How Uber Upsets the Status Quo

A 4.0 rating from an Uber driver is not good.

Driving crosstown with Uber, writer Delia Ephron realized she had a 4.5. Told that a drop to 4.0 meant drivers would not pick her up, she wondered, “What could I have done to get demoted {from a perfect score of 5.0}? In six rides?” She remembered once asking a driver to back up and wondered if that was the problem.

The power to review tweaks the taxi environment. It changes the job and, as a result, the people who do the job.

Where are we going? To how Uber has upset a labor market status quo.

A Picture of the Uber Driver

The synergy between the money and the flexibility make Uber different. Add in the ability to choose your riders and you get a job that attracts higher quality human capital. Indeed, according to a recent analysis from Uber and a Princeton economist, 48 percent of all Uber drivers have a college degree or higher. By contrast while 52 percent of all taxi/chauffeur drivers have no more than a high school degree, the same is true for 12 percent of Uber drivers.

An Uber driver either works for Uber full time, or, in addition to Uber, has a full time job or a part time job. Interestingly, a higher proportion of women drive for Uber than as taxi/chauffeurs elsewhere. As for intangibles, driver-partners said Uber had improved their life quality, elevated their confidence and boosted their financial stability.

Below you can see one group of Uber drivers’ earnings per hour are way above the average.

From: “An Analysis of the Labor Market For Uber’s Driver-Partners in the United States”

Reflecting the allure of flexibility, here are the number of hours drivers work.

From: “An Analysis of the Labor Market For Uber’s Driver-Partners in the United States”

The results? An increasing number of Uber drivers.

From: An Analysis of the Labor Market For Uber’s Drivers-Partners in theUnited States

With no wage penalty for part-time, individually determined work hours, and minimal entry barriers, we have the spread of a new labor market model in an existing industry.

Our Bottom Line: High Impact Entrepreneur

Challenging the status quo in an industry traditionally constrained by government oversight, Uber represents Joseph Schumpeter’s creative destruction.

And that returns us to the new relationship between Delia Ephron and her Uber driver.