In many markets they pay drivers more than they make on each ride - significantly more. It happens in various forms, but I suspect minimum-payout subsidies are

In many markets they pay drivers more than they make on each ride - significantly more. It happens in various forms, but I suspect minimum-payout subsidies are one of the main causes. In many cities Uber is trying to shorten wait times (so there's a car very close to you always), and the only way to do this is to flood the streets with drivers. Flooding the streets with drivers lowers each driver's earning ability, since there are now more drivers competing for the same number of passengers. To make sure drivers don't quit, Uber has been in the habit of guaranteeing payouts - if you work this area during a particular time period, they guarantee you a minimum level of earnings, paying you the difference if there aren't enough passengers. This is a big part of how they lose money - in order to maintain a system where a car is always nearby, they need to pay drivers a lot more than they make from the passengers.