NYC May Set Minimum Pay For Uber Drivers

NEW YORK, NY — New York City may become the first in the nation to set a pay floor for drivers who work for app-based car services such as Uber and Lyft. A report published Monday recommends setting a minimum pay rate of $17.22 per hour, plus an allowance for paid time off, for drivers using the city's four largest ride-hailing apps: Uber, Lyft, Via and Juno.

The measure would increase more than 50,000 drivers' pay by more than $6,300 a year, said James Parrott of the New School's Center for New York City Affairs. It would be the first of its kind applied to indpendent contractors, which the drivers are considered.

"The policy proposal addresses the inefficiency and inequity that now characterizes the app industry," said Parrott, who authored the report with Michael Reich, the co-chair of the Center for Wage and Employment Dynamics at the University of California, Berkeley.

The city's Taxi and Limousine Commission ordered the report in response to drivers' concerns last year about earning a living. It comes amid a debate about how to improve conditions in the taxi and for-hire vehicle industry after six recent suicides by professional drivers.

TLC Commissioner Meera Joshi embraced the report's findings, saying in a statement that it would inform efforts by the commission and the City Council to address driver pay. The TLC hopes to move forward this summer or early fall with a city regulatory approach, which could include Council legislation, according to a source familiar with the report.

"This first of its kind report provides an excellent foundation for public policy and illustrates the need for action," Joshi said in a statement.

But a spokesman for Mayor Bill de Blasio splashed cold water on the proposal, calling Joshi's statement "very premature."

"The Mayor and City Council will be working together on this issue and reviewing the report before making any decisions on the path to take," mayoral press secretary Eric Phillips wrote on Twitter. "Help for yellow drivers is a big focus of ours right now."

The city's four largest ride-hailing apps effectively form an "oligopoly," the report says, earning huge corporate profits while drivers face barriers that prevent them from leaving the industry. About 80,000 drivers are affiliated with those apps, the report says.

About 85 percent of the city's app-based drivers currently make less than $17.22 an hour, which is equivalent to a $15 minimum wage for independent contractors, the report found.

Driving is the only job for two thirds of the city's app-based drivers, the report says. Ninety percent of them are immigrants, and half support children. Forty percent have incomes so low they qualify for Medicaid, and 18 percent qualify for food stamps, nearly twice the rate for New York City workers overall.

The wage floor would encourage the companies to dispatch their drivers more efficiently, which would help them absorb the costs of paying drivers more without increasing fares, the report found.

"The companies do not use the drivers' working time very efficiently," Reich said. "The drivers are forced to spend much of their time crusing the city streets without passengers waiting for a requested ride."

If its drivers were actual employees, Uber would be the city's largest for-profit employer, the report says. The company spends just $50 million on operating costs in the city, according to the report, only about 13 percent of its estimated $375 million in profits from commissions and fees.

The app-based companies take commisssions of 15 to 20 percent, Reich said. Those rates are as high or higher than those charged by Amazon, which has 600,000 employees and much greater overhead, he said.

"The companies can afford to (take) much lower commission and still make pretty good money," Reich said.

But a spokeswoman for Uber said the company has concerns about "unintended consequences" of the findings in the report, which contains assumptions about the industry that are "are over-simplified to the point of flawed."

"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," Uber spokeswoman Alix Anfang said in a statement.

The report was published after a push by the Independent Drivers Guild, an organization representing drivers for the four major app companies. The guild petitioned the Taxi and Limousine Commission earlier this year to set a minimum wage for app-based drivers.

"We are continuing to analyze the potential 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," Jim Conigliaro Jr., the guild's founder, said in a statement Monday.

The proposal to help app drivers comes as the City Council considers several bills that would tighten the city's regulatory grip on Uber and similar companies, including a temporary cap on new for-hire vehicle licenses.

The New York Taxi Workers Alliance, a group that represents taxi and other drivers, favored action by the Council over the TLC's proposal, which it said props up business practices that have contributed to poverty among app-based drivers.

"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," Bhairavi Desai, the alliance's executive director, said in a statement. "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."

(Lead image: An Uber SUV waits in Manhattan in June 2017. Photo by Spencer Platt/Getty Images)