Uber, Lyft drivers in Massachusetts say pay fell post minimum wage rule
He’s not alone. Contrary to the idea that the new minimum wage would increase pay, a number of veteran drivers interviewed by The Boston Globe said their overall earnings have taken a hit since Uber and Lyft’s new minimum hourly wage went into effect in Massachusetts. Intended to give them greater stability and, ostensibly, the ability to make more money, drivers said that instead the new earnings base seems to be functioning as a cap of sorts.
It’s not that these drivers are making below the new minimum, it’s that it has become much harder to make more, according to 10 local drivers who talked to the Globe, some of whom said that, previously, with a little effort, they could average $40 or even $50 an hour.
“Right now, the situation for the money, it’s very bad,” added Syed Hussain, 41, a driver from Westborough who said that increasingly, new rides are being offered at such low rates they aren’t worth accepting; trips to Logan Airport from the Boston suburbs, he noted, routinely come in under $20.
So far, data analysis of earnings before and after the new minimum wage is limited. But drivers point to several factors that could be contributing to the earnings pinch, including more low-paying rides and less surge pricing, which they say can boost earnings by up to 30 percent. Some report an increase in drivers, including from outside Massachusetts, possibly attracted by the promise of the new minimum wage, which would mean less need to use surge pricing to incentivize people to get on the road.
But they also suspect something more insidious at play: the sophisticated AI-powered algorithms that power these ride-hailing platforms — which critics say were already calculating the lowest amount drivers would likely accept — adjusting trip offers in real time to limit drivers’ pay. And industry observers agree.
“The system is constantly adjusting in order to let the house win,” said David Weil, a Brandeis University professor who ran the Department of Labor’s wage and hour division in the Obama administration. Weil got an inside glimpse at Uber and Lyft’s operations when he served as the lead expert for the state of Massachusetts in its lawsuit that resulted in the new minimum wage deal.
Both Uber and Lyft said driver pay in Massachusetts has gone up overall since the new wage structure went into effect. Individual drivers’ wages aren’t being targeted, Uber noted. Lyft said it hadn’t seen a major influx of new drivers or drivers getting fewer trips.
“The factors we rely on for pricing trips today are the same factors we used before the earning standard was in place,” an Uber spokesperson said in a statement.
Since working hours for drivers are so fluid, the pay structure is more complicated than for a typical worker; for one, drivers are only paid for “active” time after they’ve accepted a trip and are transporting passengers. Drivers must also pay for gas and other expenses out of pocket, which eats into their earnings.
Under the agreement with the state, the hourly pay of the estimated 87,000 drivers in Massachusetts has to average out to the new minimum over a two-week pay period. If it’s below that, driver pay must be topped off. (The minimum, which is adjusted every year for inflation, went up to $33.48 an hour Jan. 15.) But several drivers told the Globe they’ve noticed that after they get a trip well above the minimum wage, they receive fewer subsequent offers, or a string of low ones, bringing their overall earnings down closer to the base amount.
Even before the new minimum wage was enacted, rates at Uber and Lyft varied depending on supply and demand, time of day, and other factors; some drivers have learned to maximize their earnings by accepting only the highest-paying trips. But incentives that used to tack on as much as $40 to a trip are now often just a few dollars.
Matt Reid, a part-time driver on the South Shore, is among those who hold out for the highest-paying rides. He still makes far more than the minimum rate, but overall, his hourly pay is now several dollars less than before, despite the fact that he’s being choosier about which trips he accepts.
“Before, I could get $50 an hour in my sleep,” he said. “Now I have to fight like crazy, swatting away the bad ones.”
Len Sherman, an executive in residence and adjunct professor at Columbia Business School who studies Uber pay trends, analyzed the pay of a handful of Massachusetts Uber drivers before and after Aug. 15. None saw an increase in overall earnings, and two saw their earnings decline, though they all still made more than the new minimum wage.
Sherman found that for one driver he studied, his pay per active hour — based on more than 1,624 trips in early 2024 and 1,123 last fall — went down by more than 40 cents an hour, to $34.40; his tips dropped nearly 18 percent; and his active driving time per shift declined by almost 3 percent. All told, his total earnings per hour on the job fell 5.2 percent in the last few months of the year.
This follows a steep drop in driver pay in 2023 after a change in the company’s pay policy the year before, Sherman said.
“Some of the most experienced and dedicated drivers have experienced a pay cut, indicating that the $32.50 per active hour seems to be serving not just as a floor but, in effect, as a ceiling as well,“ Sherman said.
A spokesperson for Uber said that pay varies widely depending on individual driving patterns and fluctuating demand, noting that looking at a single driver’s pay is “never informative.”
In an informal poll taken during a gathering of about 60 drivers late last year, about half said they thought Uber and Lyft’s algorithms were working to limit their pay to the minimum wage.
A spokesperson for Attorney General Andrea Campbell, who negotiated the minimum wage as part of a settlement in a driver misclassification case, said that Campbell’s staff is aware of complaints from drivers about their pay. The union the drivers are organizing — a process approved by voters in November — said improving pay was on the agenda for contract negotiations.
The ability to individualize pay using artificial intelligence to sift through mountains of data at lightning speed could spread far beyond the gig economy, raising concerns about corporate America’s ability to make money at the expense of workers. By using AI, in ways that are all but invisible to workers, companies increasingly control all the information about pay, leaving workers little ability to advocate for themselves.
Sergio Avedian, a retired trader on Wall Street who now drives for Uber and Lyft, and is a senior contributor to The Rideshare Guy blog, said he’s heard from a number of Massachusetts drivers complaining about lower wages since the settlement. It’s especially apparent among those Avedian refers to as the “cherry pickers,” who only accept trips above a certain amount.
“They’re all complaining to me: ‘Serge, I’m getting an earnings cut,‘” he said.
Nearly 70 percent of Massachusetts Uber drivers were making more than $32.50 per active hour in the first quarter of 2024, according to the data analytics company Big Lake Data. And this creates a lot of space for downward movement. Having a full two weeks to even out pay to hit the minimum wage gives the companies leeway in pricing rides, said Big Lake Data founder Matt Schumwinger; they then have more room to bump wages up accordingly if they need to get more drivers on the road.
If more drivers accept lower-paying trips, the algorithm will keep spitting them out, Schumwinger said. This could act as an anchor on wages, bringing down the overall average to as close to the minimum as possible.
For Rafael, the 90-plus-hour-a-week driver in Boston, pay has dropped so much, he said, that he’s now driving 13 or 14 hours a day, every day, to hit his weekly goal.
Rafael wasn’t surprised by the pay cut. That’s what companies do, he said. And as a former hotel chef, he’s used to working long hours.
“My whole life since I’ve been in America I’ve been working hard to make ends meet,” said Rafael, who is from South America and has been driving for Uber and Lyft for a decade.
So he’s keeping his head down, and his apps on, to save money to begin his next chapter: becoming a commercial airline pilot.
This story was produced by the Globe’s Money, Power, Inequality team, which covers the racial wealth gap in Greater Boston. You can sign up for the newsletter here.
Katie Johnston can be reached at katie.johnston@globe.com. Follow her @ktkjohnston.
