In July, Mayor Bill de Blasio’s administration weighed in on discussions of a minimum wage for For-hire Vehicle (FHV) drivers that work for app-based services, with officials at odds about the course of action that should be taken. The New York City Taxi and Limousine Commission (TLC) discussed a $17.22 minimum wage, after expenses, for drivers affiliated with app-based services in New York City, which together provide nearly 600,000 trips a day in the city.
After a TLC-commissioned analysis of the proposal was released July 2, the mayor’s office hesitated and indicated it wanted the City Council and the mayor’s office to spearhead some other sort of regulatory effort instead.
TLC Chairwoman Meera Joshi hailed the proposal’s analysis as “an excellent foundation for public policy,” but a de Blasio spokesman called the move “very premature.” Ms. Joshi was initially supposed to participate in a conference call regarding the proposal, but ended up not participating, for reasons that are currently unknown.
A minimum wage would benefit 80,000 of the city’s mostly full-time drivers, who have reportedly been forced to clock in excruciatingly long hours for what many are calling unfair wages, even as the companies they work for prosper.
The recent report, which was co-written by New School economist, James Parrott and University of California Berkeley economist Michael Reich, noted that the “gig economy” business model “has many serious negative consequences for drivers.” The report found 85% of FHV drivers now fall below that proposed minimum wage. App-based drivers are overwhelmingly immigrants without four-year college degrees. Half of them support children, 40% qualify for Medicaid and 18% – or about twice the city average – have incomes so low that they qualify for food stamps, according to the report.
For the vast majority of drivers who now earn less than $17.22 an hour, the city’s proposed minimum wage would mean a raise of $6,300 or more a year.
To encourage shared rides, drivers who provide them would get an additional $1 per rider. Drivers of wheelchair-accessible vehicles (WAVs) would also receive a financial incentive.
“Companies do not use the drivers’ working time very efficiently,” noted Reich. “The drivers spend much of their time cruising the city streets without passengers, waiting for a passenger, for a ride.”
The report says that in order to have quick response times, “the companies require many idle drivers to be available at any given moment and at many locations. This model creates a gap between the drivers’ desires to maximize their earnings – by maximizing trips per working hour – and the companies’ desire to minimize response times.”
Uber responded to the report with a warning against unintended consequences, adding that some of the findings were based on faulty assumptions about the company’s business model and how drivers and riders interact with the app. The minimum wage, the company argued, would ultimately make the service less reliable and available.
The report does not address the plight of yellow taxi drivers, though the city has said it is considering reducing the credit card surcharge on what cab drivers pay. The report argues that the proposal stands to benefit yellow taxi drivers, creating fairer competition and a reduction in traffic congestion.