Ubers and Cabs Are About to Get More Expensive in New York

Dec 7, 2018

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When New York City passed a series of laws in August to start regulating the ride-hailing industry, the contentious law and its effects were widely debated.

Most notably, the New York City Council passed a cap on new licenses for ride-hailing vehicles (e.g. Ubers and Lyfts). The body also said it planned to establish a minimum pay for drivers. And this Tuesday, the Council actually passed a law that would implement this new minimum wage-esque rule. While this is good news for drivers, especially since the gig-economy has made it much harder for people to earn a living wage, it also could mean significantly higher prices for consumers.

It’s expected that the new pay regulations will be implemented in January, which will give ride-hail drivers “a minimum hourly wage of $17.22 after expenses,” USA Today reports. The Independent Drivers Guild estimates that these workers currently make $11.90 an hour.

According to estimates from the New York City Taxi and Limousine Commission, 96% of NYC’s 80,000 drivers will see an increase in their net pay with the new law.

“Today we brought desperately needed relief to 80,000 working families,” Jim Conigliaro Jr., founder of the Independent Drivers Guild, said in a statement. “All workers deserve the protection of a fair, livable wage and we are proud to be setting the new bar for contractor workers’ rights in America.

Many Uber drivers have been subject to the pitfalls of the gig economy. Because drivers are classified as independent contractors, they don’t receive health insurance, have to pay for their own car repairs, gas and insurance and aren’t guaranteed a minimum level of income — no matter how much they work.

New York had seen a spate of ride-hail and cab driver suicides, with eight deaths in the last 12 months alone — many said the job’s stresses and low pay contributed to these tragedies.

NEW YORK, NY - JULY 30: A Lyft ride hailing vehicle moves through traffic in Manhattan on July 30, 2018 in New York City. After a significant increase in local traffic and a spate of suicides by taxi drivers, New York City is planning to vote on capping ride-sharing services such as Uber and Lyft. The City Council's move to vote on the measures could come as soon as Aug. 8. If the vote was to succeed, New York City would become the first major U.S. municipality to cap ride-sharing services. (Photo by Spencer Platt/Getty Images)
A Lyft ride hailing vehicle moves through traffic in Manhattan on July 30, 2018 in New York City. (Photo by Spencer Platt/Getty Images)

And while it’s great that the drivers will see a living wage, the higher operating costs are likely to be passed onto the consumers.

In August, Alison Griswold, a journalist who covers the sharing economy for Quartz told TPG that “someone will have to pay for higher driver wages, and it’s possible that could be riders.”

“Ideally, the pay formula the city will implement will get companies like Uber to use their drivers more efficiently—i.e., so that drivers have passengers in the car for more minutes every hour,” she explained. “That would go a decent way toward raising their pay without the costs being passed along to the customer. But yes, it’s certainly possible prices will rise.”

Another tax is coming in January 2019 — New York is implementing a congestion pricing fee on all ride-hail and cab trips taken in certain areas of Manhattan. By law, the $2.50 surcharge for yellow cabs and $2.75 for for-hire vehicles will be passed along to passengers who take rides below 96th street in Manhattan

“Uber supports efforts to ensure that full-time drivers in NYC – whether driving with taxi, limo or Uber – are able to make a living wage, without harming outer borough riders who have been ignored by yellow taxi and underserved by mass transit,” said Uber Director of Public Affairs Jason Post in a statement emailed to TPG. “The TLC’s implementation of the City Council’s legislation to increase driver earnings will lead to higher than necessary fare increases for riders while missing an opportunity to deal with congestion in Manhattan’s central business district.”
Lyft representatives echoed Uber’s sentiments and told TPG that the minimum wage laws “undermine competition by allowing certain companies to pay drivers lower wages, and disincentives drivers from giving rides to and from areas outside Manhattan.”
Uber spokeswoman Alix Anfang told the Wall Street Journal that “come January, riders will be subject to new state and city regulations that will result in their paying more to get around, especially in Manhattan.”

Photo by Ali Balikci/Anadolu Agency/Getty Images.

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