Uber, the massive ride-sharing service, is about to go public. Its valuation could be as high as $91 billion. That will make it one of the largest initial public offerings in history. Some of its founders and investors will make hundreds of millions of dollars. The sums are so rich, a number of Uber drivers will strike as the IPO goes to the market to protest their low pay.
The army of Uber drivers who are the foundation of the service has not done nearly as well as its investors and top management. A new study shows that their average hourly wages are only the equivalent of $9.21. That is less than what an entry-level worker at McDonald’s makes.
It is also less than Walmart, the largest employer in the United States with over a million workers, pays its entry-level associates. Walmart is known for paying workers poorly, though it has raised wages recently. While Walmart and McDonald’s pay low wages, they are not among the lowest paying companies in America.
The Economic Policy Institute has examined a number of research reports and studies on what Uber drivers make to come up with the figure. The amount covers “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.” The EPI puts that total number of Uber employees, when accounting for people who work part time or only part of the year, at 90,521. The same data shows that an Uber worker works an average of three months. The turnover among drivers is tremendous. These are the jobs with the worst (and best) job security.
Why is the pay rate so low? Some blame it on the new gig economy. This is defined by large numbers of people who work part time, sometimes at several jobs a year. Most are defined as independent contractors or freelancers. Many get no benefits or are employed for fixed hours. Forbes recently reported that the Bureau of Labor Statistics figures show the United States has 55 million people who fall into this gig workers category. That is over a third of all workers in America.
For the time being, there is no sign that the Uber business model will raise the compensation of its drivers. That puts them in among the lowest paying jobs in America.