Uber and Lyft Fares Skyrocketed But Drivers Didn't See all the Benefits, Study Says

The cost of an Uber or Lyft ride has skyrocketed as the firms seek steady profitability, but workers aren’t getting a proportional share of the spoils. A report released last week by the UCLA Labor Center found that Uber and Lyft took an even larger share of drivers’ profits as fares increased in recent years. 

Between February 2019 and April 2022, “median driver pay increased by 31% compared to an increase of 50% for median passenger fare,” according to the report, which parsed data from 50 million trips. 

The researchers looked at data from New York City Taxi & Limousine Commission’s High Volume For-Hire Vehicle trip database, composed of data points that Uber and Lyft are required to turn over to the TLC, the agency that regulates all of NYC’s for-hire vehicles. The researchers looked at monthly data from February 2019, October 2019, April 2020, and April 2022, excluding certain types of rides where the fare range varied greatly.

They found that in February 2019, the median driver pay per trip was $10.99 and the median passenger fare was $12.22. By April 2022, that gap had grown; the median driver pay per trip was $14.41 and the median fare was $18.39. Uber and Lyft’s share of profits from each ride increased from 9 percent in 2019 to 20.7 percent in April 2022, researchers concluded. 

In 2018, New York City approved a base pay of at least $17.22 an hour for app-based for-hire-vehicle drivers. It came after a report commissioned by the city found 85 percent of drivers were making less than the $15 minimum wage. The minimum base pay, with rates set per mile and per minute, was increased by 5.3 percent in 2022 and again in February 2023, with a larger increase to address rising gas prices still being debated. While Uber and Lyft opposed setting a base pay at the time, the companies have increased their revenue and share of profits since the rules were outlined, according to the UCLA report.

In a response to Motherboard, an Uber spokesperson disputed the researchers’ findings. “Without crunching the numbers it is hard to know exactly where these students failed to carry the one,” Uber spokesperson Freddi Goldstein said in an email to Motherboard. (Two of the report’s authors are graduate students, but the UCLA Labor Center’s research director, Saba Waheed, and senior research analyst Lucero Herrera, are also co-authors.)

 “Our take rate in April of ‘22 was 16.4%. In contrast, government imposed fees made up more than 18% of rider payments,” Goldstein said.

But one of the report’s authors, Vivek Ramakrishnan, told Motherboard that Uber’s numbers are different because the UCLA analysis deliberately excluded government-imposed fees, as they describe in the report. (In January 2019, NYC began issuing a $2.75 surcharge on for-hire vehicles for all trips below 96th Street, its “congestion zone.”)

“We were excluding mandated taxes, fees, congestion fees, surges and tips from our analysis,” Ramakrishnan told Motherboard. “We were just looking at the base pay and the base passenger fare.” Ramakrishnan says that the TLC reviewed the dataset using the same methodology as UCLA researchers and reached the same numbers.  

The report’s data has some limitations, the authors say. There was no way to parse rides that were taken in different types of cars, such as an Uber XL or Lyft XL.

“Since the data are de-identified, meaning there are no markers to identify individual drivers, we were unable to calculate the number of trips each driver makes or total earnings per day or per hour,” the report says. The authors have requested more granular data from the companies to help with future research.

In an email to Motherboard, Lyft said, "Drivers have seen their earnings go up over the past several years, and with expenses like high gas prices starting to come down, they are now keeping even more. In fact, the TLC's own data shows driver earnings have consistently been above $1,100 per week since early 2021.”

Ramakrishnan said that nothing in their analysis disputes that Lyft and Uber drivers are being paid more; the report rather looks at the share of profits from passenger fares that the companies are taking. He also said there was not much variety in how much Uber and Lyft were taking from fares. “We found that there are pretty similar take rates between the two companies,” he told Motherboard. 

Uber successfully sued the TLC in December to block a pay raise that would have increased per-minute rates by 7.4 percent and per mile rates by 24 percent, although that pay raise may yet take effect pending a March 1 hearing. 

The UCLA report recommends policies to ensure that increases in driver fares lead to proportionate pay increases for drivers. They also ask that the companies “increase transparency and provide drivers full access to their trip data.” 

The lack of transparency about pay was also reflected in a research study published last month that found for-hire vehicle drivers often felt like they were “gambling” due to arbitrary fluctuations in pay.

In a statement to Motherboard, Lyft said that “Commission caps like those discussed in the report only serve to dramatically increase rider prices and depress demand, disproportionately hitting lower-income communities and leading to fewer rides that ultimately undercut driver earnings overall."

Ramakrishnan said that the increase in profits at Uber and Lyft since the wage floor laws were implemented show that  “these policies wouldn't be bad for Uber’s bottom line.”