Tens of thousands of drivers who work for app-based companies in New York City are set to receive a raise, after the Taxi and Limousine Commission voted on Tuesday to enact a minimum pay standard for the independent contract workers. The move makes New York the first city to establish pay regulations for the ride-hailing giants, and comes on the heels of a first-of-its-kind cap on app-based cars passed by City Council.
Under the new per-minute and per-mile formula, drivers are promised an hourly wage of at least $17.22 after expenses. According to TLC Commissioner Meera Joshi, the new pay standard will mean a 22.5 percent increase for a majority of the 80,000 drivers working for Uber, Lyft, Juno, and Via.
Drivers will also receive a “shared ride” bonus for picking up and dropping off carpool riders and an “out of town rate” to pay drivers for time spent returning to New York from trips that took them outside the city. Overall, the new suite of rules is expected to translate into a roughly $9,600 annual salary bump.
But some drivers are skeptical. “I don’t know if the numbers are going to be what they’re saying they’ll be,” a driver who works for Lyft and Uber, and requested that we not reveal his identity for fear of retribution, told Gothamist. “Everybody is suffering right now…there’s always a catch.” He noted he used make $300 or even $400 before expenses on some nights, but is now pulling in less than $200 while working even longer shifts, sometimes up to ten hours at a time. He says overhead charges cut out more than half of his take home pay.
The rule change comes after a city study released this summer found that 40 percent of ride-hail drivers are on Medicaid, and nearly 20 percent qualify for food stamps. That study determined that “driver earnings before expenses have declined since 2014, particularly for those working more than 15 hours per week.” While the study didn’t name a precise cause for the plunging incomes, drivers and their advocates have long blamed “widespread exploitation” on the part of Uber and its competitors.
On Tuesday, the New York City Taxi Worker Alliance, which helped organize drivers in support of the pay standards, celebrated the decision, while accusing the ride-share companies of continuing their practice of “charging passengers more while cutting driver pay.”
“Just as it did with the vehicle cap, New York City is once again passing landmark regulation to protect workers in the unruly gig economy,” said TWA Executive Director Bhairavi Desai. “It’s the first real attempt anywhere to stop app driver pay cuts, which is an Uber and Lyft business practice at the heart of poverty wages.”
In a statement, a spokesperson for Uber criticized the implementation, predicting that the minimum pay standards would “lead to higher than necessary fare increases for riders.” Lyft echoed the sentiment, saying that “the rules would be a step backward for New Yorkers, and we urge the TLC to reconsider them.” Meanwhile, Via, which already pays its drivers a minimum wage, is reportedly backing the move.
Uber is widely expected to announce a major fare hike by the end of the year. The new rules will go into effect in 20 days.