Activists in New York City have been calling for officials to support increased wages for financially-struggling drivers, as at least six have committed suicide in recent months after falling into debt. Now, a new study from the city’s taxi commission is offering one potential policy change, calling for a $17.22 minimum wage for all drivers who earn a living from ride-hailing companies like Uber and Lyft.
The proposed policy from the city’s Taxi & Limousine Commission calls for drivers who work for ride-hailing companies—also including Via and Juno—to earn $17.22 per hour, the equivalent for an independent contractor of $15 per hour plus paid time off. It would be the first policy in the U.S. to apply to independent contractors who drive for ride-hailing apps.
The impact would be significant for many drivers, according to the study’s authors, James Parrot of NYC’s New School and Michael Reich, professor at the University of California-Berkely. The pair’s findings found that 85 percent of current ride-hailing app drivers earn less than their proposed wage.
“These drivers would receive an additional $6,345 per year,” they wrote. “The net (after-expense) pay increase among these drivers would average 22.5 percent.”
The study highlights the growing strain among the tens of thousands of drivers in NYC in recent years, after Uber first deployed in the city in 2013. The authors found that 90 percent of the city’s app-based drivers are immigrants, and driving is the only job for two-thirds of them.
“Eighty percent acquired their vehicle to enter the industry and would risk losing their investment if they switched to working in another industry,” the study says.
More notably, forty percent of drivers have incomes so low they qualify for Medicaid, and another 16 percent have no health insurance. Nearly one-in-five drivers qualify for food stamps.
All of this, even as Uber and Lyft, among others, have witnessed significant growth. With sky-high valuations, and billions in investor cash to boot, the companies artificially suppress the cost of rides in a competition to garner market share.
“This business model reduces driver trips per hour and therefore driver pay per hour,” the study says. Uber, Lyft, Via and Juno account for 80,000 vehicles in New York City, the New York Times reports, about six times more than the city’s 13,587 yellow taxis.
Uber and Lyft didn’t immediately respond to requests for comment from Jalopnik. In an earlier statement to the New York Times, an Uber spokesperson said: “Uber believes that all full-time drivers in N.Y.C.—taxi, limousine and Uber alike —should make a living wage after deducting reasonable expenses.”
Groups organizing around increasing compensation for drivers offered vastly different perspectives toward the study on Monday.
“The new study confirms what we’ve been saying for some time—that drivers are in fact struggling and it’s time to act. New York must require exploitative companies like Uber and Lyft to pay a livable wage,” said Jim Conigliaro, Jr., founder of the Independent Drivers Guild, which represents more than 65,000 app-based drivers in New York City, in a statement.
“The city must lead the way for a more fair industry on behalf of the more than 65,000 app-based drivers in our city as well as to set a precedent for those struggling all across the U.S.”
Conigliaro said his group is continuing to analyze the proposal, “but without a doubt establishing minimum pay rules that raise driver pay is the single most important step the city can take to help these struggling working families and we thank the city for listening to drivers and pursuing it.”
It didn’t earn praise from every group. The New York Taxi Workers Alliance said the proposal fails to take into account drivers with higher expenses, and fails to address growing income inequality by locking them into a minimum wage instead of the fare for a ride.
NYTWA Executive Director Bhairavi Desai said in a statement that city council and NYC’s mayor should throw their support behind a cap for for-hire vehicles and ensure they can earn their income based on the rates of fare.
“These companies have sought to legitimize a discourse that calls minimum wage pay a victory in an industry where for generations drivers have been able to achieve economic stability, buying homes, and sending their kids to college,” Desai said. “Minimum wage is not a reasonable floor in an industry where workers put so much on the line, where rates of injury and risks on the job are so high.”
Meera Joshi, the city’s taxi commissioner, didn’t comment on the study to the Times, but has previously said the pay rules would be set based on the study.
Update (3:33 p.m.): Uber and Lyft have sent along statements.
Lyft is proud to provide valuable, flexible earning opportunities for so many drivers in New York. We have not yet reviewed the full report, but the new proposed policy appears to create financial incentives for drivers to provide less service. As a result, there will be more empty cars, more congestion, longer wait times for passengers, and, over time, less pay for drivers in New York City. This would be a bad outcome for all New Yorkers, and Lyft is committed to working with policymakers to find a better solution.
Lyft also says its wages for drivers is far higher than what the TLC found, and claims net earnings—after expenses—already equals the $17.22 per hour wage the study argues should be set.
Here’s Uber’s remarks:
We share the goal that all full-time taxi and Uber drivers in NYC should earn a living wage, but the report’s proposals would get there by shrinking the transportation pie; hurting riders through substantially increased prices and reduced service; and severely limiting the amount of time existing drivers can access the platform. We are concerned about the unintended consequences of implementing the findings in this report and believe many of the assumptions made about our industry are over-simplified to the point of flawed.