Taking Another Look at the Labor Market for Uber’s Driver-Partners
By Jonathan Hall, Head of Economic Research for Public Policy at Uber & Alan Krueger, Bendheim Professor of Economics and Public Affairs at Princeton University
We’re pleased to announce the release of an updated version of our 2015 paper, An Analysis of the Labor Market for Uber’s Driver-Partners in the United States. We first released this paper — which analyzes the motivations, backgrounds and economic circumstances of workers who drive on the Uber platform — in January 2015. Due to widespread interest, we have updated and extended many of our initial analyses to incorporate more recent data.
Our initial findings revealed that a diverse group of drivers used Uber in many different ways: some drove every day while others drove only occasionally; some had experience as professional drivers but some didn’t; in addition to using the Uber platform, some had a part-time job, some had a full-time job, and some had no other job; and a majority drove less than 15 hours per week, significantly varying how often they used Uber week by week. At the heart of all of these findings was flexibility: the ability for people to turn on the app anytime they wanted to drive and earn income, for however long they wanted.
Uber has grown dramatically over the last two years. Did our findings continue, or did they change? Could we improve our insights about drivers’ earnings and work hours with additional research? In addition to updating many of our earlier findings, we provide new estimates of driver costs, more data on the relationship between earnings and the number of hours driven, and a time-series analysis of average hourly earnings over time.
More and more people are driving on the Uber platform
The number of active drivers in the US — here calculated as drivers who have completed at least four rides in any month — approximately doubled every six months from mid-2012 to the end of 2015. This spectacular growth suggests that Uber fits a wide range of needs, and is evidence that Uber provides many workers with a choice that they prefer to other available options or to not working at all.
Hourly earnings remained stable over time even as prices fell
Our analysis of hourly earnings (before expenses) over a 16-month period showed no evidence of a “time trend,” which means that average earnings remained stable even as prices for riders fell throughout the year. The fact that fares have trended down while hourly earnings displayed no time trend suggests that hourly earnings are anchored to the drivers’ alternative wages, with the entry and exit of workers causing utilization rates to adjust to clear the market at a more or less stable level of earnings.
Hourly earnings aren’t related to how many hours someone drives per week
When we compared the average hourly earnings for drivers across 20 U.S. cities, we found that there was virtually no difference between people driving for many hours each week and those who drove only a few hours per week. This is attractive for individuals who are interested in flexible work opportunities but have busy or unpredictable schedules, as there is not an earnings penalty for driving short hours.
Drivers’ expenses vary by type of vehicle and driving styles
Using Uber’s data on the average number of miles driven per hour and AAA figures for driving expenses (e.g. gasoline, depreciation, insurance, etc.), we provide new estimates of average hourly costs for drivers, depending on vehicle type and driving style. We estimate that costs range from $2.94 per hour, on average, for a driver who uses a personal small sedan to occasionally drive on the platform, to $6.46 per hour, for someone who uses a 4WD SUV to exclusively drive full-time on the platform.
Flexibility is (still) everything
In the first version of our paper, we noted that nearly two-thirds of drivers (65%) varied the number of hours they drove in any given week by 25% more or 25% less than the week prior — something made possible by the easy nature of going “online” or offline at any time with Uber as a driver. We also found that more than half of drivers used the app less than 15 hours per week.
Our new analysis of the distribution of driver hours over time extends this analysis. Notably, the share of drivers driving 15 hours or less per week rose throughout 2015, while as the number share of drivers using the app 35 hours or more per week continued to decline.
You can read our full paper here.