Study Finds Gig Drivers Still Earn Less Than Minimum Wage. Is Using Uber and Lyft Ethical?

Corporations are squeezing Americans for more cash everywhere. We’re all feeling it, especially at the grocery store and at the gas pump, even as the big companies in those industries rake in record or near-record profits.

A new study compounds the growing accusations of corporate gouging with a finding that Lyft and Uber are paying many drivers less than the minimum wage where they live.

The Institute for Research on Labor and Employment at the University of California, Berkeley, analyzed ride-share driver earnings from January 2022 in Boston, Chicago, Los Angeles, the San Francisco area, and Seattle.

In all five metro areas, “the typical passenger and delivery drivers earned less than the applicable minimum wage” despite measures to avoid that.

The study endeavored to calculate what drivers actually take home by adjusting for required expenses. It concluded that the hourly “employee-equivalent pay—which adjusts drivers’ net pay for employer payroll taxes that drivers must pay and mandated employee benefits—equaled only $5.97 in California and $9.18 across the other metro areas.”

In the state of California, Proposition 22, a voter-supported law that’s currently on the books, requires that gig passenger drivers and delivery app drivers be guaranteed a “minimum of 120 percent of the relevant minimum wage” before tips, according to the study.

The study omitted gratuities from its core findings, although it did track what tips added to driver income—and the picture wasn’t much prettier.

“Tips added about 20 percent to these amounts,” the study found.

Even with tips, pay for Uber and Lyft drivers is a far cry from the legal minimum wage in San Francisco ($18.07) and Los Angeles ($17.27), and that doesn’t account for drivers’ expenses required to maintain and fuel vehicles. 

The study’s conclusion is damning. Even where local mandates require the app companies to make up the difference in driver wages to bring employees up to the minimum wage, the companies don’t seem to be meeting the income shortfall. Much of the problem can be attributed to the fact that drivers are required to fund the maintenance of their own vehicles. 

Proposition 22-like policies are being proposed in other states, but some of them have been hamstrung by objections in court.

Frommer’s has reached out to Lyft for comment on the study’s findings. For its part, Uber announced in April that it had paid more than a billion dollars in minimum wage guarantees and other benefits, including health care stipends and accident insurance. 

The same day that the UC Berkeley findings were announced, Uber and Lyft reached a compromise with Minnesota lawmakers that would guarantee minimum pay to drivers there.

But the study’s results, which expose failures in similar efforts to guarantee fair pay in California, raise reasonable questions about whether the new standards in Minnesota will be enough.

All of the squabbling and calculation can be reduced to a simple statement: Uber and Lyft drivers say they are not taking home enough pay for a day’s work, and study findings have now backed up that claim.

Knowing this, travelers need to ask themselves whether it’s ethical to continue using services that have been credibly alleged to pay workers less than what they can live on. 

To read the study results for yourself, click here.

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