On a per-mile basis, nearly half of drivers can declare losses on their taxes.
Uber and Lyft drivers make a median profit of just $3.37 per hour before taxes, according to a study published by the Massachusetts Institute of Technology.
The analysis of ride-hailing driver economics is based on a survey of over 1,100 drivers. When accounting for detailed vehicle expenses and depreciation, 74 percent of drivers are earning less than minimum wage in their state and 30 percent of drivers are losing money.
For tax purposes, the government allows drivers to take a standard deduction of $0.54 per mile. Gross driver revenue is just $0.59 per mile but drops to $0.29 per mile after vehicle operating expenses are factored in. Nearly half of drivers can consequently declare a loss on their taxes.
"This business model is not currently sustainable," lead author Stephen Zoepf told The Guardian. "The companies are losing money ... and the drivers are essentially subsidizing it by working for very low wages."
The findings help explain why Uber appears to view autonomous vehicles as the next disruption in the taxi industry, representing an existential threat to ride-hailing companies that aren't prepared for the shift.