Rod Thomson

There are about a thousand lessons to be learned from a flawed MIT study on Uber drivers supposedly making $3.37 per hour; on NPR’s eagerness to run unquestioning a story that raised blaring questions; and of course on AOC’s just boundless font of knee-jerk ignorance.

The lack of common sense and the most basic understandings of economics in the media and in Congress is a sight to behold — if you have a strong stomach.

First, NPR ran a story entitled “Uber, Lyft Drivers Earning A Median Profit Of $3.37 Per Hour, Study Says” in which it explained the study by a trio of researchers at the Massachusetts Institute of Technology. When I first saw the number, it was clear something was amiss. But then NPR led with this:

“The vast majority of Uber and Lyft drivers are earning less than minimum wage and almost a third of them are actually losing money by driving, according to researchers at the Massachusetts Institute of Technology.”

Well that makes no sense. Who would work for half of minimum wage, or even work for a loss? The answer, obviously, is no one. If NPR reporters grasped the free market and voluntary exchange of time and talents for money — capitalism — they would have seen red flags everywhere. But they just ran with the story.

A working paper by Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo at MIT’s Center for Energy and Environmental Policy Research says the median pretax profit earned from driving is $3.37 per hour after taking expenses into account. Seventy-four percent of drivers earn less than their state’s minimum wage, the researchers say. Thirty percent of drivers “are actually losing money once vehicle expenses are included,” the authors found.”

That’s just so declaratory. “The authors found,” as though it is fact. But read it again if you didn’t catch it. These MIT researchers are from the Center for Energy and Environmental Policy Research. Alas, that makes the error clearer. Understand that they almost certainly align with NPR reporters and the Fresh Face Caucus in Congress when it comes to worldview.

Uber’s Chief Economist Jonathan Hall, who apparently actually does understand economics, responded with about the most gracious Medium post possible considering his company had just been slimed with false data. After all, previous studies had found wildly different numbers. He wrote:

“…a study we conducted with Alan Krueger of Princeton found that drivers across 20 of Uber’s largest US markets earned an average of $19.04 per hour, in October 2015. A more recent study with Stanford professors estimated gross hourly earnings of $21.07¹ for all US drivers between January 2015 and March 2017.

Perhaps most surprisingly, the earnings figures suggested in the paper are less than half the hourly earnings numbers reported in the very survey the paper derives its data from. That survey, conducted by The Rideshare Guy in 2017, reports average hourly earnings of $15.68.”

How could this be? Without going into details, you can read his post, Hall found a gigantic flaw in the methodology of the study. So big in fact, that the MIT researchers realized it and they are now redoing their study. NPR now has a large Editor’s Note at the top of their story with a link to Hall’s post — which is something. They should have been much more cautious and less credulous in the first place.

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Because alas, it is all too late. By this time, the enormous ignoramus floating through social media unscathed by the adoring mainstream media that created her, had tweeted the NPR story on the flawed MIT study.

Yup, Rep. Alexandria Ocasio-Cortez struck with this insipidly imbecilic tweet:

“Uber has taken in $12 billion in investment and had revenues of $1.7 billion in Q4 of 2016.

Yet their drivers only take home $3.37 an hour.

Does that sound right to you?

We must update our laws to stand up for workers in an increasingly exploitative tech-based economy.”

I would dearly love for someone to explain what the investment and revenue numbers have to do with what they pay contractors — which was wrong, and obviously wrong. I don’t know why she used 2016 numbers; 2018 figures are available. Maybe that was the first thing that came up in a poorly worded Google search?

In 2018, Uber lost $1.8 billion on $11.3 billion in revenues. So she used revenues from 2016 when the only possible case you can make on employee pay, and it is an exceedingly weak case, is based on profits. Uber is still hemorrhaging money. And investment? No idea what relevance that has either. A big number, I guess?

At any rate, a deeply flawed study, a credulous media and a media darling with a now huge social media following means that a large percentage of the population believes that Uber drivers are losing money or making far less than minimum wage. It will become accepted wisdom — and AOC and others like her will push to fix the grave injustice that does not exist with more government regulation.

And they will instead break it.

Rod Thomson is an author, host of Tampa Bay Business with Rod Thomson on the Salem Radio Network, TV commentator and former journalist, and is Founder of The Revolutionary Act. Rod also is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.


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Flawed Study, NPR and AOC Create Huge Lie About Uber
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10 thoughts on “Flawed Study, NPR and AOC Create Huge Lie About Uber

  • March 6, 2019 at 6:20 pm
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    uber drivers can make as little as $3.37 an hour. Yes.

    Tell the truth, or at least don’t lie.

    Reply
    • March 6, 2019 at 7:35 pm
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      Read. The. Story.

      Even the MIT authors are admitted they made a methodoligical error and are re-doing the study.

      Reply
  • March 6, 2019 at 10:09 pm
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    Our long-sitting Mr. Knowledge has been fired from public discourse. He is replaced by two new-hires, Mr Ignorance and Mr Arrogance, who together facilitate a total, societal, collapse of reason.

    Reply
  • March 6, 2019 at 10:50 pm
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    I was considering this, and actually did the math (All of the math). No, most will not make anywhere near the money they think they will or even what various “analyses” on the net suggest they might.

    Why, oh why, do they do it? Well, many people seem to have problems running their household finances, let alone a solid Business Expense Analysis.

    The study is fairly accurate for most small city, and probably all suburban and rural markets. Considering the impressive drop out rates, it seems the vast majority of drivers discover this the hard way.

    The biggest omissions I’ve seen are lack of accounting for Deadheading miles (drop off to pickup), self-employment taxes, and a rather odd belief the IRS is overly generous on per mile expense ‘cuz, well, yea, that’s how they roll.

    Reply
    • March 6, 2019 at 10:55 pm
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      BTW, IRS mileage expense is based on a $27K vehicle, without consideration of interest on any possible loan.

      Reply
  • March 7, 2019 at 8:33 am
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    Let’s just say the study is 100% true. If the pay isn’t enough to live on…Uber driving might not be for you…so GET A DIFFERENT JOB!

    Reply
    • March 7, 2019 at 12:30 pm
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      Absolute agreement! Assume that the worst case scenario is true–you lose money driving for Uber. So what? It’s a free society; it’s your choice. I “lose money” when I go to the movies, too. My choice. Suck it up, buttercups!

      Reply
  • March 10, 2019 at 5:06 pm
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    I drive for UBER part time in the San Diego CA area. Miles are expensed at 52 or 53 cents per mile, INCLUDING DEADHEADING to/from rides if recorded and logged accurately for ones own tax return. One must drive with eyes wide open to the fact that gas, oil, AND wear and tear is an expense, incurred by the driver. Drivers work voluntarily the days, hours, and individual rides THEY CHOOSE TO. AOC should mind her own finances and study her own hypocrisy regarding others’ liberty to subcontract freely.

    Reply
    • March 19, 2019 at 11:44 am
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      Indeed. I was talking about this with my college-aged kids while they were home on Spring Break. They were decrying to me the high cost of Ubering home after late-night partying. Apparently, it can cost upwards of $20 for a 5 minute, 2 mile trip from the tiny college town’s “downtown strip” back to the dorms/apartments. They tell me that people drive in from an hour away for the chance to ferry intoxicated college students around with very little deadheading as the demand is so high. Can’t blame them; it sounds like an excellent opportunity to make some solid jack, with minimal hassle. Now that’s America!

      Reply
  • March 21, 2019 at 4:37 pm
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    What is missing from the article, is the legal and political mental gymnastics that went into pretending Uber is not a taxi.
    Taxi: Someone wanting to get from Point A to Point B, makes a phone call to arrange to be picked up and dropped off. After being delivered at Point B (destination), the person pays the driver of the vehicle, for providing the transportation.

    Uber: Someone wanting to get from Point A to Point B, makes a phone call to arrange to be picked up and dropped off. After being delivered at Point B (destination), the person pays the driver of the vehicle, for providing the transportation.

    Magically, Uber is not a taxi, therefore requires no taxi license. Don’t you believe in magic?

    Reply

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