Uber Is Sweating NYC’s New Rideshare Minimum Wage

The new rules for app-based rideshare companies could mean $10,000 more for drivers every year.

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Dec 5 2018, 8:55pm

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If you’ve been paying attention to the taxi world in New York City, it’s been clear that something was going to give. Rideshare companies like Uber and Lyft have added to the worsening traffic congestion, cash-strapped cab drivers have protested in the streets, and multiple have taken their lives, citing the difficulty of making ends meet in the gig economy. The city’s sloppy efforts to organize various taxi options have created slow, long lines at airports and crowded intersections.

And so give it did. In an unprecedented move, the New York City Taxi and Limousine Commission (TLC) approved new rules this week to raise the the minimum hourly wage for app-based drivers to $17.22 after expenses. The goal was to pay drivers a living wage in a costly city, but also to curb the rapid growth of rideshare cars on the road. “TLC anticipates [the new rules] will represent a raise to 96 percent of the 80,000 drivers who work for Uber, Lyft, Via, and Gett/Juno,” the commission said in a statement.

The majority of Uber, Lyft, and Juno drivers have been consistently making less than minimum wage, as a New School report found. And a minimum wage floor would mean an estimated $10,000 raise per driver. The new rules also got rid of an extra fee for shared car rides, which could encourage more group trips.

Cities have been trying to grapple with the unchecked growth of companies like Uber for a few years now. Earlier this year, New York capped vehicle licenses for new app-based drivers, with similar efforts in Honolulu and Seattle. “There’s been this massive urge to onboard drivers at massive rates,” Jim Conigliario, founder of the Independent Drivers Guild, a union that represents more than 45,000 for-hire drivers, told me.

Rideshare companies, which are poised to lose revenue and growth in the city, warn that there could be a backlash. An Uber spokesperson told me in a statement that the new rules will “lead to higher than necessary fare increases for riders while missing an opportunity to deal with congestion in Manhattan’s central business district.” The company said the new rules don’t account for incentives and bonuses.

But Conigliario disagreed. He said riders wouldn’t see an impact on their fares if the rideshare companies complied with the new rules and paid their drivers. And the New School report similarly said consumers would experience minimum, if any, changes to their fares even if the companies paid 22.5 percent more.

When it comes to congestion, the new minimum wage is unlikely to have an immediate or large scale impact—there are still many private vehicles on the road in New York. But as a report from Schaller Consulting found, people who use services like Uber and Lyft are often using it instead of public transit. And even the groupshared vehicles (Uber Pool, Lyft Line, and Via) do not bring down traffic numbers, and add more car miles to road, according to the report. It’s worth noting, however, that Uber has become increasingly invested in citywide efforts to reduce traffic.

There are some loopholes in the city’s new rules. For one, a company can petition, after a year, to use its own utilization rate, which is essentially a formula based on how many hours a driver is logged into an app relative to how long they have a rider. For example, Uber could put drivers on the road, but if they’re driving fewer passengers, Uber still has to pay them the minimum wage. The new rules would allow the company to petition to set a minimum wage at a lower standard after a year and therefore give them an edge over other companies. “Unfortunately, the TLC’s proposed pay rules will undermine competition by allowing certain companies to pay drivers lower wages, and disincentives drivers from giving rides to and from areas outside Manhattan,” Lyft spokesperson, Campbell Matthews, said in an emailed statement.

For now, Conigliario said the drivers in his union are relieved to have a more dependable income stream, and he hopes that the new rules will also mean better mental health for drivers, and more stability for their families. “They’re groundbreaking,” he told me of the rules. “Now that the TLC has more data, I think we’ll have a learning process.”