City’s Proposed Minimum Pay Rate for Ride-Hailing Drivers Still Too Low, Advocates Say

Taxi drivers and drivers for ride-hailing apps testified for hours Wednesday at a hearing on the city’s plan to set minimum pay rates for drivers of for-hire vehicles (FHVs) like Uber and Lyft — but some say the current proposal isn’t enough to help drivers, who are struggling to earn a living in an industry that’s seen rapid growth over the last several years.

The proposed new rules would establish a minimum pay rate per trip for drivers at major app-based car service companies like Uber and Lyft, what would be equivalent to $25.76 an hour before expenses, or $17.22 after. The Taxi and Limousine Commission was required to set the new pay standards by a package of City Council bills passed in August to address widespread despair in the taxi industry, as the rapid rise of ride-hailing apps has flooded the streets with cars, increasing competition and lowering drivers’ wages.

There are currently more than 80,000 FHV drivers working in the city, and they’ve seen their median wages drop by nearly $3 an hour — just over 11 percent — in the past year alone, with a majority earning below minimum wage, according to the TLC. The increased competition has also been hard on livery car and yellow and green cab drivers: over the last several months, six drivers working in those industries committed suicide, spurring calls for the city to regulate the field. The legislation approved in August also placed a one-year moratorium, or cap, on the issuance of new licenses for FHVs.

Setting a minimum pay rate for FHV drivers will also incentivize app-based companies to limit the number of drivers on the streets at a given time, experts commissioned by the TLC testified Thursday.

“Today’s proposal represents a start, and an important one,” TLC Chair Meera Joshi said at the start of the hearing. “There will no longer be a debate on whether or not drivers deserve protections against unilateral pay cuts that make it hard, if not impossible, to earn a living.”

Still, driver advocacy groups say the city’s proposed pay rate is still too low because it underestimates how much FHV drivers have to shell out for operating expenses. Many app drivers lease their vehicles, for example, an expense the TLC estimates to cost an average of $635 per month but which drivers say can be triple that, according to the Independent Drivers Guild, which represents thousands of the city’s app-based drivers.

“A much larger portion of drivers lease than the city’s formula assumes,” guild director Ryan Price said in a statement. “What’s more, the city formula fails to account for the costs shifted to drivers to pay for their own benefits like health care and paid leave.”

The Taxi Workers Alliance echoed his concerns, saying the city’s proposed pay formula underestimates driver expenses by as much as $10,000 a year, bringing the actual take-home pay a driver would get under the plan closer to $11 an hour.

“It’s simply not acceptable in an industry where these companies are collectively valuated at over $100 billion,” Alliance Director Bhairavi Desai testified. “It’s a start, but it’s simply not enough.”

In separate statements, representatives for the popular app-based companies Uber, Lyft and Via said they support the city’s efforts to ensure livable wages for drivers, but took aim at specific elements of the plan, including its proposal to require a small bonus be paid to drivers for every shared ride they provide.

“The shared rides surcharge isn’t only unnecessary, it directly undermines the city’s efforts to discourage congestion-causing single-occupancy vehicle trips,” Via said in a statement. “A surcharge on shared rides means rides get *more* expensive as they are shared by more passengers.”

Joseph Okpaku, vice president of public policy for Lyft, said that instead of setting a minimum pay rate per ride, the TLC should set a minimum weekly wage, arguing that a per-ride minimum will incentivize drivers to take short trips over long ones.

“The TLC’s current proposal would increase congestion, raise costs for those who need rides most, and reduce the competition between companies that benefits drivers and passengers,” he said in a statement.

The TLC plans to review the testimony received during Wednesday’s hearing, and could potentially make changes to its proposal. It will vote on the plan at a future meeting, though a specific date hasn’t been set yet, a spokeswoman said.