied was people could deduct more than they actually spent, because they could use the $0.55 without receipts, but the reality was actually the cost was closer to $0.30.
Of course, you'd probably be best off making an actual business and call all $0.30 an expense rather than the take the $0.55 out of income.
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^Understanding
Also, ignore my drunken understanding of tax for a second, definitely best doing the $0.55...
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Pretty sure the 3-10/hour already has new car money removed.
This might be true, but that is a LOT of money. I really doubt after a year or so of driving, there is a savings account with the money for a replacement car.
Also, one needs to save payroll tax, but the miles driven deduction takes care of most of the income tax (the number deducted is $0.25/mile over true TCO according to this study).
Yes, there are deductions, more than just mileage, lots of them. File taxes quarterly & PAY them. I've been there/done that & in the end, I got nailed on taxes. The self employed get screwed horribly IMO.
If the $10/hour number is fairly accurate, it's not a terrible option, not big money, but I can certainly see why people would do it. Of course I imagine it varies a lot regionally too (tipping culture varies a lot).
Tipping!? I googled up Uber tipping & it's kina a mix on tipping. Officially, no tipping. However some tip & some drivers expect it. I've used Uber three times. The first time I did tip & the guy insisted he didn't want it. The next couple I didn't & now I feel guilty.
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Agreed, the person is probably living off the 5-10k/year in depreciation too.
So much for peer review (Score:2)
Peer review only works if you don't have a confirmation bias. If you do then it's not peer review, it's groupthink.