The statistic from the Pew Research Center is astounding. As of 2021, 16% of the US population has at least experimented with earning money from an online gig platform. That’s almost one out of every six people in the US who has worked for a gig platform. Driver earnings data, however, tells an additional story.
There are numerous reports that many drivers don’t even earn minimum wage. The post-COVID-19 impact of inflation on gig work has devastated many drivers. Gig worker earnings have not kept up with inflation.
In this report, Gridwise Analytics looks at gig driver pay. It’s an accurate picture because the Gridwise app captures aggregated and anonymized data from over 500,000 gig drivers across the various gig apps they work for. This intel allows analysts to see the volume of trips and wages drivers earn, including tips. Gridwise Analytics breaks it down based on hourly earnings and earnings per trip.
The topics we will cover include
- Driver earnings data: What are gig drivers making?
- What are the other factors affecting driver pay?
- What kinds of gig driver regulations are we seeing from states and municipalities?
- What do gig platforms say regarding higher wages for gig workers?
Driver earnings data: What are gig drivers making?
Rideshare
This driver earnings data, derived from aggregated data, is from major gig driving platforms in the rideshare industry, covering 2022 and the first nine months of 2023.
Rideshare driver hourly wages started about $21.00 an hour in 2022. By the end of Q1, earnings were almost $24.00 an hour. By June, however, hourly earnings dropped to $19.70 by Q3 2023 (a decline of 6.2% from the start of the period). As of September 2023, earnings increased to just over $20.00 an hour.
The average number of trips to earn this money had ups and downs but began and ended the period at about the same level. For example, drivers averaged 117 rides a month in January 2022 and 120 rides a month in September 2023.
Rideshare drivers faced an 8% decline in gross earnings per hour year-over-year while the number of trips remained fairly steady.
Gridwise Analytics 2023
Food delivery
These figures reflect driver earnings data in the form of average gross earnings for food delivery drivers over the same period. Our data is recorded from all major food delivery services across the US.
Although demand went up and down throughout the period, it began and ended at almost the same level. Driver earnings went down, however, starting at over $17 an hour and ending at less than $16 an hour. As with rideshare, drivers are driving the same but earning less money.
Gridwise Analytics 2023
Grocery delivery
Pulled from Gridwise Analytics driver earnings data, figures for major grocery delivery services show average gross earnings across the US, including Shipt, Walmart Spark, and Instacart, again covering the same period.
Many thought that the end to the most severe part of the pandemic would spell doom for the grocery delivery industry, but quite the opposite is true. Trips for grocery food delivery during this period of inflation increased 44% from January 2022 through September 2023. Driver pay, however, declined about $1.00 an hour.
Gridwise Analytics 2023
Summary
Gig drivers across all categories worked harder to see their earnings remain the same—or worse, decrease. In the meantime, inflation during these 21 months was up 9.5%.
Fuel costs are also high, with the national average price of $3.584 per gallon, recorded by AAA on October 17, 2023. The average per-gallon price in California was $5.589. In New York, it was $4.149. By the time gig drivers subtract fuel costs and depreciation on their cars from the massive number of miles, many are lucky if they make minimum wage in the area where they live.
Conversely, the data show that the trip volume for rideshare and food delivery remains almost unchanged. In addition, inflation and higher fuel prices mean net earnings after expenses are considerably lower.
- 29% of gig workers do not even earn minimum wage in their state (Economic Policy Institute).
- Many New York delivery drivers report earning an average of $11.12 per hour after expenses, again below minimum wage (New York City Department of Consumer and Worker Protection).
- Chicago Uber and Lyft drivers average $12.72 hourly after expenses (Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign).
What are the other factors affecting driver pay?
The issue of more compensation for gig drivers and other benefits is complicated. Both the drivers and tech companies employing gig drivers make important points.
Drivers and the companies employing them like the freedom and flexibility
Gig driver stories almost uniformly tell how the flexibility and freedom of their work are key benefits. They drive when they want to and don’t drive when they don’t want to. Drivers are motivated by earning as much as possible and keeping their customer ratings at or near five stars.
I went on a three-week vacation that my wife and I had been planning for a long time,” said one Southern California driver. “I didn’t have to ask for the time. I just shut the app off. When I turned it back on three weeks later, it was as if I was never gone. And the freedom was great. In the fifteen months I drove, ending with the pandemic, I never talked to a supervisor. There are no supervisors. I occasionally texted about a found item or a difficult customer through the app, but that was it.
Gig platforms prefer the freedom and flexibility, too. Letting drivers have their autonomy bypasses the requirement for a field-management crew.
There are concerns about how employee status for drivers would change that dynamic, both for drivers and the companies. There are many questions and few answers.
Gig drivers have limited access to benefits commonly enjoyed by regular employees
Since before the pandemic, labor groups and driver advocates have been pushing companies to employ gig drivers to fund benefits packages, and there is frequent mention of a gig worker minimum wage.
What kinds of gig driver regulations are we seeing from states and municipalities?
Reports of low earnings, driver deactivations, and other occurrences have created many activist drivers, gig worker rights groups, and other advocates. They have made significant inroads in legislation affecting gig workers.
Seattle gig laws. In 2022, the Seattle City Council passed minimum pay rules for food delivery apps, requiring a minimum wage of $17.27 an hour. This follows other City Council legislation passed in 2019, and later statewide legislation that guarantees rideshare drivers are paid wages equivalent to Seattle’s minimum wage.
More recently, the Seattle City Council followed up with legislation that placed specific requirements for gig platforms before they deactivate drivers, including a 14-day notice and a review process by a human rather than solely relying on artificial intelligence. Washington State is also considering legislation addressing portable benefits for gig workers.
New York gig law. Proposed legislation in New York City would grant food delivery drivers a minimum wage of $17.96 an hour. The food delivery companies requested and received a temporary restraining order that kept the ordinance from going into effect. This follows 2019 legislation guaranteeing rideshare drivers a minimum wage equivalent to that of other New York City workers.
Chicago gig law. Crain’s Chicago Business reports that the Chicago City Council is considering an ordinance that would guarantee rideshare drivers a minimum of $7.00 per ride, allowing for higher rates if a per-mile or per-minute rate dictates a fee greater than $7.00. The minimum per-mile rate would be $1.85, with a minimum per-minute rate of $0.65. Rates would increase annually based on inflation. You can view the proposed ordinance on the web page of the Chicago Gig Alliance.
California’s AB5 gig-worker law. Gig drivers across the US celebrated the passage of AB5 in 2019 in the California State Legislature. The law restructured the California Labor Code and moved toward making gig workers eligible for employee status.
For those curious about how California’s AB5 law affected Uber and Lyft driver pay, we’ve yet to see. In 2020, Proposition 22 passed by voter referendum, exempting Uber and Lyft from AB5. The battle over Prop. 22 was the costliest in California history, with more than $181 million spent to pass it, according to the Los Angeles Times. Also, according to the Times, Uber contributed $52 million toward passing the measure, Lyft spent $49 million, DoorDash contributed $48 million, and Instacart pitched in $28 million.
Nolo.com reports that in 2021, California’s Supreme Court ruled Prop. 22 unconstitutional. An appeals court turned over much of that decision two years later. Major rideshare and food delivery companies are still free from any AB5 limitations.
These are just the significant pieces of legislation in the US. There are others, far too numerous to report in this blog post.
What do gig platforms say regarding higher wages for gig workers?
Many rideshare and delivery companies maintain that increasing gig driver pay, including administrative costs, will require them to raise prices to the end user. CFRA research analyst Angelo Zino told CNBC.com that the increase would likely be from 10 percent to 30 percent.
Will rate increases create a drop in business for technology companies?
Gridwise Analytics data shows that even with the Seattle gig law and the New York gig law requiring a gig worker minimum wage, the percentage of demand for each of those respective cities has not appreciably changed in almost three years. Minimum wage requirements appear not to have had any affect on demand in these areas.
Gridwise Analytics 2023
One aspect to consider is how much rideshare and food delivery has become a part of American life. Here are a few statistics:
- Lyft revenue of $1.021 billion in Q2 2023 represented a 3% year-over-year increase. Rideshare rides were up 18% year-over-year (Lyft second quarter financial highlights).
- For Q2 2023, Uber Technologies, Inc. posted a net profit of $394 million (Uber second quarter financial results).
- DoorDash orders total orders for 2023 Q2 were 532 million, an increase of 25% year to year. Gross order value jumped to $16.5 billion, a 26% year-to-year increase (DoorDash second quarter financial results).
- New installs of the consumer apps for the food delivery companies peaked during the pandemic. Although they have decreased since then, they are still higher than pre-pandemic levels (Adjust).
Americans have come to rely on rideshare. In their daily routines, they use it to get to work, the airport, entertainment spots, and other destinations.
As for consumer delivery ordering habits, these show little impact during the recent high inflation, as illustrated by the DoorDash numbers. Whether a rate increase by these companies will make a difference remains to be seen.
Partner with Gridwise Analytics
“What can be measured can be managed.” —Peter Drucker
Thanks to accurate data from Gridwise Analytics, we see a much clearer picture of the state of gig driver pay.
Decision-makers within various gig platforms have access to well-rounded information, helping them determine how to structure compensation and create programs to increase driver loyalty, optimize driver recruitment, and deliver even better service and value to end users.
Hedge fund managers, venture capitalists, and equity research firms can better understand how driver earnings impact costs and consumer demand for gig platforms. They can leverage Gridwise’s unique dataset to predict quarterly business volume for public companies, identify the fastest-growing private companies to invest in, or determine the most and least used gig services by region to improve investment decisions.
This data also provides unique and valuable insights for companies serving the broader transportation infrastructure, showing how people and goods move from one location to another. Indeed, companies involved in electric vehicle charging, autonomous vehicles, and highway and city planning have benefited from Gridwise Analytics transportation analytics.
Analysts can see where trips originate and end, and the primary travel corridors. Data researchers can sort this information to reflect daily, monthly, and annual patterns.
For a demonstration of how Gridwise Analytics vehicle trip data can sharpen your transportation analytics, contact us below.
