How Rideshare Platforms are Lying to Everyone
The last time I flew out of DIA, my Uber app showed a fare just short of 80 dollars for the 30 minute ride to the airport; my driver only kept 30 dollars of that fare, pre-tip. But neither the driver nor me knew the full story here. Until I asked him how much he was paid, I didn’t realize that over 60% of my money went to Uber’s corporate profits, not to the person who helped me with my luggage and got me to the airport on time.
If I hadn’t asked (risking my partner ditching me to make our flight on time) I wouldn’t have seen how little the driver actually kept; he probably would have thought I got a cheap ride, and I would have assumed he made a hefty profit off my 30-minute trip. The sliver of data that the rideshare platform lets us see paints a very different picture than the dirty truth of this app-based work. Drivers work around the clock to get us home safely when it’s 2am, or help us get where we need when our car unexpectedly gives out. Yet, their employers provide little to no transparency or accountability for them. Instead, big gig companies harvest on-the-job data to deploy algorithms and coercive incentives that deprive drivers of stable income, job security, discrimination protections, or informed consent when agreeing to the next gig.
CFI’s recent analysis of local data, and a growing body of national studies, affirm that Colorado drivers and their families face high rates of economic insecurity and material hardship as a result of opaque, exploitative policies used by rideshare corporations to spike your fare while suppressing driver’s earnings.
While platforms like Uber and Lyft promise drivers high pay, a recent CFI study found that Denver drivers make an average wage of just over $10.50 an hour once we account for the out-of-pocket expenses like gas and car maintenance, and uncompensated working time when drivers head to the next gig, or “deadheading time.” This runs contrary to the $30/hour in potential earnings touted by the industry, and a fraction of the state and local minimum wage.
Most drivers aren’t part-time workers or college kids earning extra beer money; a 2022 survey found that 6 in 10 drive to support a child or adult at home. Drivers receive just under 80% of their weekly income from app-based work on average, and work a median of 38 hours a week; despite driving full-time, hourly wages fall woefully short of what’s necessary for a family to achieve economic self-sufficiency.
A “take rate” is the portion of what consumers pay that goes directly to rideshare platforms. These can be between 50-70% of the rider’s fare, but this data isn’t publically available. Using local trip data, CFI’s new analysis estimates that if current take rates were 25% lower in the state, a rounding error relative to the rideshare company’s international profits, Colorado drivers would earn over $10 more per hour- that’s $20,000 more each year to care for their families and $769 million more in economic value that’s currently leaking out of our state.
High take rates and out-of-pocket costs eat away at drivers’ earning opportunities, but riders only see the total amount they pay. This creates an information gap that harms drivers when it comes time for consumers to decide how much to tip. Tips have a large impact on a driver’s ability to put food on the table; over one-fifth of the typical Denver driver’s income came from tips.
Researcher Veena Dubal shows that corporations like Uber and Lyft use coercive incentives and hidden algorithms to differentiate fares and suppress wages in ways unknown to workers and riders, while the apps hide data to prevent consumers and workers from seeing the other side’s perspective so the public won’t catch onto the exploitation going on behind the curtain of these apps. The result is what scholars have called a “tacit oligopoly of high prices and low pay” that harms drivers and consumers alike, and we also know that the rideshare companies are claiming an increasing share of workers’ earnings. Coloradan workers and riders deserve full information, so they can decide for themselves if they’re getting a fair deal.
In addition to the income volatility that drivers see as a result of high take rates, bearing the brunt of out-of-pocket costs, and the company’s covert methods of algorithmic wage discrimination, drivers are also at risk of being “deactivated” from the app (and therefore losing their livelihood) over discriminatory complaints, with no process for recourse. Over 1 in 5 Denver drivers report being discriminated against on the basis of their identity, and the majority of drivers are workers of color. We also know that 15% of Denver drivers report being terminated, with many facing predatory or unexplained termination from the platforms, and two-thirds of those drivers rely mainly on gig income to make ends meet. In other words, we may see that riders might rate drivers of color with lower stars or raise arbitrary complaints rooted more in biases than the realities of their service, which can result in unjust terminations.
SB23-098 corrects the information asymmetry that is harming working families and consumers and stymying the potential of our state’s economy. I know exactly my salary at CFI and you probably know yours too. There isn’t any black box that dictates how much you make each day. If there was, you’d want to know how that black box works.
