Ride-hailing contract drivers for companies like Uber and Lyft are getting squeezed, at least in Los Angeles, according to a new report that UCLA researchers released on Wednesday.
For two-thirds, driving is their main source of income, but 44 percent say they have trouble paying for gas, insurance, and car maintenance, meaning that profits are slim for too many. With 260 completed surveys and only eight in-depth interviews, some salt taken with the results is advised. Still, the data is disturbing enough to raise questions.
Uber, Lyft, and other ride-hailing businesses have framed driving as a path to self-employment, with flexible hours for people who want to make some good money on the side.
This isn't the first report to question the viability of a driving career. Some have found that the majority of drivers make less than their state minimum wage. There have also been reports that drivers try to game the system and increase their income.
L.A. isn't a stand in for every other location in the country. Known for massive automotive congestion, the city has a relatively extensive public transport system that the population largely ignores. People love traveling by car, and services like Uber and Lyft have helped decline public transportation use.
Perhaps that is why so many of the drivers are full time. As the study from UCLA's Labor Center, Labor and Workplace Studies Minor, and Institute for Research on Labor and Employment stated, "Because of its high population density, an increased demand for service work, and an emergent desire for more independent working conditions, Los Angeles is an ideal site for on-demand ride-hailing companies."
But what has caused the type of service to flourish hasn't provided a path to a prosperous future for many of the drivers. Those with additional jobs largely work in the service sector "just to make ends meet." More than half support at least one other person and 35 percent support families with at least one child. Sixty percent of the contractors drive more than five days a week, and almost half drive at least 35 hours a week. Drivers are likely to be immigrants and older.
The problem the drivers face is high fixed business costs, increasing variable costs, and no control over pricing, while the companies want to keep fares low to attract more users.
A third of the drivers either bought or leased a car for work. Most drivers have made other purchases, like cell-phone mounts, mats, and seat covers. More than three-quarters of the drivers provide water, cell-phone chargers, candy, or other amenities. About 57 percent had major car maintenance costs that came out of their gross earnings.
For the many who can't make enough to keep up with car expenses, a large portion work longer hours or take out loans or credit card debt.
Almost half of drivers think they're not getting the pay they earned because of shifting prices and terms from the companies. Half said their contract conditions had changed since they started.
There's also a degree of unrealistic expectation among the drivers. They want to control their work, like pricing (which must be a major consideration for any self-employed person), but they also want the benefits of being employees. Almost all want workers' comp and health care coverage, although that is something the self-employed must make enough to cover out of revenue while still leaving money for income, profits, and taxes. Right now, almost half get notifications from the companies when the app is off, trying to nudge them into driving more.
These sound like nightmare conditions for someone who wants to actually run a business. You're neither really self-employed nor are you an employee. It's like a "de-employified zone."