Chicago Driver Income Study

Introduction

The purpose of this study is to investigate the opportunity that driving as a partner of uberX provides for residents of Chicago. Supplying rides dispatched through Uber’s software is a new and lucrative opportunity to partners who live in all neighborhoods of Chicago, and we hypothesize that the opportunity is particularly useful to drivers who live in areas with lower median incomes.

Methodology

In order to investigate the opportunity that partnering with Uber offers local drivers, we created a data set that contained:

  • median income by community 1
  • census community in which each driver lives 2
  • each driver’s estimated hourly income from supplying rides through Uber’s software

We focused on drivers whose time spent on on the uberX platform was at least 20 hours/week in order to make the strongest statement about partnering with uberX as a meaningful career option, but note that working fewer hours as a driver on uberX is not associated with lower hourly totals. We summed the fares for each local driver’s rides in February, subtracted the portion that constitutes Uber’s fee, adjusted for utilization (i.e. the time spent in the car without a passenger) and then deducted a conservative estimate of costs related to operating a vehicle.

A driver’s home community’s median income and her hourly income on uberX were plotted against each other (see chart below). We then totaled the percentage of drivers who earn more than their neighborhood’s median income, i.e. those points that fall above the dashed diagonal line. This analysis was run on a large number of drivers in 2014 in Chicago.

Results

The median driver on uberX who lives in Chicago earns more than $16/hour, almost twice the local minimum wage. 59% of uberX drivers in Chicago earn more than the median hourly wage in their neighborhoods.

If you only look at residents of communities with a median hourly wage of less than $15/hour, 92% of uberX drivers earn more than the median hourly wage.

Furthermore, the opportunity that uberX offers drivers is unrelated to their home area – if you regress hourly income from these drivers on their home area’s median income, the coefficient is tiny (an extra dollar in median area income is associated with 2 extra cents/hour in driver income) and not statistically different from 0.

The data, as well as a dashed 45-degree line, are visualized in the scatterplot below:

RPLOT

Each colored dot represents a driver.  Drivers above the diagonal line, in turquoise, earn more than their neighborhood’s median hourly wage when driving for uberX.

1. We assumed a 32 hour median work week in converting from annual to hourly income based on this. If this is low, then we are exaggerating the median hourly incomes in the Chicago community areas.

2. Census area boundaries and income stats come from here.

 

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