Why Some Sharing Economy Jobs Aren’t All They’re Cracked Up To Be
Why $90K for being an Uber driver isn’t attainable
According to Uber, a New York city driver can rake in an estimated $90,000 annually for driving for them.
Seem too good to be true? It probably is, as shown through research by Princeton professor Alan Krueger, an economics and public affairs specialist. Last year, Uber reported that the mean salary for drivers in Manhattan was a little over $90K and close to $75,000 in San Francisco, two of the busiest cities for the company. A survey by the firm Requests for Startups (RFS) showed that the median pay for sharing economy drivers averages to about $25 per hour. At this rate, not even a 70-hour work week would accumulate to the $90K that Uber released as their median salary for NYC drivers. Krueger’s research exposes that average Uber drivers make closer to $17-22 per hour, still a higher wage than taxi drivers in the same cities. According to a chart distributed by the Bureau of Labor Statistics, Uber drivers are making double, if not more than double, in most cities when compared to licensed taxi drivers.
But these numbers don’t take into account all that independent contractors are dealing with when becoming drivers for Uber. Gas, tolls, car payments, auto maintenance and others are among the list of things that private drivers must deal with when not directly working for the company as a full fledged employee. These added expenses extend to other “gig economy” companies as well, including TaskRabbit, Rover, and Lyft.
There’s concern on the part of the Department of Labor about companies like this claiming employees as private/independent contractors. There’s a wide array of issues regarding this mislabeling of employees/independent contractors, according to Department of Labor administrator David Weil. “When employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation.”
Postmates is another example of a gig or on-demand economy company in which people can order food from a large variety of restaurants and have it delivered to their door. Charles Perry is a bicyclist delivery man for the company in Chicago, and claims that his weekend hours add up to only “beer money”. It’s not Perry’s only source of income, but he says that if it were, “I’d be concerned.”
Perry isn’t the only one who feels somehow misled by the offers put out. Uber’s campaign relies heavily on the phrase “earn great money” while TaskRabbit claims that “TaskRabbit is the smart way to work [and helps] build your business.”
An anonymous woman who works for Rover, a pet sitting company in the same business format as other sharing companies, said she makes good money doing what she does, but that she didn’t file for taxes. The woman made an estimated $8K-$10K between Thanksgiving and Christmas of 2014. But she hadn’t hired an accountant because she was unaware the company didn’t deduct taxes on their own. “We didn’t have to fill anything out through Rover,” she explained. “I don’t know how any taxes will be deducted.”
Lots of sharing economy companies are making it big. Uber and AirBnB are both on Forbes’s Unicorn List of startups worth a billion or more. But their public offers of making an average of $90K a year as a driver may not be exactly the case.