Subsidising Billionaires: Simulating the Net Incomes of UberX Drivers in Australia

by Jim Stanford

Uber’s rapid growth in point-to-point transportation services has become the most potent symbol of the growth of the so-called “gig economy”: where people perform work on an irregular, on-demand basis, paid by the task, and without the stability or security of traditional paid employment. The expansion of this model has raised concerns regarding the erosion of labour standards and entitlements (including minimum wages, paid leave, and superannuation). This report simulates the net hourly incomes received by UberX drivers in six Australian cities, and finds that they almost certainly earn much less than would be required under relevant minimum wage standards.

The report considers gross revenues generated by a typical urban fare (traveling 10 km, and taking 22 minutes to complete), according to UberX’s published rate schedule. After deducting Uber’s various fees, net taxes, and the costs of providing and maintaining the vehicle, the driver is left with an average of just $8.29 from that fare (barely one-third of the gross revenue they collect).  Accounting for unpaid time spent waiting for the next fare and collecting the passenger from their pick-up point, this translates into a net hourly wage (before personal income tax) of $14.62 per hour.  This is well below the national statutory minimum wage, and less than half the level of the weighted-average minimum wage (including casual loading and penalty rates for evening and weekend work) that would apply to waged employees under Australia’s Passenger Vehicle Transportation Award.  The underpayment of UberX drivers in Australia constitutes a subsidy paid by them to the company amounting to hundreds of millions of dollars per year; and this underpayment of drivers (in Australia and elsewhere) has been essential to the dramatic expansion of Uber’s market value (most recently estimated at almost $50 billion U.S.).

These findings confirm that the use of digital platforms to organise and compensate irregular work, and the ability of businesses (including large global firms like Uber) to classify their workers as independent businesses in their own right, are undermining the effectiveness of traditional labour market protections (such as the minimum wage, superannuation entitlements, paid leave, and others).  The report calls on Australian lawmakers and regulators to urgently address the gaps in existing labour laws, to ensure that traditional labour protections are available to workers in the “gig economy.”

Full report