Updated Jul 7, 2018 - Technology

Between the lines: Uber's driver wages under increased scrutiny

An Uber logo in a windshield

An Uber logo in the windshield of a car. Hpoto: Smith Collection/Gado via Getty Images

The New York City Taxi and Limousine commission is making its latest attempt to legislate a minimum wage for ride-hailing app drivers, reports the New York Times.

Between the lines: New York is one of many cities considering regulations to better the lives of ride hailing drivers after an MIT study determined that Uber and Lyft drivers are making a profit of $3.37 per hour. Drivers fear they aren't making enough to support themselves.

What they're doing

Cities across the world are trying to figure out how to regulate their ride hailing drivers; some are developing wage policies and unions for its drivers, while others are creating more restrictions.

  • Seattle was the first city to approve a law allowing ride hailing drivers to unionize, though it is currently being challenged in court, per Reuters.
  • In Honolulu, the mayor recently vetoed a law that capped surge pricing during busy hours for ride hailing apps.
  • In London Uber recently won back its license to operate after a legal battle where it ended up agreeing to stronger government oversight.
  • A federal judge in California ruled that 'Uber Black' drivers shouldn't get the same benefits as full-time employees because the company doesn't "exert enough control over them," per CNN.

What they're saying

New York's Taxi and Limousine Commission made its recommendation based off of a study from James A. Parrott, an economic and fiscal policy director at New School's Center for New York City affairs, and Michael Reich, an economics professor.

  • Parrott and Reich recommended a $17.22 minimum wage designed to "cover the drivers' expenses" while still providing independent contractors with a minimum of $15 per hour.

Yes, but: Most drivers see Uber and other ride hailing apps as a way to make supplemental income. Because of that, some argue there shouldn't be a required minimum wage.

Be smart: Despite some drivers seeing Uber as supplemental income, it's the main source of income for many others — especially in large cities like New York.

New York is a competitive driver market, says Harry Campbell, author of The Rideshare Guide, with about 60,000 cars driving Uber, along with 13,000 taxi medallions that come with built in fares. As competition increases, there are less passengers available per driver, which the commission argues makes a minimum wage necessary.

"There are much higher barriers to entry. There aren't part time drivers in New York."
— Campbell

Reality check: Though a minimum wage makes sense for ride hailing drivers, it won't be as lucrative in smaller markets like in the same way it is in larger cities like New York and San Francisco.

  • If wages are considered in other cities, they'll vary depending on market size and how many cars are in the market.
  • The biggest factors for how much drivers will make, Campbell said, will be how savvy drivers are and the passenger population in the given city.
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