Transportation Network Company Driver Earnings Analysis and Pay Standards
Parrott and Reich prepared this report to inform Minnesota’s deliberations regarding a minimum compensation standard for Minnesota Transportation Network Company (TNC, i.e., Uber and Lyft) drivers. This report analyses a year’s worth of trip activity (over 18 million trips) and driver pay and indicates that a minimum compensation standard is needed to ensure that Minnesota’s 12,000 TNC drivers are compensated at rates on a par with minimum wages for employees in Minnesota.
After factoring in Minnesota-specific vehicle costs and all of a driver’s working time, median after-expense pay for Twin Cities metro drivers was $13.63 an hour in 2022 and $8.12 an hour for Minnesota drivers outside of the seven-county Twin Cities metro area. Noncasual, committed drivers working more than 10 hours a week provide 89 percent of all Minnesota trips, but 75-80 percent of these drivers were paid in 2022 below the proposed compensation standards.
In addition to a base level pay standard that covers usual vehicle expenses, the report provides estimates for pay standard options that would cover fringe benefits such as paid time off, health insurance and retirement savings.
The pay standard would ensure that drivers receive compensation for all their working time and that they receive a reasonable amount for the expenses of acquiring, operating and maintaining their vehicle. The working conditions of incumbent drivers should improve under the pay standard. However, conditions will need to be monitored for changes in the balance between trip demand and driver supply, as well as changes in business practices that might affect driver compensation.
This report is the third TNC pay standard report prepared by Parrott and Reich—the two previous reports dealt with pay standards for New York City and Seattle.