The Data on Uber Driver Partners

Full academic report here. Conclusion below:

“This paper has provided the first comprehensive analysis of Uber’s driver-partners, based on both survey data and administrative data. Several findings are worthy of emphasis and exploring in further research.

First, the Uber platform provides a great deal of flexibility to driver-partners. Responses to the BSG survey indicated that many driver-partners valued the flexibility to choose their hours of work and days of work. Furthermore, the administrative data indicate that a large share of driver partners avail themselves of this flexibility and vary their hours from week to week. Compared with traditional taxi drivers, Uber driver-partners tend to work fewer hours per week. For example, taxi drivers and chauffeurs were five times more likely to work 50 or more hours per week (35 percent of taxi drivers and chauffeurs versus seven percent of Uber’s driver partners). The finding that hourly earnings for Uber’s driver-partners are essentially invariant to hours worked during the week also makes Uber an attractive option to those who want to work part time or intermittently, as other part-time or intermittent jobs in the labor market typically entail a wage penalty.

Second, Uber’s driver-partners are more similar in terms of age and education to the general workforce than to taxi drivers and chauffeurs. There are many possible explanations that could have contributed to this result. First, the U.S. economy was operating at less than full employment during the period studied, and more highly educated and younger workers may have had fewer alternatives available than is normally the case in this time period. Uber may have represented a particularly attractive bridge option for these workers. Second, entry barriers in traditional taxi and limo services may prevent a broader segment of the workforce from gaining such jobs. And third, a broad segment of the general public may be drawn to Uber over traditional taxi and chauffeur jobs because Uber permits greater flexibility in terms of scheduling. The fact that new drivers continued to partner with Uber at an accelerating rate in late 2014, when the economy strengthened and the unemployment rate fell below six percent, suggests that weakness in the economy was not the major reason why drivers partnered with Uber. In addition, most driver-partners were employed prior to joining Uber. These considerations suggest that Uber has attracted driver-partners with a wide range of backgrounds because they value the type of opportunity for flexible work that Uber provides.

Third, although it is difficult to compare the after-tax net hourly earnings of Uber’s driver partners and taxi drivers and chauffeurs taking account of all costs, it appears that Uber driver partners earn at least as much as taxi drivers and chauffeurs, and in many cases more than taxi drivers and chauffeurs. The prospect of higher compensation is probably part of the explanation for why the number of Uber driver-partners has grown at an exponential rate (along with lower entry barriers and flexibility). Another aspect of Uber that can influence the pay of Uber’s driverpartners vis-à-vis taxi drivers is that customers rate their driver when they take a trip with Uber, and drivers’ ratings are made available to potential customers. This leads Uber’s driver-partners to develop reputations, and to have an incentive to perform well to develop and maintain a good reputation. By contrast, taxi drivers typically are anonymous and customers are not aware of their reputations. Reputations matter in markets. Driver-partners are rewarded for having a good reputation, which could lead Uber’s driver-partners to earn more than taxi drivers. Furthermore, drivers who expect to do a good job and develop a strong reputation are more likely to be attracted to Uber than to traditional taxi service.27 Estimating the impact of drivers’ reputations on their earnings is an important topic for further research.

Lastly, although some have argued that the sharing economy is weakening worker bargaining power and responsible for much of the rise in inequality in the United States, the actual effect is much more complicated and less clear. First, there is little evidence of a secular rise in the percentage of workers who are self-employed, independent contractors, or part-time. As Bernhardt (2014; p. 15) concluded, “we all share a strong intuition that the nature of work has fundamentally changed, contributing to the deterioration of labor standards. Yet at least with aggregate national data, it has been hard to find evidence of a strong, unambiguous shift toward nonstandard or contingent forms of work — especially in contrast to the dramatic increase in wage inequality.” Second, inequality increased dramatically in the United States long before the advent of the sharing economy, and has increased much less in many other countries that, unlike the United States, experienced a sharp rise in part-time work. Third, at least insofar as the advent of ride sharing services like Uber is concerned, the relevant market comparison is to other forhire drivers, many of whom were independent contractors prior to the launch of Uber. Moreover, the availability of modern technology, like the Uber app, provides many advantages and lower prices for consumers compared with the traditional taxi cab dispatch system, and this has boosted demand for ride services, which, in turn, has increased total demand for workers with the requisite skills to work as for-hire drivers, potentially raising earnings for all workers with such skills. And finally, the growth of Uber has provided new opportunities for driver-partners, who, based on the BSG survey, seem quite pleased to have the option available.”