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New York City Considers New Pay Rules for Uber Drivers

Discussion in 'News' started by BurgerTiime, Jul 2, 2018.

  1. BurgerTiime



    New York City’s taxi commission is considering new pay rules for drivers for Uber and other ride-hailing apps — a move that would make it the first major American city to regulate driver pay rates amid growing complaints about low wages in the industry.

    The initial proposal, which will be outlined in a study to be released on Monday, would establish a minimum rate for drivers of $17.22 an hour after expenses. The policy would increase driver earnings by about 22.5 percent on average, or $6,345 per year, for those who would get increases under the proposal, according to the study by two independent economists.

    The rules seek to address a problem at the heart of Uber’s business model: New Yorkers have quick access to cheap rides in nice vehicles. Uber takes a steep commission. But many of its drivers are working long hours and struggling to make a decent living.

    “Their low pay has persisted despite the rapid growth of the industry, the major benefits it has provided to consumers, and the high returns it has generated for the companies and their external investors,” the study said.

    The study is a rare glimpse inside New York City’s booming ride-hail industry. It found that most drivers work full time and that 85 percent of drivers currently make less than the proposed pay standard. The median net hourly earnings in the industry were about $14.25. The proposal aims to bring their pay in line with the $15 minimum wage the state is moving toward while considering the challenges they face as independent contractors.

    About 40 percent of drivers have incomes so low that they qualify for Medicaid, according to the study. About 18 percent qualify for food stamps. Some drivers bought vehicles, enticed by claims that they could make as much as $5,000 during their first month of driving, and now feel trapped.

    The new pay rules come as New York City is considering a series of regulations for Uber, including a cap on vehicles.

    “We look forward to reviewing the report,” said Alix Anfang, a spokeswoman for Uber. “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.”

    The rise of Uber has decimated the yellow taxi industry in New York and drivers across the for-hire vehicle business complain of low wages. Six professional drivers have killed themselves in recent months.

    But Mayor Bill de Blasio and other elected officials might be cautious to start another bruising battle with Uber, which launched an aggressive attack against the mayor in 2015 when he tried to cap its vehicles. Cities across the world have struggled with how to regulate the company. Uber recently won back its license to operate in London after agreeing to stricter government oversight.

    The city’s taxi commissioner, Meera Joshi, has said that the commission would set new pay rules based on the study’s findings. She declined to comment on the study before its release. The City Council might separately consider its own legislation.

    Under the rules the taxi commission is weighing, if a driver’s earnings fall below $17.22 per hour over the course of a week, after subtracting an expense allowance, the apps will be required to make up the difference. The study suggested the apps could absorb this cost partly by lowering their commissions, which range from about 10 to 25 percent of passenger fares on average, depending on the company.

    Some drivers would still make substantially less than $17.22 per hour because their expenses are much higher than the allowance.

    Beneath this straightforward approach is a sophisticated arrangement designed to make the entire app-based system more efficient.

    Its centerpiece is an incentive for the app companies to increase their so-called utilization rates — that is, the portion of each hour in which drivers are ferrying a passenger. The utilization rate is essentially a measure of how busy drivers are.

    Under the proposal, the per-mile and per-minute rates of pay would fall the more drivers as a group work during each hour, giving the companies an incentive to keep drivers busier. They could do this by limiting the number of drivers working at any given time.

    The authors say this incentive would address a key inefficiency of the current system, which is that companies like Uber and Lyft lure too many drivers onto the road as a way to lower wait times for passengers. This oversupply depresses wages, since drivers can only earn money when they have a passenger in their car.

    The pay rules would apply to four major car service apps — Uber, Lyft, Via and Juno — all of which provide more than 10,000 trips each day. The study, which relied primarily on data collected from the companies by the taxi commission, was written by Dr. James Parrott, of the Center for New York City Affairs at the New School and Professor Michael Reich, of the University of California at Berkeley.

    Zubin Soleimany, a lawyer for the Taxi Workers Alliance, a group that advocates on behalf of professional drivers, criticized the proposal for accepting the general pay structure of the app industry, which, he said, has created a race to the bottom that hurts both app drivers and taxi drivers. His group prefers requiring the apps to charge the regulated taxi fare at a minimum, and giving drivers a guaranteed percentage of that fare.

    The proposal has at least two potentially significant flaws. Mr. Soleimany pointed out that app drivers could end up having to work harder over time for the same amount of money. As drivers work a greater portion of each hour, the per-mile and per-minute rates fall, leaving them potentially no better off financially.

    But in an interview, Mr. Reich said his calculations showed that the utilization rate — the measure of busyness — was only likely to increase by a few percentage points, meaning drivers would be working only somewhat harder (about 2.5 minutes per hour on average in a plausible scenario) for significantly more pay (about 22.5 percent more per hour on average).

    “We think they’ll see this as a good deal,” Mr. Reich said.

    A second problem is the potential for gaming the new system. Because drivers must be paid $17.22 per hour regardless of whether or not they earn that amount by transporting passengers, they could choose to simply decline rides and collect the minimum wage while remaining idle.

    “We have not seen the full report, but the new proposed policy appears to create financial incentives for drivers to provide less service,” said Adrian Durbin, a Lyft spokesman. “Lyft is committed to working with policymakers to find a better solution.”

    Mr. Reich said the app companies are able to identify app drivers who decline too many rides. But the companies are loath to penalize drivers, whom they classify as contractors, for declining rides because that would imply an employment relationship.

    Other researchers have also found that app-based drivers make low wages. A study earlier this year by the liberal Economic Policy Institute, relying on data released by Uber, showed that the company’s drivers make about $11.77 per hour on average nationally, after deducting Uber’s share and vehicle expenses.

    The findings in the taxi commission study are roughly in line with that figure after adjusting for the pay scale in New York City, where wages are about 25 percent higher than the national average.

    Driver expenses can add up quickly. A typical driver could easily spend about $20,000 a year on expenses, including gas, car payments, insurance and vehicle registration fees, according to the study.

    The study showed that despite the claims by Uber and Lyft that drivers can work when, where and for however long they want, a majority work full-time in New York City in order to pay off their vehicles, which they obtained in order to drive on the apps.

    “Paying for a vehicle entirely by driving for hire, as over two-thirds of New York City’s app drivers try to do, is only possible by working full-time,” the authors wrote. “Work hours are not flexible.”

    In New York City, Uber’s annual revenue from passenger fares is about $2 billion, according to the study’s estimate. The company keeps about $375 million in commissions and fees while its operating costs are relatively low, at an estimated $50 million each year.

    That kind of markup, the authors concluded, was higher than almost any other similar marketplace — higher even than Amazon, which must carry large inventories of goods and shoulder far greater labor costs, and much higher than companies like eBay and Etsy.
  2. SEAL Team 5

    SEAL Team 5

    Wow, where do I sign up?
  3. In general, I HATE government intervention. But in this case, I LOVE it!

    It sends a clear message to U/L that you can't keep lying to people and f*cking people over without consequences. FWIW, city council in my market is considering something similar.

    I hope this goes thru all over, and U/L lose billions before breaking down and playing fair with drivers.
  4. Well actually
    I would prefer if we all gather on the roof of Uber Corporate
    Dressed as pirates
    And make Board of Directors and Uber management walk the plank
    . . .
    But i will SETTLE for Govt. Intervention.

    Attached Files:

    Last edited: Jul 2, 2018
    ABC123DEF, Dice Man, Ziggy and 20 others like this.
  5. 1.5xorbust


    San Diego
    Uber might not be that opposed to this since all rideshare companies would have to abide by the same rules and they probably wouldn’t lose market share.
    Yomann, KekeLo and tohunt4me like this.
  6. Possible solutions:

    1. Raise prices, to cover the inevitable additional expense that will arise.

    2. Increase pay.

    3. Cap the number of drivers out at slow times.

    4. Stall legislation by any means. Hurry up and get SDCs.
    Atariq, KekeLo and tohunt4me like this.
  7. Except

    They murdered a woman with their S.D.C .!

    Too cheap to hire a REAL TECHNICIAN.

    Attached Files:

    NYCY, KekeLo and unPat like this.
  8. Oscar Levant

    Oscar Levant

    A better solution is to force Uber into the same fee/pay structure as given to Taxis. put everyone on the same playing field. Maybe rideshares get a slightly cheaper rate given that they cannot take street hails, only app hails, which would give taxis the advantage, and cabs can take cash. I'd say make Uber fee structure similar to taxis, but 80% of taxi rates.

    An hourly wage is nice, but, it will definitely for uber to shut down, there is no way they are going to agree to it.

    What I would prefer is a flat fee weekly rate, that way, if I work harder, I make even more, but it would have to be regulated to prevent Uber exploitation, which they do a lot to drivers.

    UBer won't do it, trust me. They shut down in Austen merely because they didn't want to pay for fingerprinting and more stringent backgrond checks ( I think that was the reason, I'll have to check ) the kind that were given to taxis. This is too big of a pill to swallow for Uber, I'm.
    KekeLo and everythingsuber like this.
  9. UBERPROcolorado


    KekeLo likes this.
  10. UBERPROcolorado


    NYC is funny. Do they really think that Uber will allow a precedent to be created that could spread to other cities? Never!

    Uber will pull out of NYC and wait for their citizens to hang the politicians that drove Uber out. Riders do not car about the drivers income, they only care about the cheap rides.

    The liberals are brain dead. If Uber were to agree to a minimum wage, which I cannot see happening, the cost of a trip would drastically increased. Again, the citizens of NYC would revolt.

    I love watching the liberals self destruct.
  11. I read a publication a while back (from Uber itself) stating that NYC is their 3rd most profitable market. London #1, btw. They won't leave NYC, but they will fight tooth and nail.
  12. If this kind of policy goes forward Uber will actively trim the driver force to match ride demand, I assume/hope by forcing low rated drivers off the system when necessary. I mean why would Uber want to cover their hourly mins? Some new and ugly incentives would be added to the current ones.
    UBERPROcolorado likes this.
  13. You think Uber would pull out of its biggest market in the US?

    Lol... so you’re pro-being paid less? I don’t get your argument.

    “Stupid liberals! Let us drivers be paid less instead of being guaranteed a wage!”

    Lol I usually don’t say this but man this is either a troll account, or a paid Uber account. No possible way does a normal person turn down being paid a wage.
  14. uberdriverfornow


    They don't need to do all this crap, they can just set a minimum fare, minimum mileage rate, and a maximum percentage that Uber and Lyft can take from what the rider pays. Very simple.

    All this calculating just makes it too complicated and will allow Uber and Lyft to get around it.
  15. UberProphet?


    "after expenses"

    I wonder how the city will calculate expenses? I hope they don't do a survey of Florida drivers, many of whom say
    "My only expense is gas."
    Disgusted Driver and 2Cents like this.
  16. BurgerTiime


    They already tried that and ended up regulated like a taxi. Proof their business model can oprerte contradictory of what they claim.
    NYCY, tohunt4me and SatMan like this.
  17. I foresee drivers purposefully finding waiting spots where they hardly ever get pings, sitting on their asses most of the day, then at the end of the week putting in for their $17.22/hour makeup bonus.
  18. njn


    NYC is a unique market where drivers are fingerprinted, drug tested, require TLC car registration, inspection, plates and must pay for their own commercial insurance.

    Why not throw them a few bucks for accepting every ping? Miss one ping or cancel a request, forfeit the min wage.
  19. They should make Uber charge 80% during regular hours and 100% during bar hours and 175% during snow.
    tohunt4me likes this.
  20. uberdriverfornow


    that's why they can't do a minimum wage bit, they need to make minimums on fares instead so you prevent the lazies from sitting around trying to take advantage of the situation
    tohunt4me likes this.

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