Are Uber and Lyft Drivers Well Paid? It Depends on the Study

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The most contested question in the gig economy may be how much workers earn, since their hourly wages can be widely uneven. Concerns about pay have helped fuel moves in California and New York City to regulate gig-economy companies as if they were more like conventional employers.

Last week brought evidence that drivers for Uber and Lyft may be much better compensated than previously understood. But it hardly settled the debate.

The only costs the authors factor into their preferred calculation are so-called marginal costs — like gas and maintenance costs that accrue because of the extra miles a worker drives while on the job. This assumption results in costs that are up to about $5.50 an hour lower for full-time drivers, and a net wage that is several dollars per hour higher, than under a more conventional calculation.

But many Uber and Lyft drivers may buy a more expensive car in order to drive on these platforms. If that’s the case, the vehicle’s additional cost should be considered part of the driver’s expenses as well, according to Mr. Katz.

“I think the expense number is just way too low,” he said. He also worried that focusing on a single week might have created an unrepresentative portrait of earnings.

Analysis of wages and their impact often hinges partly on researchers’ assumptions, as with a pair of reports about the effects of Seattle’s minimum wage in 2017 and 2018 that produced somewhat divergent results.

Mr. Hyman of Cornell acknowledged that the assumptions on wait time and expenses might have overstated the results somewhat and noted that his team had provided analysis using alternative assumptions. He also said that the study had found a wide variation in earnings among drivers, and that driving might be a worse deal for full-timers than those who drive casually or part time.

Some critics on social media noted that the companies had paid Cornell $120,000 to support costs like research assistance, not an unheard-of arrangement for such work. (Mr. Hyman and his fellow professors received no money.)

Both Mr. Katz, who called the group “totally honest,” and Mr. Zingales suggested that the paper highlighted a more subtle problem: Academic work that relies on data controlled by companies tends to avoid negative findings.

Scholars typically obtain such data in two ways: They approach the company with a research question they would like to answer; one recent paper in this vein examined the wage gap between male and female Uber drivers, and another sought to put a value on the flexibility of working for Uber. Or the companies can approach scholars with a question they want answered, as with the Cornell study.

When the scholars are faculty members at an academic institution, the companies typically cede editorial control to them.

But the process still tends to skew what we know about the companies, Mr. Zingales said, because companies are unlikely to approve the release of data for a study, or approach a scholar with data, if they believe the conclusion is likely to reflect poorly on them. One such study, he has noted, recently asked whether traffic fatalities increase after Uber and Lyft start operating in a city, for which the companies did not provide detailed data.

Many scholars have an interest in maintaining a relationship with companies because it is difficult to answer key policy questions without access to their data. This can lead researchers to adopt more favorable assumptions when there is legitimate debate about how to handle a methodological question.

Mr. Katz said the problem arose with many companies, but was a growing concern with digital platforms in light of their size and relevance to the economy.

Mr. Hyman said Uber and Lyft had not influenced his results in any way. He said they had approached him after people at Uber read his 2018 book, “Temp,” a well-reviewed history of the rise of alternative work arrangements like freelancing that was relatively positive about the online gig economy.

The companies appeared to be pleased with the findings, and were quick to point out flaws in a study for the City of Seattle, also released last week, that put the typical driver’s wage at $9.73. That study calculated earnings from cruder data the city had obtained from Uber, supplemented by a survey of thousands of drivers.

“Cornell’s study is the first to provide an independent, data-driven picture of the full earnings experience of ride-share drivers,” Matt Wing, an Uber spokesman, said in a statement. A 2018 report of ride-hailing drivers prepared for the City of New York drew on detailed data it had obtained from the companies. He said the other study, by contrast, “is based on limited data and flawed assumptions.”

Mr. Wing said that Uber was willing to share more detailed data but that the city couldn’t commit to protecting its confidentiality.

Julie Wood, a spokeswoman for Lyft, which largely declined to share information with Seattle, also pointed to the merits of data used by the Cornell researchers and cited the other study’s data limitations.

Mr. Hyman seemed exasperated by the experience, particularly his dealings with what he called “the Twitter mob.”

“I would love to have dragged Uber’s name though the mud, trust me, but it’s not what the data showed,” he said. “I thought it was important for public debate and drivers most importantly to have access to the data nobody knew.”

“For me, this is not going to get me anything,” he added. “I’m tenured.”


Noam Scheiber

2020-07-14 10:39:54

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