Ride-Hail Driver Minimum Wage Law is a Rotten Deal for Big Apple

by Jennifer Tiedemann
December 18, 2018

You might remember that a few months back, the New York City Council approved a one-year freeze on the issuance of new licenses for ride-hail vehicles. Well, the Big Apple has struck again this December: This time, the New York City Taxi and Limousine Commission became the first city to pass a minimum wage for ride-hail drivers. The rules are expected to be enacted in mid-January.

Under the new wage law, ride-hail drivers will receive a minimum hourly wage of $17.22 after expenses. In a press release announcing the new wage law, the TLC estimated that would result in a raise for about 96 percent of the city’s approximately 80,000 ride-hail drivers, with the average raise coming in at about $10,000 per year. But that’s assuming that all drivers will be able to stay in business once the minimum wage is set: A mandatory minimum wage often has the effect of depriving willing employees of the opportunity to work. Many New York City restaurant workers, for example, expressed displeasure at the possibility of a mandatory minimum wage hike earlier this year, fearing that such a move would result in job cuts. It’s easy to see how a mandatory minimum wage for ride-hail drivers would mean higher fares passed along to riders, who then may decide to seek out less expensive transportation options. And fewer paying customers would obviously be a big problem for the financial prospects of ride-hail drivers.

Even the TLC is already hinting at the new law’s potential drawbacks for customers. TLC Chair Meera Joshi said upon the passage of the regulation, “I believe all New Yorkers are willing to pay a little more and wait a little longer so the people transporting them are able to provide for themselves and their families.” Maybe they’re willing, but this is a not-so-veiled acknowledgment that thanks to the law, riders will soon be paying more for worse service. New Yorkers are not likely to be pleased with that.

But then again, that hasn’t stopped the City before in its approach to ride-hail regulation. One of the biggest criticisms of the ride-hail license freeze New York City imposed earlier this year was that such caps tend to keep drivers in busier parts of town, where more potential fares are concentrated. That may be fine if you’re traveling in midtown Manhattan, but if you want to get to one of the outer boroughs—areas already under-served by cab companies—you might be in for a challenge.

And this problem is only expected to get worse under the minimum wage law. The commission’s new rules “set a per-minute and per-mile minimum trip payment formula,” and as USA Today’s Mike Snider writes, ride-hail companies like Uber and Lyft are saying that this approach “could actually increase congestion because it encourages drivers to take more short rides in Manhattan’s central business district.” Sound familiar? In the wake of the ride-hail license cap, the wage law is just more of the same for New York City, making it harder for people to get around an already crowded city.

Not surprisingly, the New York Taxi Workers Alliance—the union that represents New York City cab drivers and ride-hail drivers alike—is all for the new law. TWA Executive Director Bhairavi Desai said in a statement, “just as it did with the vehicle cap, New York City is once again passing landmark regulation to protect workers in the unruly gig economy.” But it’s really the City that’s creating and perpetuating an out-of-control situation, making Uber and Lyft rides less affordable—and less reliable—for New Yorkers. It’s plain to see that this new wage regulation is rotten news for anyone looking to get a ride in the Big Apple.

Jennifer Tiedemann is the Deputy Director of Communications at the Goldwater Institute.