Since Uber overhauled the transportation market, and simultaneously heralded the dawn of the gig economy, there’s been much speculation as to what gig workers in this new era actually make.
A recent report by the Economic Policy Institute has pegged the hourly wage of an Uber driver at around US$11.77 (adjusted to about $10.87 when factoring in what contractors contribute to Medicare and social security) or about minimum wage.
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“It’s more low wage than I thought, to tell you the truth,” Lawrence Mishel, a labour economist and former EPI president who authored the report 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 any more.”
However, gig-economy wages have been widely disputed, and several studies have already attempted to determine the earning potential of Uber drivers.
While Uber has shared some data on driver compensation, the figures aren’t usually palatable, and often don’t account for how much of drivers’ hourly wage is channelled into other things. In January 2018, Uber released a “gross earnings” report, which pegged a driver’s hourly wage before gas, vehicle depreciation or the Uber service fee at $21.07 per hour.
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This past January, an MIT report claimed that the hourly wage of an Uber driver was likely between $8.55 and $10.
If it can be assumed that an Uber driver’s hourly wage averages out at $11.77, this doesn’t fall below the U.S. federal standard for minimum wage, but is below the wage floor for many major American cities.
The local minimum wage in New York City, for example, is $13, whereas in San Francisco the local standard is even higher at $14.
It’s important to note that cities where an Uber driver’s wage does not meet local minimum-wage standards often align with those where it’s most expensive for Uber drivers to get started. Both New York City, San Francisco and Toronto are in the top 20 cities where it’s most expensive for Uber drivers to start driving due to regulatory fees and other miscellaneous expenses.
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In Canadian dollars, an hourly wage of US$11.77 would translate to C$15.05, which is slightly above Ontario’s current minimum wage of $14 per hour, and will hit even closer to the wage floor when the minimum wage is raised to $15 per hour in January 2019.
The rise of the gig economy has also brought with it an onslaught of concerns about fair wages for those who participate. According to U.K. government research released earlier this year, over a quarter of people who work in the U.K’s gig economy are paid below the national minimum wage.
The Department for Business, Energy and Industrial Strategy’s findings determined that approximately 700,000 Brits, mostly those aged 18 to 24, are making below £7.50 per hour (C$12.99) working as couriers, taxi drivers, and other self-employed work. London is No. 7 on the list of cities where it’s most expensive for Uber drivers to start out.
The chairman of the Commons work and pensions select committee, Frank Field, told the Guardian that the figures showed gig work was now “the single biggest force in the British economy undermining the national living wage.”
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He added that he wants the minimum wage offered to “the small army of workers who are exposed to poverty pay because they are forced into forms of self-employment that are unrecognizable to most people.”
Uber has been criticized often due to perceived ill-treatment of drivers, including continuing to classify drivers as contractors who work close to or more than full-time hours for the transportation company.
Recently, an employment tribunal in London ruled that Uber drivers were to be classified as employees, rather than contractors. Uber retorted that it would appeal the decision.
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