Uber released a massive study of its internal data Thursday that found its drivers make more money than traditional taxi drivers. But the study failed to account for one crucial thing: the cost of operating a car.
According to Uber's financial analysis, conducted by the company's in-house policy research lead Jonathan Hall and Princeton economist Alan Krueger, Uber drivers make about $6 an hour more than their traditional taxi-driving peers in many major U.S. markets. But that is the gross hourly rate earned by the drivers, which doesn't account for how much it costs drivers to maintain their cars.
The study acknowledges as much. "Of course, Uber’s driver-partners are not reimbursed for driving expenses, such as gasoline, depreciation, or insurance," it notes, while taxi and limo drivers may not have to cover those costs. The analysis also points out that drivers may be able to offset some of those costs by deducting work-related expenses from their income for tax purposes.
But not all drivers seem convinced.
"The whole analysis brushes off driver expenses and earnings per mile. Gross earnings really are not a fair comparison point," wrote one commenter going by the alias rckymtnrideshrdriver in a reddit section focused on Uber drivers. I would love to see the earnings per mile line graph -- probably looks like falling off a cliff."
Some Uber drivers were already nervous that Uber's plan to lower fares in 48 cities could hurt their pocketbooks -- a move Uber said was designed to entice more riders to use the service. (The company also introduced a guaranteed minimum fare per hour for drivers in these cities.)
The Internal Revenue Service can help us here because it sets standard mileage rates for tax purposes. For 2015, taxpayers can deduct 57.5 cents a mile for operating a car for business purposes. That rate is based on an annual study of the costs of vehicle operation -- those things like repairs, insurance, maintenance, gas and depreciation that were not factored into Uber's study.
The IRS mileage may not exactly match up with the actual out-of-pocket expenses for drivers -- it's hard to say how much an individual driver may shell out for everything -- but it does provide a sort of benchmark, even if it's unclear just how participants in the new "sharing economy" are handling their taxes.
And we do know that Uber drivers, well, drive. They may be commuting from where they live to the the areas where Uber sees the most demand. And they're certainly driving to pick up and drop off their riders.
So the big questions become how much they drive and how it affects their actual bottom line. But the data Uber released doesn't do much to answer those questions. The report gives the median number of trips per hour for drivers in some markets, but this doesn't provide any insight into the lengths of those trips, or how far drivers must travel between trips to get to their next rider.
Still, Uber's analysis argues that its drivers, on average, are still likely coming out ahead of more traditional competitors. "Unless their after-tax costs average more than $6 per hour, the net hourly earnings of Uber’s driver-partners exceed the hourly wage of employed taxi drivers and chauffeurs, on average," the report says.
Yet that is the crucial question: Do those expenses amount to more than $6 an hour?