Uber rides are about to get a bit more expensive in New York City.
The price hike is the result of a new law that requires ride-hailing apps like Uber, Juno, and Lyft to pay its drivers a set minimum wage that equates to at least $27.86 per hour. After expenses, though, drivers’ wages will amount to $17.22, or approximately $5 more than they were making before.
The new wage is a victory for the Independent Drivers Guild, which represents approximately 70,000 New York City-based Uber, Lyft, Juno, and Via drivers. But it also underscores these drivers’ status as independent contractors, not employees of the platforms they work for. As Vox’s Alexia Fernández Campbell pointed out, drivers’ independent contractor status is also the reason the city had to pass specific legislation regarding their wages: New York City’s $15/hour minimum wage for large employers, which went into effect on December 31, doesn’t apply to drivers who work for ride-hailing apps.
Uber, for its part, claims to be in favor of the new rule. “We fully support the spirit of this rule, because it aligns with one of our core missions: to connect drivers to the best earnings opportunities,” the company wrote in a blog post on Friday. The blog post didn’t specify how much rates will go up, but an Uber spokesperson told me the rates will vary based on time and distance.
Lyft and Juno, meanwhile, each filed lawsuits against New York City in state court on Wednesday to block the law from going into effect — not because they’re opposed to raising wages for drivers, they say, but because they claim the law unfairly benefits Uber.
“Our lawsuit does not target the law passed by City Council, but instead addresses the specific way the [Taxi and Limousine Commission, which approved the rule] plans to implement the rules, which would advantage Uber in New York City at the expense of drivers and small players such as Lyft,” a spokesperson told The Verge on Wednesday.
Lyft and Juno’s opposition to the law stems from the formula being used to determine how drivers are paid. Drivers won’t be paid a flat hourly rate, but are instead compensated based on a per-minute/per-mile calculation. Since Uber has more drivers than both Lyft and Juno, its competitors claim, they can’t keep drivers as busy as Uber can. Lyft and Juno drivers won’t be getting the mandated raises until the lawsuits are resolved. According to The Verge, a judge said both Lyft and Juno can put the money that would have gone toward the drivers’ wages in escrow accounts.
A spokesperson for Lyft told Vox that the company does plan on raising drivers’ wages in New York, though not according to the city’s mandate. “This [temporary restraining order] victory acknowledges that Uber was handed a sweetheart deal by the [Taxi & Limousine Commission] that would irreparably harm Lyft. Drivers shouldn’t suffer while we work to right the TLC’s mistakes so we are immediately raising driver pay as we continue our fight in court,” the company spokesperson said in a statement.
In some parts of Manhattan, fares will also be affected by a new congestion pricing surcharge: riders will have to pay an additional $2.75 per trip for regular trips, or 75 cents for pools. This additional fare doesn’t go to any ride-hailing company or to their drivers, but instead to New York’s Metropolitan Transportation Authority.
It’s worth noting that according to a July 2018 report by economists at the New School and the University of California, Berkeley, ride-hailing apps like Uber, Lyft, and Juno “could easily absorb an increase in driver pay with a minimal fare adjustment and little inconvenience to passengers.”
Instead of challenging the law, Uber has opted to push the additional costs on to passengers, though it’s unclear how much rates will increase as a result.