Growth and earnings in the “Online Platform Economy”: a comment on the new JPMorgan Chase Institute study
By Libby Mishkin, Senior Economist at Uber
People have always come to Uber for work that fits around their lives, with studies and surveys showing drivers place tremendous value on the ability to drive if, when, and how long they want, and to make those choices in real time.
This has been true since our founding. Back then, Uber was a premium service and we partnered primarily with professional livery drivers. But over time, with the introduction of peer-to-peer products like UberX, more people from all walks of life have partnered with us for work that fits around their lives.
Today, more than 900,000 people drive with Uber in the US. In 2014, that number was 160,000. As the number of people who drive with Uber has grown, the share of drivers who drive only occasionally also increased. In fact, today more than 50% of drivers drive less than 10 hours a week. These people include stay-at-home moms, retirees, college students and others.
The rise of the “occasional” driver is documented in a study released today by the JPMorgan Chase (JPMC) Institute titled “The Online Platform Economy in 2018: Drivers, Workers, Sellers and Lessors.” It also finds that the number of participants in the so-called “Online Platform Economy” has increased significantly over time.
Broadly speaking, the study’s findings reinforce what we and many others have been saying for some time: that the number of people involved in flexible work arrangements is growing, and that growth is driven, in large part, by people who use platforms like Uber on the side (the stay-at-home moms and college students mentioned earlier).
But while the paper gets many things right, we believe it comes up short on its analysis of driver earnings.
In particular, the JPMC study reports that average monthly earnings for people working with “transportation” platforms (including Uber) have declined as the total number of drivers on these platforms has grown. However, the study does not report any new data on average hourly earnings, even though it makes brief mention of past studies on the topic.
The distinction between monthly and hourly average earnings in this context is an important one: if the share of our partners who drive only occasionally has increased over time, as it has, it stands to reason that the average of every driver’s monthly (or, for that matter, weekly or yearly) earnings would decrease.
In our view, a more appropriate metric for evaluating earnings among the diverse and evolving group of drivers would be average hourly earnings, which according to academic research produced in partnership with Professor Alan Krueger of Princeton and John Horton of NYU have remained stable over time.
What is more, Professor Krueger’s paper (jointly authored with Uber’s chief economist Jonathan Hall) compared the average hourly earnings for drivers across 20 U.S. cities. It 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.
The growth and scope of on-demand work has attracted much attention from policymakers and researchers. The JPMC Online Platform Economy dataset provides a valuable, if incomplete, perspective into this segment of the labor market. But it’s important to keep in mind what the study doesn’t show — an apples-to-apples time series of hourly earnings among “transportation platform” workers — even as we recognize the contribution of the report of documenting the small but growing (and diverse) number of people who are drawn to flexible work.
- The authors state, “In our data, we do not observe wages and hours separately. We see only their product, earnings.”