However much you tip your Uber driver, it's probably not enough.
Harry Campbell, founder of the Rideshare Guy, a company that surveys drivers, said "The most common feedback we hear from drivers is they end up earning a lot less than they expected". The finding: median before-tax profits were a shocking $3.37 an hour. When the billions of dollars in venture capital that these companies are losing each year is factored in, Zoepf concludes that "this business model is not now sustainable".
The researchers made use of data from Edmunds, Kelly Blue Book, and the Environmental Protection Agency to determine the cost of insurance, maintenance, gas, and depreciation for various vehicle models.
Motorists making some extra cash by hauling around Uber or Lyft customers are mostly earning less than minimum wage, and almost a third of ride-hailing drivers are losing money behind the wheel, according to researchers at the Massachusetts Institute of Technology.
Seventy-four percent of drivers earn less than the minimum wage in their state, while 30 percent "are actually losing money once vehicle expenses are included", the report said. Drivers are able to use the IRS standard mileage rate deduction to write off some of the costs of using a vehicle for business. The mean monthly pretax profit for drivers is $661, while the median profit for a month is just $310. "And the drivers are essentially subsidizing it by working for very low wages".
Uber could not be reached at time of writing, although earlier a spokesperson told The Guardian it reckoned the study's methodology and findings were "deeply flawed". Uber last fall shut down a vehicle leasing business targeting their drivers when the company found it lost $9000 per auto rather than the $500 it has estimated.
Driving for Uber or Lyft is not a smart way to make money, a new study from MIT shows. The paper also found that 73.5 percent of ride-sharing app driver profit in the USA was untaxed. The MIT study found that some 80 per cent of drivers worked fewer than 40 hours per week.
"An ever-growing number of individuals around the country are using Lyft as a flexible way to earn income, and we will continue to engage with our driver community to help them succeed", Lyft spokeswoman Alexandra LaManna said.