Is Uber Offering It’s Drivers Payday Loans? - Change Machine

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Is Uber Offering It’s Drivers Payday Loans?

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Mae Watson Grote | Founder and CEO

Employers intending to thrive on the very financial insecurity they create reflects a deeply broken labor market.

In the late aughts, one of the last customers I coached was a man named Jay. Jay’s prison term had ended the year before we met, he was single, didn’t have debt, and held a job delivering paychecks. I was helping him establish a new financial identity, from securing a relationship with a bank to establishing credit history, and identifying a financial goal. Among all my customers, Jay was one of  the more financially secure because, in most months, he could make ends meet.

But building on that foundation and achieving financial mobility was going to be even harder for Jay. Delivering paychecks was a steady gig — he would joke about the holes he’d wear out in his monthly MetroCard from running all over the city — but it was still a gig. He wasn’t an employee and didn’t have benefits. At the end of the day, he was still one paycheck away from abject poverty.

If there were a standard, 40-hour-a-week job with benefits available to Jay, he wouldn’t have thought twice. But he’s a formerly incarcerated Black man from East New York. William Julius Wilson’s field-defining work on race and poverty helps us understand why generations of African American men like Jay have worked at the periphery of the labor market.

Since the advent of the modern labor market, African Americans and women are disproportionately represented in the gig economy.1 Sometimes people take on extra, albeit temporary work because they want to afford a better vacation. Or maybe they need the flexible hours to help care for their families because affordable child care is scarce, or a medical expense needs to be paid. More often than not though, gig work is a manifestation of their marginalization. Sometimes people take on extra, albeit temporary work because they want to afford a better vacation. Or maybe they need the flexible hours to help care for their families because affordable child care is scarce, or a medical expense needs to be paid. More often than not though, gig work is a manifestation of their marginalization.2

There’s no doubt that the margins can be an engine for growth. Tech platforms, for example, have enabled labor markets to be more efficient. “At nearly $1 trillion (approaching 5 percent of U.S. GDP), freelance income contributes more to the economy than industries such as construction and transportation and is on par with the information sector,” according to Upwork and Freelancers Union.

Scores of people have joined Jay’s ranks since I coached him a decade ago. Whether by choice or default, tech-enabled platforms have allowed millions of job-seekers to secure income as gig workers. But these platforms largely exploded in popularity only after the Great Recession, during a period of economic recovery. What happens to gig workers during the next recession or economic downturn?

Between dwindling retirement contributions and rising healthcare costs, workers are shouldering a greater share of the risk and taking on an increasing amount of financial insecurity in the workplace, as Jacob Hacker argues in The Great Risk Shift. As this trend of risk displacement reshapes how workers are paid and compensated, low and middle-income people’s financial insecurity will only be exacerbated.

To wit: Uber Money.

Last November, I was in Las Vegas when Uber announced its push toward financial services at Money20/20. Like a 1980s Milli Vanilli concert, the announcement featured dry-ice vapor and a laser light show.

The smoke and mirrors didn’t end there: “Drivers often start the day in the negative,” said Peter Hazlehurst, Uber’s Head of Payments, “because they have to buy gas. So Uber’s new card will front them $100.”

Wait, what?! That sounds like a payday loan. Smoke and mirrors is one thing for a corporate kick-off event, but no amount of spin should obscure worker exploitation.

Hazlehurst described a small, short-term loan probably unsecured and possibly linked to the driver’s next paycheck. But what distinguishes payday loans from small-dollar loans offered by your local credit union or non-profit lender, and even many credit cards, is their predatory nature and wealth-stripping effect.

The specific terms of Uber’s microloans are not yet available, so an ominous question looms:  Is Uber planning to offer payday loans to its own workforce? The company already has a track record of misleading drivers about the true financial benefits and costs of ridesharing.

Drivers don’t start the day with a deficit because they need to fill the tank at the top of the day. They start the day with a deficit because they don’t have the proceeds from the previous day to pay for that gas.

Employers intending to thrive on the very financial insecurity they create reflects a deeply broken labor market.  And given rideshare companies’ innovation is the very technology that manages complex systems of data, no entity could appreciate the financial insecurity caused by income that doesn’t cover expenses than the platform itself.  There’s really no better illustration of how design reflects the intent and purpose of the designer.

Uber drivers start the day with a deficit because financial insecurity is the norm for a marginalized workforce. Legally, rideshare drivers are considered independent contractors, but nonprofits we’ve partnered with in the Change Machine community contend that they rarely think of themselves or fully operate as small business owners and operators. Not only are Uber drivers unable to to set their own prices and are closely supervised by the app’s algorithms, but in our experience, drivers readily buy-into Uber’s “earn anytime, anywhere” pitch, as if one is an entrepreneur just by picking up rides in between educational classes, or using the downtime between rides to work on their screenplay.  But below, in 7.5 point font, there’s the rub:  “The opportunity is for an independent contractor” which effectively means that drivers are assuming the risk, but hardly the profit.

From too-low estimates on the accelerated depreciation of the car to unanticipated costs like a license to access the airport, rideshare drivers often spend significantly more than they anticipate. Even when expenses are carefully tracked, real-life expenditures often exceed income — leaving drivers struggling to just break even.

As a result, they’re “lost to rideshare,” said a financial coach working with a workforce development nonprofit in Columbus, Ohio. Coping with all these unanticipated consequences puts the job search or going back to school even farther out, becoming another barrier disguised by the promise of mobility and entrepreneurship.

Uber’s genius is in building a software app to utilize fallow assets, but the company doesn’t help drivers make that mental or operational shift as independent contractors who maximize those assets. Of Uber’s 11 Resources for Drivers (“Get all the information you need to start driving and delivering with Uber”) only one addresses the financial implications. And even then, “Your tax questions, answered,” makes no reference to quarterly income and employment tax payments, how to record expenses like parking, tolls, and gas, let alone advise drivers about the Volunteer Income Tax Assistance, the IRS’s free tax preparation program.

A decade ago, at least Jay could afford a monthly MetroCard upfront, and nor did his employer introduce by-design, wealth-stripping financial products.  But his financial insecurity, alongside that of most gig workers, is not a foundation for a thriving labor market nor a healthy economy.


(1) “People of color … are more likely to be in non-traditional arrangements that are lower paid and offer less flexibility to workers.” Gig Economy Data Hub, “Who Participates In the Gig Economy” (Washington, D.C.:  Aspen Institute’s Future of Work Initiative and Cornell University’s ILR School, 2020),

(2) “More than half of contingent workers (55 percent) would have preferred a permanent job.” U.S. Bureau of Labor Statistics, “Contingent and Alternative Employment Arrangements – May 2017” (Washington, DC: U.S. Department of Labor, 2018),

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