WASHINGTON — Every day, millions of Americans hop in their cars to get to work. But in light of the wages UberX drivers are making, the average person could probably make more money by staying in his or her car all day, and driving for the popular ride service.
A major shift is underway on the roadways. For a long time, driving strangers from point A to point B paid terribly. Estimates of the typical cab driver’s salary hover around $30,000.
But according to Uber, the median wage for an UberX driver working at least 40 hours a week in New York is $90,766 a year. In San Francisco, for an UberX driver working at least 40 hours a week it is $74,191.
The gap illuminates the power of Uber, which is using technology to disrupt the traditional cab industry. Worldwide, 20,000 drivers a month have joined Uber’s platform in 2014.
‘‘New people are flocking to Uber in part due to the money that they can make and due to the flexibility you have, basically being able to decide when you want and where you want to work,’’ said Rachel Holt, Uber’s general manager for the East.
Uber capitalized on the rise of smartphones to create a more efficient marketplace for connecting those who want to get a ride and those offering rides. Uber drivers don’t waste time circling blocks, hoping to be in the same place as someone who wants a ride. Less downtime means more fares and more money.
Uber’s app connects its drivers with users who are in search of a ride. The company takes a 20 percent cut of the fare.
In an Uber-enabled world, every corner is a virtual cab stand. Since being founded in 2009, Uber has expanded to 60 US cities; it says it can deliver a ride to 43 percent of Americans within five minutes. An ECONorthwest study Uber commissioned found that the company has a $2.8 billion a year impact on the US economy through direct, indirect, and induced means.
The company has hundreds of thousands of drivers. According to the San Francisco Cab Drivers Association, one-third of its drivers ditched their registered cabs in a 12-month span to drive for services such as Uber, Lyft, and Sidecar.
Uber’s algorithm can connect drivers with customers in seconds, eliminating the need for dispatchers. Cab drivers also pay for expensive permits to operate a cab. In New York these are called medallions, and they’ve sold for about $1 million this year. Medallions began in the 1930s as a way to ensure quality and safety, but Uber’s popularity has shown they may not be needed. Uber has its own ways of ensuring quality. Instead of regulators who monitor cars, Uber has riders who rate drivers. It also does background and insurance checks.
Uber has been valued at $17 billion; some suggest it will be the next $100 billion company.