How Much Do Uber Drivers Make?

The freedom to choose when and how long to work is such a tempting prospect. The fact that there is an established market for ride-hailing services sweetens the gig even more.

Whether it’s full-time cab drivers seeking to increase their trip count or individuals seeking a reliable side hustle, the opportunity is there for the taking.

But the question is, how much do Uber drivers make?

Lots of misinformation is peddled around about this topic. This blog post arms you with facts on everything you need to know on the subject.

What Is Uber, and How Does It Work?

Uber is an American ride-hailing company headquartered in San Francisco, California. The hugely successful mobility service provider is the market leader and rakes in the highest revenues compared to all its peers.

As of July 2022, Uber was available in 10,000 cities across 71 countries.

You can sign up and earn money with Uber, but only if your vehicle meets some requirements:

• It must have four doors and be able to transport a minimum of four passengers
• The model must be 15 years or newer
• The title cannot be salvaged, reconstructed, or rebuilt.
• The vehicle cannot have any cosmetic damage, missing pieces, commercial branding, or taxi paint jobs
• Uber does not allow rental vehicles except those from an approved Uber rental company
• If you choose to drive a vehicle you do not own, you must be listed as an insured driver on the car’s policy. Uber doesn’t approve a vehicle if the driver’s name is not on the insurance document.

Signing up

If you have a vehicle that checks these boxes, you can register on the company’s website, or you can download the Uber Drivers app.

You will need to furnish Uber with information about your vehicle. The company will then check whether it meets the requirements.

Notably, you can make money with Uber even if you don’t own a car. You can rent one from a list of dealers specified by the company.

The next step is you must agree to undergo a background check. To maintain safety standards, Uber will thoroughly check an applicant’s criminal history, character, mental and physical health, etc.

The final step is submitting and verifying your documents which include:

• Vehicle insurance
• Vehicle registration
• Vehicle inspection clearance forms
• Profile photo
• Driver’s license
• Required training depending on the city (i.e., in New York, you need a TLC license to be a rideshare driver)

Once you finish the signing-up process, your documents will be submitted to the company for approval. In most cases, Uber takes two to five days to make a decision.

The company also provides successful applicants with tutorial videos to facilitate their onboarding.

How the Uber app works is common knowledge:

• A rider opens the app and requests a ride
• The rider is matched with a driver
• The driver picks up the rider
• The driver takes the rider to the destination
• Both the driver and the rider leave ratings and reviews

Employment Status of Uber Drivers

Right from their inception, ride-hailing (Uber & Lyft) and delivery companies (Doordash & Instacart) have courted controversy over their business models.

The organizations style themselves as software companies and classify drivers as independent contractors.

This has often led to friction between the companies and unions over poor pay and lack of benefits. This difference in opinions tends to ignite heated debates on salary vs hourly pay amongst rideshare drivers.

In August 2020, Uber and Lyft threatened to leave California after the state’s top court ordered them to classify drivers as employees. The court also ordered them to pay the more than 10,000 drivers full employment benefits, including overtime and unemployment insurance.

California Attorney General Xavier Becerra had sued Uber & Lyft earlier in the year. The state official argued that the two companies violated Assembly Bill 5 (AB-5) by classifying drivers as independent contractors.

The legislation was designed to upend the business models of big companies that rely on a cheap contractor workforce. Especially since the gig economy remains largely unregulated.

However, the companies spent $200 million to bankroll a ballot measure that saw California residents pass a vote — Proposition 22 — which advocated for keeping drivers as independent contractors.

Therefore, Uber drivers don’t earn a salary.

How Much Do Uber Drivers Make?

The amount drivers earn mainly depends on Uber’s fare calculation formula.

This is how Uber calculates drivers’ earnings:

1. Base trip fare: Drivers earn a standard trip fare, where Uber’s percentage cut is 25%. Notably, Uber driver rates per minute and per mile vary by city.
2. Location & Distance: Uber also factors in the location a driver picks up a rider, the distance to the destination, and whether there are any stops in between.
3. Surge: Drivers earn more when demand is higher. The ride-hailing company recommends checking heat maps to find out when and where rider demand is highest. This allows you to earn more on top of your standard fare. Typically, rides requested during rush hours and when it’s raining command higher fares.
4. Tips: The ride-hailing company lets drivers keep 100% of customer tips.
5. Cancelation fees: When a rider cancels more than two minutes after you’ve accepted their trip, you’ll be paid either the standard cancelation fee or the actual time and distance you spent driving toward the pickup (whichever amount is higher).

So, what is an Uber driver’s income?

Average Uber driver earnings per ride

Uber drivers make an average of $11 per ride. This is after factoring in all expenses and Uber’s commission percentage.

According to a working paper published by economist John List in 2019, the average tip per ride was $3.11. The study also found that Uber customers tip on just 16% of the rides.

Average Uber driver earnings per mile

The average Uber pay rate per mile is $0.89. This is before expenses such as fuel and vehicle maintenance costs are factored in.

Average Uber driver hourly pay

According to the 2020 Rides Survey, the net hourly Uber driver pay across all service levels without tips and bonuses was $16.95.

With tips included, the average Uber hourly pay was $18.16.

With tips and bonuses included, the average Uber hourly pay was $19.36.

However, the Uber pay rates varied for the different service levels.

• The net earnings of Uber X drivers were $18.97
• The net earnings of Uber XL drivers were $19.89
• The net earnings of Uber Select drivers were $17.21

Average Uber driver earnings per day

Using the average earnings per hour data, we can calculate how much drivers earn with Uber.

Assuming an Uber driver works eight hours in one day, their base pay will be $136. If the tips and bonuses are included, the driver will make $155.

Average Uber weekly pay

Using the same methodology, we find that a Uber driver’s weekly earnings are $678. That’s assuming a driver works 40 hours in one week.

When tips and bonuses are included, the driver will make $774.

Average Uber pay per location

As you would expect, rideshare fares are higher in major US cities.

According to the 2020 Rides Survey, New York City recorded the highest average hourly earnings at $26.24. The city was followed by:

• San Francisco: $22.30
• Los Angeles: $21.91
• New Jersey: $20.80
• New York (outside NYC): $19.18

And the Uber average pay is lowest in the following areas:

• Ohio: $16.98
• North Carolina: $14.92
• Oklahoma: $13.28
• South Carolina: $12.90
• Florida: $12.55

Uber Drivers’ Expenses

Since Uber drivers are independent contractors, they incur a lot of costs which include:

Fuel

Gas prices are a bone of contention between ride-hailing companies and drivers. This is because fuel costs are the highest expense that independent contractors have to account for.

For instance, in 2022, the highest recorded average price of fuel at the national level, according to the American Automobile Association (AAA), was:

$5.016 for Regular Unleaded on June 14
$5.816 for Diesel on June 19

A month earlier, Uber was forced to introduce a temporary fuel surcharge of $0.45-$0.55 in response to surging gas prices.

But such interventions are rare. More often than not, when prices go up, drivers take home less than they would under normal circumstances.

Taxes

Uber drivers pay two sets of taxes.

• Self-employment taxes: These are basically the self-employed version of social security and Medicare taxes. Drivers who make more than $400 from ridesharing must pay self-employment taxes.
  For the fiscal year 2022, the self-employment tax was 15.3%.

• Income taxes: As an independent contractor, you will still have to pay income taxes. Unlike self-employment taxes, income taxes are not defined and depend on how much you make.

Most Uber drivers use tax software to help them file their dues.

Car insurance

New Uber drivers tend to assume that their regular auto insurance policy covers them in case of an accident, but that is not the case.

Insurance companies classify cars in the ride-hailing business as vehicles engaging in “commercial activity.” Consequently, Uber drivers are required to take policies that are specific to rideshare insurance.

A rideshare insurance policy ranges between $28 and $90, depending on the company.

Although the average cost of car insurance seems like a niggling extra cost, it’s worth it since it protects you and provides a loose guarantee you will continue earning in case of an accident.

Maintenance and repair costs

The more you drive, the more likely your car will require maintenance, and if a car is not looked after properly, the costs can be steep in the end.

To ensure that a car stays in peak condition, drivers are advised to take the vehicle for servicing once it hits a predetermined milestone.

The average cost of a basic inspection in 2022 after every 5,000 miles ranged between $150 and $250.

Car purchase

Although Uber offers the option of renting a car, most drivers still prefer to drive their own vehicles. The average cost of a new car as of early 2022 was $47,000, according to Kelley Blue Book (KBB).

At the end of 2021, the average cost of a used car in the US was $28,205.

Meanwhile, the average car loan amount in 2021 was $35,163.

How to Make More Money with Uber?

If you are an Uber driver, there is the amount of money you will make at the end of every hour, day and week. But you might want to make more, and there are several ways to do that.

Put in more hours

The most obvious way to increase your earnings is to clock more hours. Uber allows drivers to work up to 100 hours in one week, and some drive up to 19 hours a day to get by.

Schedule driving hours around surge pricing

Uber charges more when demand exceeds the number of available drivers. So it makes sense to time your working hours to coincide with these moments. Demand is highest during rush hours and on special occasions like during extreme weather conditions and when most drivers are on strike.

Reduce your expenses

Another way to earn as much as you can on Uber is to be as efficient as possible. Uber drivers are freelance workers meaning they are responsible for all their costs, such as fuel and maintenance. On top of that, you also have to pay taxes. Keeping track of your expenses and working out the most economical way to go about things goes a long way in boosting your income.

Qualify for weekly promotions

Uber runs two weekly promotions to incentivize drivers to meet some targets.

Uber Quest: This promotion rewards drivers who complete a certain number of rides in a specified amount of time.
Uber Boost: This promotion rewards drivers who work for a specified amount of time during peak hours.

You can make the most out of these promotions.

Check the alternatives

When rates or requests are low on Uber, you can also drive for Uber Eats. This option is conducive for drivers who prefer making deliveries over ride-sharing.

If that doesn’t appeal either, you can check rates on Swyft.

Payment Methods

Uber pays its drivers weekly via a bank deposit.

Every Monday, Uber sends drivers an email informing them how much they made the previous week. The money is then deposited into the driver’s bank account. It may take by Thursday evening for the payment to be reflected, though.

Uber also allows drivers to access their money on the spot. Drivers can cash out instantly up to five times a day for a $0.50 fee per transaction.

For the instant cashout option, a driver can either link their regular debit card or the Uber Debit Card powered by GoBank. Both options allow drivers to withdraw their money immediately.

Uber Alternatives

Although Uber has lost market share to other players in other countries, the rideshare company is very strong in the US. It only faces genuine competition from one other company.

The emergence of other services such as grocery delivery has also created a different kind of opportunity for drivers.

Below are the most viable Uber alternatives.

Uber vs Lyft

Lyft is Uber’s biggest competitor in the United States. According to Statista, Uber enjoyed 69% of the market share as of July 2021 compared to Lyft’s 31%.

But who pays drivers more?

According to various driver surveys, Lyft drivers earn an average of $17.50 per hour, which is around $2 more than what Uber drivers earn.

Instructively, the average monthly earnings of Lyft and Uber drivers are almost the same. However, Lyft drivers make more per trip.

This is because Uber’s cut is higher. The company charges a 25% commission while Lyft charges 20%.

Uber vs Instacart

Although Instacart is not a ride-sharing company, it engages drivers on an independent contractor basis like Uber does.

However, Instacart — a grocery delivery service — pays drivers an average of $25 per hour. This was the highest rate in the sector as of July 2022.

Instacart also lets drivers keep 100% of their tips and is convenient for drivers who prefer not to have passengers in their car.

Pros and Cons

Uber is a good option for drivers, but what are the platform’s advantages and disadvantages?

Pros

• Flexible working hours
• Ability to cash out anytime
• You can earn more than employees
• Drivers enjoy independent contractor tax privileges

Cons

• Low pay versus operations and maintenance costs
• You don’t get employee benefits such as health insurance
• No job security
• No access to unemployment insurance and workers’ compensation

Wrap Up

Should you become an Uber driver?

The ride-hailing services company is far from perfect, as evidenced by perennial driver strikes calling for better pay and benefits.

But considering you set your own working hours and work as an independent contractor, the opportunity presents a great way to supplement your income.

However, make sure you understand the requirements and cost implications before making a final decision.