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.
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.
EDITORS NOTE: This column originally appeared in The Revolutionary Act.