Methodology For Estimating Uber Drivers’ Hourly Net Earnings
Earlier this year, a source provided BuzzFeed News with three internal Uber spreadsheets — covering the company's Detroit, Houston, and Denver markets. Each of the spreadsheets contained, among other things:
Data on a sample of 10,000 Uber X trips taken during a two- or eight-week period in late 2015.
Data summarizing overall statistics (e.g., hours worked, number of trips, average fare, etc.) of contractors who made at least two Uber X trips during that same time period.
Together, the two datasets provided an unprecedented view of Uber drivers' earnings, time spent working, and miles driven. To estimate a typical full-time driver's hourly income (after expenses), BuzzFeed News independently analyzed the data.
After BuzzFeed News presented Uber with its findings, the company said that the spreadsheets were not fully representative of Uber drivers' activity in those markets. Among the key reasons:
In some markets, not all Uber X rides were counted for each driver, stemming from a quirk of how Uber organizes its data.
The driver data counted all hours worked but did not include fares from non–Uber X rides, such as Uber Select rides and Uber XL rides.
The data did not account for the specific Uber commission rates levied on each trip. (For example, new drivers in Detroit are assessed a 28% commission on Uber X trips, but drivers who joined earlier may incur a lower commission rate.)
Uber subsequently recalculated BuzzFeed's estimates using a broader and more detailed set of internal data — which it declined to share directly with BuzzFeed News. The company did, however, conduct this recalculation according to BuzzFeed News' methodology and in the presence of a BuzzFeed News editor and reporter. Those calculations used the same basic methodology as BuzzFeed News' calculations did, but with the advantage of access to all Uber "peer-to-peer" trips (which exclude Uber Black and Uber Taxi trips), drivers' actual commission rates, and additional payment details (which take into account, for example, reductions in payment that result from passenger complaints).
To be sure, not all drivers net the same hourly income; more experienced drivers may, for example, gross more fares per hour or manage their expenses more carefully. And, because the Uber spreadsheets reviewed by BuzzFeed News didn't contain hard data on each driver's expenses, this analysis relies on a few basic assumptions — based in large part on the same assumptions Uber used in its pricing models — which made it possible for BuzzFeed News to roughly estimate drivers' overall effective hourly wages.
Those assumptions:
Contractors drive a $16,000 vehicle, which has a 250,000-mile lifetime, resulting in depreciation costs of 6.4 cents per mile. (For each city, the Uber spreadsheets all assumed a 250,000-mile lifetime, but used slightly different car-cost assumptions: $20,213 in Denver, and $16,000 in Houston and Detroit.)
Gas costs drivers $1.75 per gallon, and the vehicle gets 25 miles per gallon of gas, resulting in gas costs of 7 cents per mile. (The Houston spreadsheet used these figures; the Detroit spreadsheet used $1.63 per gallon and 25 miles per gallon, while the Denver spreadsheet used $1.79 per gallon and 28 miles per gallon. Historical prices from GasBuddy.com show gas costing around $1.75 per gallon, or slightly higher, for the three cities in mid-December.)
Drivers incur no per-mile expenses while not matched with a ride request. This assumption underestimates total costs; the spreadsheets, however, provided no data on miles driven while not matched with a fare.
Insurance, maintenance, and miscellaneous costs add up to $3,000 per year. (Here, the data entered into Uber's internal spreadsheets varies somewhat widely: $6,000 per year in Detroit, $3,137 in Denver, and $2,500 in Detroit. We selected a conservative middle ground between these figures.)
A "typical" full-time contractor for Uber works for 40 hours per week, 50 weeks per year, which would translate to annual expenses accounting for approximately $1.50 per hour ($3,000/2,000 hours) in each market.
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