Poverty Wages for Uber Drivers

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A new study shows that Uber drivers make $9.21 an hour when calculated based on full-time, full-year employment. The figure puts Uber driver compensation below the poverty line for many families.

The pay rate is based on estimates by the Economic Policy Group. Using the pay rate, 24/7 Wall St. estimates that a driver who works a 40-hour week for 50 weeks per year makes just below $18,420. The federal poverty level calculation puts household poverty income level for a household of two at $16,240 and a family of three at $20,420.

Reviewing the figures, Economic Policy Institute (EPI) Distinguished Fellow Lawrence Mishel said:

The low pay and small economic weight of Uber and the gig economy overall, coupled with the fact that Uber drivers and other gig workers are mostly working on a part-time basis as a way to earn supplementary income, argue for a change in perspective. There is a lot of hype around Uber and the gig economy. But in any conference on the future of work, Uber and the gig economy deserve at most a workshop, not a plenary.

The figures take into account “Uber’s commissions and fees and vehicle expenses, and taking into account the cost of a modest package of health insurance and other benefits equivalent to those earned by W-2 workers.” Mishel estimates the total number of people who drive for Uber at 833,000 a year.

While the calculations do not take into account whether some Uber drivers work more than one job, which would increase their annual wages, the $9.21 is below what Walmart, McDonald’s and other large retailers pay for their most junior employees. Critics often point out that Walmart wages put many of their workers below the poverty level, which requires them to seek government assistance.

Whether the EPI data are accurate when second jobs by Uber drivers are taken into account, apparently the jobs make being an Uber driver alone a very tough business.