When you’ve had your taxi ride, or you’re about to, you might find yourself thinking, “Is this really worth it?”
Or, “I don’t want to pay this much money.”
You’re not alone.
According to the U.S. Bureau of Labor Statistics, the average hourly wage for a taxi driver in 2016 was $9.50.
It is a significant increase from the $7.40 an hour drivers were earning in 2012, when the industry was still reeling from the Great Recession.
And yet, the vast majority of taxi drivers do not make much money.
“I would argue that the majority of taxis are not being driven by drivers who are making less than the minimum wage,” says John B. Smith, director of the Institute for Local Self-Reliance, an advocacy group.
“The majority of drivers are making at least the minimum amount that the law requires.”
But the average driver’s earnings do depend on how well he or she performs in a job.
“If you don’t know the drivers, they can be very misleading,” says Smith.
“When you hire a taxi, the drivers should be looking for a job.”
Taxi drivers can earn more than the average worker, but some have more money than the rest of us, says Michael H. DeMarco, a professor at the University of Maryland, Baltimore County, who has studied the industry.
“There’s a lot of people out there that are earning way more than minimum wage and a lot that are being paid way less than minimum wages,” says DeMarco.
“They may not have a job and be driving taxis, but they are earning far more than you’d think.”
The average driver in New York City earns about $6.60 an hour, and some in Los Angeles earn $7 an hour.
“These drivers make the drivers look good, but there’s no way they’re really getting paid that much,” says Robyn P. Schoener, the vice president of policy and advocacy for the New York Taxi Workers Alliance.
A taxi ride can be an expensive trip.
The average cab fare in the New England states of Massachusetts, Connecticut, and Rhode Island is about $2.60.
New York drivers in the region make $10.80 an hour or $20.80 per hour.
In California, the median hourly wage is $9 an hour and drivers in San Francisco make $11.70 an hour in the San Francisco Bay Area.
“A driver is not going to pay a driver $15 an hour,” says Pia Chai-Wu, a senior staff attorney at the New Jersey Restaurant Association.
The minimum wage for the industry is a good starting point.
“You need to be looking at the amount of money that a driver is making, and then figuring out what the hourly wage should be,” says Schoeder.
The hourly wage, which is defined as the hourly rate of pay that a worker makes, does not include tips.
But drivers can get tips, which are earned in exchange for driving.
In most states, drivers get paid tips at the end of the day.
The National Restaurant Association estimates that drivers in New Jersey, California, and New York earn about $7 to $9 per hour, but drivers in Massachusetts, Rhode Island, and Connecticut make about $12.40 per hour or more.
But the industry has had some success raising wages for drivers over the years.
“It’s very rare that the minimum-wage increase comes with a substantial raise,” says Robert B. Miller, a labor economist at the Labor Department.
The Federal minimum wage has increased by nearly 20 percent since 2005.
In 2015, the Federal minimum was $7 per hour in New England, $8 in the South, and $9 in the Midwest.
New England’s minimum wage went from $8.25 an hour to $10 an hour by 2021.
In 2018, New York’s minimum was raised to $11 an hour; in 2019, to $12 an hour nationwide; and in 2020, it was raised again to $13 an hour nationally.
The U.K. has had the highest minimum wage in the world since 2003, when it was £5.30.
California, with the second-highest minimum wage, has the lowest average hourly pay in the U; drivers there make about the same as drivers in Washington, D.C. And in New Mexico, drivers earn about the least in the country.
“Drivers in New Mexicos minimum wage is just way too low,” says Chai Wu.
“So it’s not fair for them to be driving $7 and $8 an hour.”
What is the minimum hourly wage?
The Bureau of Transportation Statistics’ Bureau of Labour Statistics calculates the federal minimum wage as a percentage of the state’s average hourly earnings.
This means the federal rate is the federal wage rate plus the state rate.
The Bureau says