City of Chicago Announces Study that Finds Average Taxi Driver Earns $12 per hour

August 29, 2014

Vehicle Leases Cost Nearly $24,000 Annually; After Costs Average Driver Earns $34,000

Mika Stambaugh    312.744.5365

The Chicago Department of Business Affairs and Consumer Protection (BACP) announced the results of a comprehensive study finding that the average taxi driver in Chicago earns $34,000 annually, or $12 per hour.  Before accounting for costs, the average driver makes nearly $61,000 a year, or the equivalent of $21.79 an hour.  The cost of a lease is by far the biggest cost for the 94 percent of drivers who lease vehicles:  the study found that the average driver pays approximately $24,000 each year to lease the vehicle, representing 39.2 percent of driver revenue.  The study can be found here.  

“This study is the most comprehensive of its kind available in Chicago and my department is reviewing it closely as we work to make reforms that will improve the experience for Chicago’s roughly 12,500 taxi drivers,” said Commissioner Maria Guerra Lapacek of BACP, “I look forward to working with the City Council, taxicab drivers, and the industry to identify additional reforms to reduce costs, red tape, and obstacles for drivers.”

The City’s study is the most comprehensive review of Chicago taxi driver income available.   The study analyzed eight months of trip-by-trip records for more than 10.6 million taxi trips conducted from January 1, 2013 thru August 31, 2013 provided by 3,900 taxis.   In addition to its analysis of trip records, the study also includes results from a survey of 414 drivers.  By relying on actual trip records for taxi rides, the study is far more rigorous than other recent, commonly cited studies that were based upon self-reporting surveys of taxi drivers conducted at O’Hare Airport.

After adjusting income for costs, the study found that the average driver earns $12.14 per hour or $33,857 annually.  “Extended-time drivers,” the 40 percent of drivers who work 11 or more hours a day, earn $12.50 an hour or $46,614 annually. Another 20 percent of drivers are “part-time drivers” that work 7 hours or less per day and earn an average of $10.05 an hour, or $15,374 annually.  Overall, 58 percent of drivers make more than $10 per hour.

The study found that driver income is heavily influenced by their costs. Before deducting costs, the average driver earns $21.79 per hour, or $60,767 annually in revenue. Vehicle leases are by far the biggest cost faced by drivers, costing the average driver $23,841 each year.  Other common costs for drivers include fuel, airport fees, and licensing fees.  Lease rates alone consume roughly 39.2 percent of average driver revenue. Approximately 94 percent of taxi drivers in Chicago lease their vehicles.      

The City’s 2012 taxi reform ordinance improved the quality of taxi service in Chicago while reducing costs for drivers.  Changes to vehicle age limits created incentives for the taxi industry to invest in more fuel efficient vehicles:  today approximately 80 percent of taxis are fuel efficient, up from 11 percent in 2011, the year before the taxi reform ordinance went into effect. A more efficient fleet means that drivers pay less in fuel. The average driver of a fuel efficient vehicle has saved between $6,600 – 8,900 each year at the pump which would help offset some of the lease rate costs.  

To better understand the current state of taxi driver income in Chicago that will help identify opportunities for future reforms, the City commissioned a taxicab industry study in 2012. BACP awarded a contract to conduct the study to a team led by Nelson\Nygaard Consulting Associates through the City of Chicago’s open bid and solicitation process set by the Department of Procurement Services. Nelson\Nygaard Consulting Associates conducted the study in association with DemandTrans Solutions and Taxi Research Partners. Nelson\Nygaard Consulting Associates is an internationally recognized firm committed to developing transportation systems that promote vibrant, sustainable, and accessible communities. DemandTrans is a research and consulting company that specializes in technology solutions for businesses, with an expert knowledge of transportation systems. Taxi Research Partners is an international consulting company specializing in the analysis of on-demand transportation - taxicabs and shuttles. C. S. Carthan and Associates, a management consulting firm, provided supporting contributions.  


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