Report

Uber business model does not justify a new 'independent worker' category

17 Mar 2016
Description

There has been a continuing, strong debate about the size of the gig economy and the pay earned by gig economy workers—specifically as gig work scope and pay relates to Uber, the leading gig economy firm. The debate has been fueled by a number of recent studies using differing and misleading measures of Uber pay and the size of the gig economy. For example, some pay studies present measures of driver earnings that do not deduct Uber commissions, or driver’s expenses, or the cost of benefits Uber drivers must fund on their own (as they are classified as contract workers, not “employees”). Some scope studies look at the raw number of drivers but don’t account for the fact that most ride-hailing drivers drive far fewer than 40 hours a week and only for a few months a year.

This paper seeks to provide clarity by offering a framework for understanding various pay and size concepts and a common terminology. Then, using newly available administrative data on Uber drivers, it answers two key questions: (1) what is the hourly pay earned by Uber drivers comparable to hourly wages or compensation of payroll employees (i.e., driver net income after accounting for Uber commissions and fees, vehicle expenses, payroll employees’ benefits, and the interaction of expenses and benefits with the tax code)?; and (2) what is the scale of Uber, and gig work, in the overall economy?

The findings reinforce our skepticism that Uber, and “gig work” more broadly, represent the “future of work.” Our results indicate that Uber drivers earn low wages and compensation and the total hours and compensation in the gig economy represent a very small share of total hours and compensation in the overall economy. These findings—and the fact that many Uber and other workers who provide personal services via a digital platform do so on a part-time basis primarily as a way to earn supplementary income—argue for a change in perspective.

Publication Details
Language: 
English
License Type: 
All Rights Reserved
Published year only: 
2016
10
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