The opportunity to “be your own boss,” make your own hours and work as much or as little as you like may sound like a dream. That’s what rideshare services like Uber and Lyft purport to offer their drivers. But can you really drive full-time for these companies and make a living?
While there are some interesting budding rideshare apps (i.e. Ziro in San Francisco), the only nationally available rideshare companies at this time are the giants Uber and Lyft, so we’ll focus our attention on them.
Pay Structure
The first thing to note here is that it’s incredibly difficult to measure what kind of pay drivers receive from rideshare apps. How much you make can vary wildly depending on a number of factors including:
- Location
- Time of day
- Number of rides booked
- Distance of rides
- Tips
- Surges
- Service (i.e. UberX vs. Uber Black)
- Incentives earned
- Demand
- Cancellation Fees
Uber and Lyft have their own algorithms based on these factors and more that determine how much a driver earns for each ride. But the companies have remained fairly cagey when it comes to details of how their pay structures actually break down, and they often update these formulas, sometimes to the apparent detriment of drivers’ earnings.
It’s also a challenge to nail down an accurate approximate hourly rate since sites like Glassdoor, Indeed, and ZipRecruiter don’t allow drivers to specify whether they’re inputting earnings before or after subtracting the appreciable costs of doing this type of job.
Costs
Rideshare drivers are wholly responsible for paying for their own:
- Gas
- Vehicle maintenance
- Insurance & car payments
- Tolls
- Permit and license fees
- Self-employment tax (15.3% of income)
Generally, the industry standard is to budget roughly 20-30% of rideshare earnings for these expenses, but this amount can necessarily fluctuate due to things like insurance markups and rising gas prices. Currently, the war in Ukraine and other inflationary conditions have caused gas prices to rise nearly 50% from a year ago. Though this may prove to be a temporary increase, it’s severely affecting drivers’ ability to make an income.
Rideshare pay and expenses being as variable and unpredictable as they are, we can do our best to estimate potential income, but we should look at these numbers within the context of an ever-changing economic climate, dynamic pay policies, and other uncontrollable circumstances.
How Much Do Rideshare Drivers Actually Make?
Both Lyft and Uber appear to have a history of exaggerating earnings potential for their drivers. Numbers like $29.47/hour and $55,000/year have been floated by each company respectively, while external reporting paints a much less rosy picture.
Even looking at pre-pandemic stats (more relevant to us than 2020 and 2021 data as the world continues to return to normal levels of rider demand), we see that rideshare drivers have been grossing relatively low hourly wages for some years now. A Gridwise study conducted in 2019 found that rideshare drivers in the U.S. earned an average of $17.21 per hour before expenses. Once we factor in a 25% cut (extra rideshare costs tend to be 20-30% of earnings), we’re now looking at an hourly rate of $12.90 in that pre-pandemic year. Taking no vacations and working a standard 40-hour week, a driver could expect to make around $26,832 annually. In some U.S. cities and states this amounts to less than the minimum wage.
On the other hand, some drivers have anecdotally claimed to make a very reasonable living in the rideshare space. Before the pandemic, one New York City rideshare driver said he averaged about $250 per 9-11 hour shift. Converting to a 40-hour work week and assuming you took no vacations, that would mean you could expect to make an annual salary of $52,000 driving in NYC in 2019 … before taxes and expenses. Assuming those cost you 25% of your earnings, you’re now netting $39,000. But even this amount does appear to be the exception to the rule. Notably NYC is one of the top 5 rideshare hourly earnings locations.
Pros and Cons of Driving for a Rideshare App
Pros
Cons
So, Can You Make a Living Wage Driving for Rideshare Apps Uber and Lyft?
The short answer is, in the right urban location and under the right circumstances, it’s possible — but generally, making a living solely on rideshare income would be a huge struggle. Take our pre-pandemic annual rideshare salary based on the Gridwise study mentioned above ($26,832) and compare that to the average cost of living for a single person in the United States. This cost is now estimated at $3,017 monthly, or $36,204 per year (note: this number varies a fair amount by state and city. For an estimate of your area’s cost of living, click here). The discrepancy between these figures tells its own story.
You should also remember that as a driver, you’d be classified as an independent contractor and therefore any desired medical insurance, retirement savings and other benefits usually provided by an employer would be deducted from your annual profits.
While there are clear advantages to being a rideshare driver — making your own hours, being your own boss, etc. — in many cases, you’d be better off looking for full-time work elsewhere, and perhaps supplementing your income with some rideshare hours on the side. Depending on where you live, you could potentially be making more at a minimum wage job, with the added bonus of employee benefits.