Uber Claims Higher Pay For Drivers Will Force Layoffs

November 13, 2024

NYC’s Taxi & Limousine Commission (TLC) is instituting a raise in the minimum pay standard and Uber states doing so will force layoffs

Reportedly, New York City‘s Taxi & Limousine Commission (TLC) is instituting a raise in the minimum pay standard for drivers in “high-volume” services, which applies to Uber and Lyft. Uber has stated that doing so will effectively force the rideshare company to lay off thousands of its drivers.

According to AMNY, the pay standard has already made Uber too expensive, which has resulted in a decline in trip volume. Raising the standard will come at the expense of the drivers who make their living off the rideshare app. The TLC is expected to announce higher pay standards this month. Uber has asked the agency to lower its “per-mile” rates paid to drivers by 6%, from $1.36 to $1.277. Uber reasons that the pay should be reduced because the company bears the brunt of the cost. They have stated that the drivers are experiencing lower costs due to lower gas prices, the use of used cars, and an overall reduction in inflation.

“It’s time for our governing bodies to wake up,” Uber’s Senior Economist Rodrigo Moser stated in a column on Medium. “You can increase prices all you want — but if fewer people are taking fewer trips, you end up hurting the people you’re trying to help.”

Uber says average prices for Uber and Lyft fares are now 20% higher than they were in 2019, just four years ago. Yet, the companies’ trip volume has decreased for the first time since 2022.

New York bases its pay formula on a “utilization rate.” It measures how long drivers carry passengers versus their total time on the road. If the rate is higher, drivers are suspected of picking up more fares, which allows the apps to pay lower per-minute and per-mile rates to the drivers under the city’s minimum pay rules. But, Uber and Lyft want the utilization rate changed and the payout, like other cities, a minimum pay rule for drivers.

The TLC responded to Uber’s beef with the city.

“Uber recklessly onboarded thousands of drivers for many months, only to lock them out in an effort to pay them less. We haven’t yet introduced rule amendments, but they appear to be already threatening to deactivate the same hardworking drivers if they don’t get the results they want,” said TLC spokesperson Jason Kersten. “We have hired an independent contractor to study driver expenses, and we will see what that study finds before accepting cherry-picked data.”

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