As Uber's Profit Margins Grow, Workers Make Less and Less

The companies claim they aren’t cutting pay, but drivers — and some data — suggest otherwise.

By Eric Gardner, More Perfect Union

Uber's mobility division, the ride-hail portion of the company, expanded its profit margin last quarter, reinforcing the growing belief among business experts that the company’s profitability hinges largely on keeping worker wages down.

Uber does not release detailed financial data on its share of individual rides, distorting the public debate. Using reliable third-party data, Columbia Business School professor Len Sherman estimated in December that Uber takes nearly 40 percent of a ride’s fare. However, Uber denied that charge and said the take rate was “nowhere near” that amount. Others have found that this rate was increasing in major cities. Last year, researchers at the University of Colorado estimated that Uber took over half a fare during surge pricing. Lyft has seemingly adopted the framing, publicly capping the company’s share of fares at 30 percent to attract more drivers to their platform.

Uber famously lost $31.5 billion before it turned its first annual profit in 2023. To start 2024, the company went back to losing money-losing ways. Uber lost over $700 million after failed investments in self-driving car technology and ride-hailing apps across Asia. The firm also announced that it paid $178 million to settle an Australian class-action lawsuit over lost wages. In total, the company lost $600 million to start the year.

Uber management has generally been very coy about detailed ride data, but it does release a high-level profit margin for each business segment. In 2020, the mobility division recorded profit margins of about 23 percent. Four years later, that number expanded to over 30 percent. Despite the drag of bad investments on company profit, Uber’s core business continues to make money, posting an operating profit of $172 million. Lyft, meanwhile, has never turned a profit in its existence. Last quarter, it lost $31.5 million, which was a drastic improvement after losing $187 million during the same time last year. 

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The lack of concrete data disadvantages local governments when regulating the growing ride-hailing industry, said Mariah Montgomery, the National Campaign Director at Power Switch Action, an organization working with rideshare drivers to pass legislation setting minimum pay. “It's been to Uber's advantage that these fights on policy are happening at the state and local level,” she told MPU in an interview earlier this spring.

There are growing calls for increased regulatory scrutiny as Uber and Lyft become more financially viable. Minneapolis recently passed a minimum pay standard for ride-hail drivers, while a ballot proposal to define drivers as company employees in Massachusetts is set for public vote in November. 

Both attempts at regulation were met with the same playbook the companies have used for nearly a decade—threats not only of price increases but exiting the area entirely. “They would rather leave than be governed,” Montgomery said.

“We have a particular strategy designed specifically for each market,” Kristen Sverchek, president of Lyft, said when asked about the efforts to regulate the companies last week. 

Part of that is undoubtedly spending a lot of money. Senate disclosures show that the two companies have spent $28.3 million on lobbying at the federal level since 2016.

Uber more than doubled its lobbying in Minnesota, where the companies face the prospect of paying a minimum wage. Lyft increased theirs from $20,000 to $140,000. The lobbying seems to be working. Democratic Gov. Tim Walz suggested pre-empting the Minneapolis legislation, and now state lawmakers are moving a compromise bill with minimum wage requirements that are lower than those passed by the city of Minneapolis, but above what Uber and Lyft have claimed they can afford to pay drivers. Despite the compromise, the rideshare giants last week renewed their threats to leave.

“Too often policymakers are treating these as good faith responses to a public policy discussion,” Montgomery said, “rather than a strategy and a tactic to try to control the local government.”