A new report conducted by New York City’s Taxi and Limousine Commission argues that a minimum pay standard should be established for drivers who work for major ride-hailing companies, such as Uber and Lyft.
The study, by economists James Parrott of the New School in New York City and Michael Reich at the University of California at Berkeley, contends that drivers for ride-hailing companies should get a raise to $17.22 an hour after expenses. This would translate to a net earnings boost of 22.5 percent, or an average of $6,345 per year.
“The proposed minimum pay standard is designed to cover the drivers’ expenses and still provide the independent contractor equivalent of $15 an hour,” the study says.
Offsetting operating expenses
The study authors found that 85 percent of current drivers earn less than their proposed minimum wage, and 60 percent of ride-hailing drivers in New York work full-time.
“Hourly pay is low in large part because the industry depends upon a ready availability of idle drivers to minimize passenger wait times,” the report said. “This business model reduces driver trips per hour and therefore driver pay per hour.”
New York has about 80,000 ride-hailing vehicles, which is about six times more than the city’s 13,587 traditional yellow taxis, the New York Times reports. “Uber alone would be the largest for-profit private employer in New York City — if Uber drivers were classified as employees rather than independent contractors,” the report said.
If implemented, the wage boost would have a minimal impact on riders. Fares would only increase 3 to 5 percent, and average wait times for passengers would go up by about 12 to 15 seconds, according to the study.
Uber issues statement
Uber criticized the proposal and argued that a wage increase would end up “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 [being] flawed,” an Uber spokesperson said in a statement.
The study’s findings were received in a more positive light by the Independent Drivers’ Guild, a group affiliated with the machinists union that represents more than 65,000 New York City drivers.
“The new study confirms what we’ve been saying for some time — that drivers are in fact struggling and it’s time to act,” guild founder Jim Conigliaro Jr. said in a statement. “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.”