UberDATA: Uber’s Economic Impact on

the City of Chicago

March 12, 2014 / Chicago

Uber’s operations in Chicago – connecting riders in need of transportation with drivers

– generate significant economic activity and deliver expanded economic opportunities
in the city. A recent study by ECONorthwest, an economics consultancy, found that
the total gross impact of Uber’s operations on Chicago’s economy in 2013 was over
$46 million. That activity is also associated with the equivalent of over 1,000 gross
new jobs in Chicago in 2013.
ECONorthwest calculated the following economic contributions resulting from Uber’s
technology platform:

• The total gross impact on Chicago’s economy of Uber’s operations was $46,380,000
in 2013. We expect the impact in 2014 will be substantially larger. Uber’s year over
year revenue in January and February, 2014 has more than tripled. Even looking at
monthly growth from December 2013 to February, 2014, Uber’s revenue has grown
by almost 30%. Gross economic impact will scale roughly proportionately to Uber’s
revenue growth.

• In 2013, the convenience and efficiency of Uber’s technology created as many

as 25,000 additional rides in the City of Chicago than the transportation market would
have provided without Uber – these are incremental rides – that otherwise wouldn’t
have happened.

• Uber is also associated with the equivalent of 1,049 gross new jobs in Chicago in
2013. Uber does not employ drivers; this figure captures the new direct jobs created
last year for the transportation providers with whom Uber partners as well as the
indirect jobs supported throughout the rest of the economy from related activities by
transportation providers who use the Uber platform.

The Impact
“UberX has brightened my financial future for me and my family. I fell into financial
hard times recently after the City of Chicago pulled the lease for a second full time job
at Chicago Midway Airport. uberX has given me hope for my future! My dreams of
purchasing a house for me and my family are now going to happen with the money I
will be making with Uber.” – Alejandro Garcia, uberX partner
“Uber gave me the opportunity to purchase a new car and a new opportunity to
concentrate on my life on a whole different level and that level is called Freedom.”
– Luca Cius, UberBLACK partner

“It’s the only source for me to support my family. I was unemployed for more then a
year. I have a family of 6 people to support.” – Mohammed Osmani, uberX partner

Background and Methodology

To estimate Uber’s economic impact on a macroeconomic level, ECONorthwest
identified eleven cities – including Chicago – with well-established operations where
Uber offered all three of its different vehicle classes: UberBLACK, UberSUV and
uberX.

Researchers employed an input-ouput modeling technique that takes into account

both direct impacts of Uber’s operations as well as the indirect economic stimulus
provided to suppliers in the transportation industry and induced impacts associated
with stimulated purchasing by employees and partners of Uber.

The overall gross economic impact of Uber is the sum total of all of the economic
activity in an area that traces back to Uber’s business. This includes not just the
payments from riders to Uber and Uber’s partners, but also the activity created when
partners spend money in order to provide rides, and, on top of that, the additional
personal spending that partners undertake as a result of their income as drivers. The
additional value that Uber provides riders flows through drivers and encourages
additional economic activity in the area above and beyond a given ride. Finally,
consumers also reap economic rewards from using Uber – by virtue of the fact that
they choose to spend money on Uber rides rather than their next best alternative use
of the money, new “consumer surplus” is created.

Researchers estimated the incremental rides in several steps. Using conservative

estimates for unknown parameters, they first calculated the implied perceived cost of
Uber rides using the estimated cross-price elasticity of demand for taxis and Uber, the
estimated time cost of Uber and taxi rides, and the observed market share of Uber
rides in Chicago. They then used this perceived cost in conjunction with literature-
based estimates of the price elasticity of demand in the taxi industry to calculate the
expansion in the incremental supply of rides in Chicago.

Background on Uber Chicago

Home to Uber’s Midwest Headquarters, Uber launched in Chicago in September 2011
as the 4th market in the U.S. and is now one of 80+ markets worldwide. In Chicago,
Uber offers all of its vehicle classes: UberBLACK, UberSUV, uberX, and uberTAXI.
Uber currently employs >40 people in Chicago and will expand that number to 100 in
2014 and 250 in 2015. Not only has Uber had a dramatic economic impact on the City
of Chicago, and helped create thousands of new, well-paying driver jobs since 2011,
it has also greatly increased transportation options throughout the city. In fact, four out
of every 10 Uber trips in Chicago serve neighborhoods defined as underserved by the
city.

Posted by Uber

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