A recent MIT study stating that median profit for Uber and Lyft drivers was $3.37 an hour caused a stir. Many people have driven for either or both, whether to make some extra money, to develop a side hustle, or to go all in and make a business of it.

Lord knows, financial issues have been large for the companies. Neither has hit a profit yet. Last fall, Uber needed even more investment after the first $11.6 billion it had raised. Turnover has been high among rideshare drivers, and income, not as juicy as people had thought it would be -- or were led to believe. However, it turns out things aren't close to as grim as the study suggested.

In a painfully embarrassing move, after receiving a letter from Lyft questioning the study's conclusions, Stephen Zoepf, executive director of the Center for Automotive Research at Stanford University and lead author of the MIT Center for Energy and Environmental Policy Research (CEEPR) paper, walked back the study's results.

Uber chief economist Jonathan Hall had addressed some methodology problems that he saw in the study. A question in which drivers were asked how many hours they worked in a month was ambiguous: "How many hours per week do you work on average? Combine all of the on-demand services that you work for." If, as many do, the drivers worked part time on the side but provided all their hours of work, including those at a separate main job, the money per hour would be lower than it might actually be. Hall claimed there were also some significant flaws in how researchers calculated the final figures that led to invalid results.

Hall did write: "It is important to note that we do not take issue with the paper's estimation of costs. They are very much in line with previously reported costs associated with driving."

According to Zoepf's post, Hall had some valid points, so Zoepf recalculated the results using two different methods. The first method in a recalculation showed median profit (revenue minus costs) for the drivers was $8.55 an hour, not the originally reported $3.37. Only 8 percent of drivers lost money rather than 30 percent. And the number of drivers making less than their state's minimum wage was 54 percent, not 74 percent.

With the second method, median profit was $10 an hour. Forty-one percent of drivers made less than their state's minimum wage and 4 percent lost money.

Lyft sent a statement that read in part, "While the revised results are not as inaccurate as the original findings, driver earnings are still understated."

Zoepf wrote "unequivocally that this work is mine" and that the MIT connection happened from his time as a post-doc at CEEPR, which published the report as a working draft with the assumption that there could be feedback.

For someone looking to run a side hustle, however, the profit levels should be much higher. Even $15 an hour is not a lot when you own the business and are responsible for all aspects of it.

Published on: Mar 6, 2018