In July, an Uber driver we’ll call Dave—his name has been changed here to protect his identity—picked up a fare in a trendy neighborhood of a major U.S. metropolitan area. It was rush hour and surge pricing was in effect due to increased demand, meaning that Dave would be paid almost twice the regular fare.
Even though the trip was only five miles, it lasted for more than half an hour because his passengers scheduled a stop at Taco Bell for dinner. Dave knew sitting at the restaurant waiting for his fares to get a Doritos Cheesy Gordita Crunch or whatever would cost him money; he was earning only 21 cents a minute when the meter was running, compared to 60 cents per mile. With surge pricing in effect, it would be far more lucrative to keep moving and picking up new fares than sitting in a parking lot.
But Dave, who was granted anonymity out of fear of being deactivated by the ride-hail giant for speaking to the press, had no real choice but to wait. The passenger had requested the stop through the app, so refusing to make it would have been contentious both with the customer and with Uber. The exact number varies by city, but drivers must maintain a high rating in order to work on their platform. And there’s widespread belief among drivers that the Uber algorithm punishes drivers for cancelling trips.
Ultimately, the rider paid $65 for the half-hour trip, according to a receipt viewed by Jalopnik. But Dave made only $15 (the fares have been rounded to anonymize the transaction).
Uber kept the rest, meaning the multibillion-dollar corporation kept more than 75 percent of the fare, more than triple the average so-called “take-rate” it claims in financial reports with the Securities and Exchange Commission.
Had he known in advance how much he would have been paid for the ride relative to what the rider paid, Dave said he never would have accepted the fare.
“This is robbery,” Dave told Jalopnik over email. “This business is out of control.”
Jalopnik asked drivers to send us fare receipts showing a breakdown of how much the rider paid for the trip, how much of that fare Uber or Lyft kept, and what the driver earned.
Of all the fares Jalopnik examined, Uber kept 35 percent of the revenue, while Lyft kept 38 percent. These numbers are roughly in line with a previous study by Lawrence Mishel at the Economic Policy Institute which concluded Uber’s take rate to be roughly one-third, or 33 percent.
Those take rates are 10.6 percent and 8.5 percent higher than Uber and Lyft’s publicly reported figures, respectively.
“This is really fascinating and troubling,” said Sandeep Vaheesan, legal director of the Open Markets Institute, a nonprofit studying corporate concentration and monopoly power, when briefed on Jalopnik’s findings. Vaheesan went on to say the findings “support the argument that their business model is built on large scale labor exploitation.”
Don’t support Uber or Lyft, and if you live in California, contact your legislator to support the legislation classifying gig economy employees as employees.
It seems that all of the “gig economy” business plans are centered on cheating someone or other.