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Business Impact

This Is How Uber Has Shaped the Taxi Labor Market

Ride-hailing hasn’t eroded the number of taxi driver jobs, but it has made them pay less.

Ride-hailing services like Uber and Lyft have changed the way we get around cities—but how have they changed the employment situation for drivers? A study by University of Oxford researchers confirms some predictable impacts, but also provides a few surprises.

The research considers data from the U.S. Bureau of Labor Statistics between 2009 to 2015, allowing it to investigate what happened to the driver labor force during the arrival of Uber in a number of American cities, including New York, Los Angeles, and San Francisco. 

When Uber rolled out in a city, the number of self-employed drivers rose on average by around 50 percent, which makes sense. But the number of traditional wage-paid taxi driver jobs didn't decrease when Uber arrived. In fact, there was a small increase in regularly employed taxi drivers.

That doesn’t mean that Uber’s presence isn’t felt. The analysis also shows that the average hourly earnings of waged taxi drivers have fallen by around 10 percent in cities where Uber is active. Meanwhile, self-employed drivers have enjoyed a 10 percent rise.

“The spread of Uber has increased competition in taxi services, contributing to lower overall incomes for taxi drivers, and a redistribution of income from payroll taxi services to self-employed drivers,” explains Carl Benedikt Frey, one of the paper’s co-authors.

The higher hourly rate for self-employed drivers is likely due to the technological advantages provided by Uber. The company’s app streamlines the process of matching cars with drivers, so despite being paid only on a per-ride basis, drivers can achieve a higher utilization of their time.

Not that Uber drivers are necessarily happy with their earnings. Earlier this month, Uber announced that it will pay $20 million to settle a lawsuit with the FTC—because it promised unrealistic earning potential.

(Read more: Drivers of Disruption?, Vice, “Uber and Lyft Are Still Trying to Avoid Acting Like Regular Employers”)

Hear more about labor at EmTech MIT 2017.

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