Do UberX Driveres Really Earn Three Times More than Taxi Drivers?

Original post date: September 16, 2014
Article by: Ben Douglas

In May, Uber revealed annual median incomes for UberX drivers in New York and San Francisco of $90,766 and $74,191, respectively. In contrast, 2013 median annual taxi driver incomes in New York and San Francisco are $29,910 and $28,060 according to the Bureau of Labor Statistics (BLS). This translates into UberX driver annual incomes exceeding taxi incomes by 303% in New York City and 264% in San Francisco. In other words, Uber pays its drivers three times as well!

Online magazines such as Time and Pando were quick to criticize Uber for using gross and not net figures (i.e., for excluding fuel, insurance, wear and tear). ValleyWag, Business Insider, and The Daily Dot followed suit. Uber followed up by sending Fusion’s Felix Salmon good-faith driver cost estimates: “If we go with these figures, we end up with net income for a New York uberX driver of $75,686, and net income for a San Francisco uberX driver of $60,014. Both of which are still significantly higher than the kind of money cab drivers make in NYC and SF respectively.” While we don’t have good estimates for net taxi income for comparison, the fact that UberX’s net incomes are still greater than gross taxi incomes in New York and San Francisco by 240% and 210%, respectively, is revealing.

There are several factors which, when taken into account, diminish the difference between taxi and UberX incomes. First, Uber’s figures come from drivers putting in at least 40 hours/week, whereas the BLS figures likely understate the incomes by assuming an exact 40-hour work week. Second, the BLS calculates incomes for the entire Metropolitan Statistical Area. As a result, the income estimates may be understated due to lower population density outside the city limits and higher demand for cabs in the city. Finally, Uber likely used median instead of mean incomes for their best-paid cities in order to show the highest value possible. BLS mean taxi incomes are also somewhat higher than median, thus the switch would decrease the difference even if it wouldn’t affect UberX incomes.

While adjusting for these factors likely would decrease the difference between UberX and taxi incomes, the basic conclusion probably doesn’t change: UberX drivers are much better compensated than taxi drivers in San Francisco and New York. This is supported by the fact that BLS taxi [gross] incomes include tips, and incorporate data from limousine drivers, who tend to have higher incomes than cab drivers. Finally, taxi drivers often face even more costs of operation than rideshare drivers in the form of permit-related fees and car lease expenses.

The fact of the matter is we don’t have enough data to draw strong nationwide, or Florida specific, conclusions on driver incomes. Nonetheless, these impressive figures indicate the magnitude of ridesharing’s  potential to transform transportation markets. The initial evidence is promising. Uber is not just good for consumers; Uber is great for its drivers as well.

About DeVoe Moore Center

The DeVoe L. Moore Center is conducts economic research and policy analysis focused on state and local policy issues and is located in the College of Social Sciences and Public Policy at Florida State University in Tallahassee. As an educational institution the DMC provides professional research experience to undergraduate and master’s students through an extensive program of internships and independent study, preparing them for a future in public policy, economic development, public sector accountability and entrepreneurship.
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