Gig Passenger and Delivery Driver Pay in Five Metro Areas

Press Coverage

Abstract

Proposition 22, the gig company-sponsored 2020 California ballot measure, promised that drivers would earn at least 120 percent of local minimum wages. Yet little is known about whether drivers earn these amounts. In numerous other jurisdictions, policy initiatives to regulate the pay of gig drivers have been hampered by the absence of systematic data on drivers’ working time, earnings, tips, and expenses. To fill these data gaps, we analyze data on 52,370 trips by 1,088 drivers who worked on six passenger and delivery platforms in five major metro areas. We examine earnings using a variety of measures. One key measure is earnings, after expenses, over a driver’s entire shift. Using this measure, a majority of drivers in each of the five metro areas earned less than the applicable minimum wage.

A second key measure, employee-equivalent earnings, further adjusts net earnings to account for the cost of employer payroll taxes that drivers must pay and for the value of mandated employee benefits. Among gig passenger drivers in California, the median hourly employee-equivalent wage equaled $5.97 without tips and $7.63 with tips. Even with adjustment payments to drivers who earned less than Proposition 22’s guarantees, passenger drivers in California earned less than their counterparts in Boston, Chicago, and Seattle.

Tips, which are explicitly excluded from the Proposition 22 guarantee, play a much larger role in the net earnings of gig delivery workers. The employee-equivalent pay of delivery workers in California equaled $4.98 an hour without tips and $11.43 with tips, well below the minimum wage. These results suggest that Proposition 22-type initiatives underway in other states may not adequately increase sub-minimum compensation rates and that most drivers would be better paid as employees than as independent contractors.

Key findings

  • We analyze data on gig passenger and delivery driver earnings in January 2022 in the Boston, Chicago, Los Angeles, San Francisco Bay, and Seattle metros. The typical passenger and delivery drivers earned less than the applicable minimum wage in all five metros.

Passenger drivers

  • After expenses and excluding tips, passenger drivers’ median net hourly earnings equaled $7.12 in California and $10.64 in the metros outside California.
  • Employee-equivalent pay—which adjusts drivers’ net pay for employer payroll taxes that drivers must pay and mandated employee benefits—equaled only $5.97 in California and $9.18 across the other metro areas. Tips added about 20 percent to these amounts.

Delivery workers

  • Tip income is an integral part of delivery drivers’ pay. Delivery workers’ median net hourly earnings, after expenses and excluding tips, equaled $5.93 in California and $0.48 in the other metro areas. Including tips, median delivery driver earnings equaled $13.62 in California and $9.87 in the other metro areas.
  • Excluding tips, delivery workers’ employee-equivalent net earnings equaled $4.98 in California and $0.40 in the other metros. With tips included, the typical delivery driver earned an employee-equivalent wage of $11.43 in California and $8.36 in the other metro areas.

Impact of Proposition 22

  • In California, Proposition 22 adjustments (additional payments required of the gig companies when minimum pay mandates are not met) were more common for delivery drivers than for passenger drivers. Sixty-six percent of DoorDash drivers and 48 percent of Uber Eats drivers received Proposition 22 adjustments, compared to 5 percent of Uber drivers.
  • Even with Proposition 22 adjustments, but excluding tips, California passenger drivers earned less than their counterparts in the non-California metros. However, after including tips, the typical California delivery worker earned $3 more an hour than those outside California.

Read the full report.

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