Krueger paper on Uber receives push back

After economics professor Alan Krueger published a paper he co-authored on Jan. 22 analyzing the ride-sharing service Uber, some have taken issue with his conclusions, which mostly favor the controversial company.

Uber contacted Krueger in December about conducting “independent analysis” of data they had collected through a survey of their drivers and of other data sets they collect, he said.

“I think they were looking for an economist that understood labor economics,” Krueger said. “I think they were aware of research I had done in the past with occupational licensing.”

Uber did not respond to multiple requests for comment.

Krueger co-authored the paper with Jonathan Hall, the head of policy research at Uber.

Hall did not respond to requests for comment.

“This is actually the first time I’ve co-authored a paper with the son of someone I’ve co-authored a paper with,” he said. “His father is an economics professor at Stanford. It was a very productive partnership.”

Krueger said he thinks this report is the first comprehensive analysis of a company in the new sharing economy.

The company employs over 165,000 drivers, which is double the number it employed six months ago, he said.

“It appears the drivers are drawn to Uber because the hours are very flexible,” he said. “They get to choose their own hours, their earnings are at least as high as what traditional taxi-cab drivers earn and the entry barriers are pretty low.”

Krueger and his co-author also found that Uber drivers seem to enjoy the work, that there is a lot of demand for services of Uber drivers and that Uber is an example of new technology helping to make an old industry more efficient.

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Krueger said he was surprised by some of the results he found, such as Uber’s chart for exponential growth.

“I think it is quite impressive,” he said. “It really jumps off the page that this is a company that has been growing by leaps and bounds.”

Especially in the U.S. economy, the nature of entrepreneurship is that most companies tend to fail while a select few flourish, he explained.

“The research has found that there are some gazelles that just run faster than everybody else and just take off, and a lot of failures,” Krueger said. “What’s important for the U.S. economy is that we have a dynamic labor market where companies can start up, some succeed and some fail, which leads to an outcome that is more efficient for everyone involved.”

However, some criticize Krueger’s findings, noting that his paper does not tell the whole story.

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., said it was “unfortunate” that Uber did not share its information on average miles per trip with Krueger.

“This is crucial for trying to produce an estimate of net pay after expenses,” Baker said. “Uber has this data, but for whatever reason chose not to share it. As a result, we can only know the gross revenue for each driver. We don’t really have a basis for estimating their hourly take-home pay after expenses.”

Krueger said the issue is actually more complicated.

“The number one issue the U.S. economy has been facing is weak demand for workers with the kinds of skills that can provide for middle class income,” he said. “A company like Uber increases demand for drivers, and I think that’s positive for the economy.”

It is important to compare Uber employees to employees who work at Uber’s competitors, most notably traditional taxi cab companies, instead of just looking at Uber on its own, he added.

“I don’t think Uber has weakened the bargaining power of taxi drivers,” he said.

Instead, Krueger explained that he thinks Uber has “reduced the value” of companies that had monopolies on the industry.

“I think that’s to the benefit of consumers,” he said. “The evidence suggests that Uber drivers make as much as traditional taxi-cab drivers, even if one accounts for expenses.”

The traditional taxi industry is inefficient because it largely fails to take advantage of mobile technology, Krueger said.

Krueger does not expect Uber’s growth to slow down soon, he added. He said that he found that Uber’s growth improved as the economy improved, meaning that although drivers had other alternatives, they still chose to work at Uber.