What’s a fair minimum wage for drivers?
As some cities and states begin to grapple with this question, they’ll likely find there is much more to it than just saying, “pick a number.” Factors such as location, cost of living, and the demand for drivers are only part of the story. Natural disasters are another part—or they should be.
When the mid-February snow and ice storm hit Texas, the situation left many drivers completely unable to get out to make money at all. At Gridwise, we studied the figures that tell the story of what happened. In this article, we’ll demonstrate why they show the importance of events like this terrible storm and its aftermath when it’s time to propose an amount for a minimum wage.
Here’s what we’ll examine:
- A minimum wage for drivers: What’s happening across the U.S.
- The Texas storm and how it impacted rideshare and delivery driver earnings
- What government officials and the companies need to know
- How you can protect your income in the meantime
A minimum wage for drivers: What’s happening across the U.S.
There’s been a lot of controversy concerning driver status and driver pay over the last few years. California’s attempt to get Uber and Lyft to classify their drivers as employees failed when the companies prevailed and Proposition 22 passed in November 2020.
When this happened, Uber and Lyft set about creating new “benefits” for drivers, and among them was a promise to set a minimum wage. In California, Uber and Lyft pay 20 percent above the minimum wage in the pick-up city, and for those using a motor vehicle, 30 cents per mile.
In the fall of 2020, in Seattle, the city council conducted research into the earnings of rideshare and delivery drivers, and concluded that they must be paid $0.56 per minute and $1.33 per mile driven while transporting passengers. These minimum wage policies took effect in late 2020 and early 2021, but in another city, this happened much earlier.
New York enacted a minimum wage for rideshare drivers in 2019, but it was done by the city’s Taxi and Limousine Commission (TLC). The policy has been met with mixed reviews, with many saying the guaranteed wage was one way to reduce competition to benefit taxis and livery services outside of Uber, Lyft, and other similar app-based services.
In the summer of 2020, the Massachusetts Attorney General sued Uber and Lyft, charging that they were misclassifying drivers under the Commonwealth’s labor laws, and that drivers should be employees. The argument is ongoing, but the fact that it is going on at all proves that government officials have their eyes on the rideshare and delivery industry, and want to have a say in how much drivers are being paid.
But before they continue on their campaign to set wages for drivers, there are factors that companies and government agencies need to consider. After all, life isn’t always a sunny day when business rolls along without a hitch. Let’s look at what happened last month in Texas.
The Texas storm and how it impacted rideshare and delivery driver earnings
In mid-February 2021, a massive winter storm hit Texas, bringing record low temperatures, ice, and snow. The electrical grid was paralyzed by ice, and so were the state’s roads. Most of them were impossible to navigate because the storm was so intense and so vast. The majority of this happened the week of February 15th.
While it’s easy to imagine that demand for both rideshare and delivery would increase during this period, making money was anything but easy for drivers. At Gridwise, we discovered just how difficult things got when we tapped into our data for Texas drivers during that time period.
We studied three different earnings metrics: earnings per week, earnings per hour, and earnings per trip. What we found is how these different aspects of drivers’ compensation played varying roles in determining their ultimate income. The data speaks for itself, so let’s get to it.
First, we’ll look at what happened to rideshare driver earnings:
Median earnings per week dropped off sharply, by some 22.5% during the week of February 15th, the week when the weather was the worse. This reflected the fact that it was not only difficult to drive during the storm, in many cases it was impossible, and when drivers could get out on the road, they were not able to drive much.
Earnings per hour remained rather consistent. Remember, though, this only reflects those drivers who were able to get out to drive.
Here, we see that earnings per trip escalated dramatically during the week of the storm and the power outages. This is largely due to driver incentives the companies put into play to encourage drivers to provide rides to passengers.
Delivery drivers took an even bigger hit. Their weekly earnings took a nosedive that amounted to a decline of more than 40%.
While again, earnings per hour remained consistent from the previous week. But keep in mind, this is for drivers that were on the road, during the time they were able to get on the road.
As with the rideshare driver earnings per trip information, we see that incentives helped support a slight spike during the storm and blackout period.
Delivery seems to have been hit especially hard. This is likely because the power outages created a situation whereby restaurants and other establishments drivers would usually have delivered from were out of commission.
What happened in Texas was an utter tragedy for everyone involved, and as we can see it severely affected rideshare and delivery drivers. Seeing this occur has made us aware of what many government entities might be leaving out of those minimum wage numbers they’re so busily calculating.
How should that affect driver minimum wage laws?
When government officials go about securing fair wages for drivers, they need to consider what happens to them when natural disasters and other disruptive events occur. In 2020, for instance, when protests spread through several states, many drivers were unable to get from place to place so they could earn money.
Rather than completely focusing on earnings per hour, government officials will need to think about the potential volatility of hours for drivers and account for that in one of two ways: by paying drivers a higher minimum wage, or keeping some sort of reserve that will be paid to drivers who are unable to work. The latter option would be similar to paid sick leave or vacation time.
Not every government agency is seriously considering minimum wage laws for drivers. Those that are need to look at the full picture, not just median or average earnings per hour.
How you can protect your income in the meantime
Now that it’s clear how disasters of all kinds can devastate the average driver’s means of earning income, what can you do to protect yours? You can’t stop bad things from happening, of course, but you can shield yourself from being left without any money should some type of disaster occur.
- Save. Do you save any of the money you earn? We know it’s not easy to do that, with housing costs, utilities, groceries, medical bills, and other expenses eating up earnings faster than we can put them away. But try to be more judicious about spending. As the old saying goes, pay yourself first by allocating a certain percentage of your earnings to a savings account. When and if a disaster hits, you’ll be glad you did.
- Invest. Once you have a nest egg put aside, invest part of it in something that makes sense to you. If you’re not sure what to invest in, or how to do it, find a professional who can guide you.
- Diversify. If you’re just doing rideshare, make sure you have an account for delivery; if you’re delivering, consider applying to do rideshare as well. In addition, do the multi-app thing. Apply to as many apps as you can, so if one is not sending you enough business, you can go to another.
Think also about other side gigs you can do to supplement your driving income, and always reach out to help others in a disaster. You’ll be surprised at how willing those you assist will be to share what they have with you—to help get you through the crisis.
Track your earnings with Gridwise
When you need to take a realistic look at how much you’re earning from each app you’re working, you have to get Gridwise. Our automatic earnings tracker will seamlessly record your trips, how much you’re paid, and how far you drove for each app you connect. Now, Gridwise can also record your expenses, so you’ll see what your real bottom line truly is. The results come out in graphs that look like this:
Gridwise can also help you hold on to more of your money. Check the Perks tab for discounts and deals made just for drivers. There’s also a quick link to our blog, which has tons of helpful articles, and the Gridwise YouTube Channel.
Join us on Facebook to get in on great gas card giveaways and be part of a community of drivers who want to make more money and protect their livelihood just like you do.
Gridwise is always here for you, whether everything is going great, or you’re in the midst of a crisis or disaster. Download the app now, and you’ll see why Gridwise is the #1 assistant for rideshare and delivery drivers.