Researchers conducted in-depth interviews and discovered a lot about the pitfalls of working in the rideshare business.
When Katie Wells hired a babysitter one night in 2014, she was astounded when the sitter ordered an Uber to go home. It was raining, but the sitter’s house was only five blocks away. Wells, a visiting scholar at George Washington University in Washington, D.C., wanted to know more. She wondered: Who were these people who were willing to drive such a short distance, and for so little money?
Wells teamed up with fellow GWU researcher Declan Cullen and Kafui Attoh, a professor of urban studies at the City University of New York, to find out more about Uber drivers. The researchers were particularly interested in discovering the extent to which economic inequality was a condition for the rise of Uber, and in turn whether gig jobs would affect a household’s economic stability. A grant from the Ewing Marion Kauffman Foundation allowed the team to explore these questions via surveys and 40 in-depth interviews with drivers in the Washington, D.C., area. This is, according to the researchers, one of the first studies about the rideshare industry to draw from interviews with drivers themselves. (We’ve excerpted some of the drivers’ responses below.)
This fall, Wells and her colleagues will release the first of three papers based on this research. CityLab sat down with Wells to learn about the study, the drawbacks of driving for Uber, and what cities can do to protect the rights of rideshare workers.
Uber’s website attracts drivers with the line, “Drive when you want, earn what you need.” What are the benefits and costs of such flexibility?
We found that the cost of that flexibility is significant. Uber promises a lucrative job based on a flexible schedule, but drivers are basically responsible for all of the costs of running a car service. They have to pay for the car, insurance, cleaning, and whatever else comes up, while Uber retains control over the compensation. And if a driver is sick and unable to work, or gets in an accident, there are no protections in place.
In addition, many of the drivers we interviewed conform to when Uber wants them to drive. Uber raises or lowers its pricing based on an algorithm that’s linked to supply and demand. So though Uber says you can drive whenever you want, drivers often only work from, say, 7 a.m. to 11 a.m. or from 3 p.m. to 8 p.m., because fares are too low at other times. Even then, drivers can have a hard time finding riders; those “dead miles” and “dead hours” cut into their earnings, and are hard to anticipate. Getting to decide one’s own schedule seems like a red herring because a driver ends up ceding control over the things that matter most.
Are drivers aware of how Uber works, and the particular pitfalls?
Drivers generally don’t have a full picture of the system—and can’t, because Uber limits access to a lot of the information or makes it difficult for drivers to digest. For instance, the majority of drivers we interviewed weren’t sure how much commission Uber takes for each ride, or whether Uber takes its booking fee before or after the commission. And these drivers didn’t have a strong sense about whether they need commercial rideshare insurance—which they do, as although Uber generally provides such insurance, its coverage is limited. The problem is not just that Uber has a lot of fine print. The rules about fares, bonuses, and fees are constantly changing.
It was shocking, but understandable, that drivers didn’t really understand how much they were earning. It’s a laborious process to figure what you need in terms of coverage, what you’re making, and, most importantly, your expenses. There were uncomfortable moments in our interviews when we asked drivers about their earnings. After we would go through a list of expenses, some drivers realized that they were making only a little more than minimum wage.
You and your colleagues also found that Uber encourages its drivers to take out car loans that are comparable to subprime mortgages.
Uber needs more and more drivers, so it will take drivers without cars. Uber offers drivers loans at high interest rates. And, if a driver can’t lease a car that way, Uber directs would-be drivers to Enterprise Rent-a-Car, which leases cars at even higher rates with even lower credit barriers. Parallels to the subprime mortgage industry are useful, as these drivers don’t have a lot of information about the purchase of their car—much in the same way that first-time homeowners weren’t really sure what they were buying. Uber creates a debt-to-work pipeline. The drivers are taking on significant financial risks to get the chance to earn a wage.
We spoke to one woman who had taken out one of these leases. Not long after she started paying for the loan, she had trouble earning enough through Uber to make her payments or pay for groceries. She eventually returned the car, and believes she is worse off financially as a result.
Being a taxi driver can be a precarious undertaking, but driving for Uber is riskier. Can you explain?
There are some similarities between taxi and Uber drivers in that they are both independent contractors, but the difference in how they are regulated is stark. Every city has legislation around taxi drivers, which is there to protect public safety as well as help make it possible for drivers to earn a living. For instance, cities limit the number of taxi drivers that can be on the road at any one time, and they limit the number of hours in a row that a taxi driver can work. Uber is exempt from these kinds of regulations. And it shows: One of the Uber drivers we spoke to fell asleep at the wheel after working 16 hours straight.
What can be done to make rideshare companies better employers?
The biggest thing is for Uber to recognize their drivers as employees so that they are entitled to workers’ compensation, sick days, and the like—just like any employee. But this is also the least likely thing to happen in the near future. Other fixes would involve allowing drivers, whether or not they’re recognized as employees, to address problems in courts, rather than requiring arbitration, and in union actions. Seattle has started to go down this road by allowing drivers to form associations and, hopefully, build bargaining power.
A more likely path to improvement will be a crackdown on the subprime auto leasing. Getting rid of these practices would dramatically affect the chances of financial success for Uber drivers, because it would make the costs of leases more legible. Until these things happen and the working conditions of Uber are addressed, cities should not partner with Uber for any public transit provision unless they want to underwrite poor-paying jobs. Workers should also be very careful about driving for rideshare platforms—Uber or otherwise.
What’s your advice for Uber passengers?
If you can’t find a co-operative taxi company, get in the Uber as soon as it shows up. The drivers don’t start earning a wage until you actually enter the car. Tip big, and in cash. And skip the ultra-cheap Uber Pool option, which makes it even harder than it already is for drivers to scrape together a decent wage.