Image source: Time Out
Uber takes a stand in New York as the company sues the city over its plan to raise the minimum wage for drivers.
New York plans to raise the ride-share drivers’ minimum wage by more than 24% per mile.
As a result, the company says the drastic increases will hurt the ride-sharing industry, according to new court documents.
The New York City Taxi and Limo Commission approved the first meter fare increase in November, the first since 2012.
Increasing per-mile and per-minute prices will affect Uber and Lyft Inc., drivers.
Last Friday, Uber argued in the lawsuit in Manhattan Superior Court that the new increase would mean the company would spend more money (about $21 million to $23 million) over the holiday season.
Otherwise, according to the lawsuit, they will increase fares by 10%, which will only damage Uber’s reputation.
The new rule goes into effect next week and will increase driver compensation from 2019 by 7.42% per minute and 23.93% per mile.
In addition, yellow and green taxi fares must increase by 23% by the end of 2022.
According to the TLC, a 30-minute, 7.5-mile sample trip would require a minimum payment of $27.15.
It’s also unclear what the exact cost will be for ride-sharing customers, as each company must decide how much to raise fares.
The TLC hopes the wage hike will attract more cabs and drivers to the road to meet passenger demand.
TLC Commissioner David Do released a statement on the decision, saying:
“Raising taxi fare rates and minimum pay for high-volume drivers is the right thing to do for our city.”
“This is the first taxi fare increase in ten years, and these raises will help offset increased operating expenses and the cost of living for TLC-licensed drivers.”
The drop rate for metered rides goes from $2.50 to $3.
Meanwhile, unit prices are jumping from $0.50 to $0.70.
According to the TLC, this translates into an increase in passenger fees of more than 22.9%.
As a result, a $15.97 ride is increasing to $19.62.
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The New York Taxi Workers Alliance (NYTWA) welcomed the fare increase and said it was an incentive to increase driver earnings to $25 an hour after expenses.
Explaining why the move is good, NYTWA member and Uber and Lyft driver Mamadou L. Diallo said:
“This raise is very important for us. After the $2,300 a month I pay in rent, the expensive cost of gas and food, what do I have left at the end of the day?”
“Our families, parents, children depend on us, but it is not enough. We make New York a 24-hour city. We deserve this raise.”
Uber says the increase is “arbitrary and capricious,” adding that it will hurt drivers, passengers and the ride-sharing industry.
As driver prices increase, the number of trips and driver salaries decrease.
According to the lawsuit, the rule’s purpose will be undermined if drivers’ incomes decline.
Additionally, Uber claims that TLC abruptly changed how it calculates how much to increase driver wages for inflation, taking a single month or a subset of months and moving to a volatile inflation index.
The lawsuit indicates that this decision is a radical departure from past practice or the rational approach of the Commission.
“Fundamental economic principles reject the Commission’s approach as unsound, and it appears selected to achieve a predetermined result,” wrote the suit.
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The Taxi and Limousine Commission
Uber’s filing alleges that the TLC did not provide data on what it used to calculate or allow the public to participate and comment on the rule change.
The TLC began raising the minimum wage for drivers in February 2019 with a minimum wage rule.
It has since raised wages for inflation twice in February 2020 and March 2022.
Uber has not contested previous hikes with strong feelings of support for drivers receiving fair compensation.
However, the lawsuit argues that the increases must be based on consistent data and methods.
Additionally, Uber wants an emergency ruling to prevent the rule from taking effect on Dec. 19 until the trial is underway.
Uber spokesperson Freddie Goldstein released a statement saying:
“With this latest rule-making, on top of the annual inflation adjustment, the TLC is choosing to invent a new methodology that locks in this summer’s high gas prices in perpetuity with a mid-year adjustment that takes place 12 days before the end of the year.”
“The TLC should have followed its annual adjustment and instituted a temporary gas surcharge when gas prices were actually elevated,” he added.
Meanwhile, David Do said they are not backing down and plan to take action against the lawsuit.
“We must stand behind our workers without traditional employment protections,” said Do.
“New York City leads the nation in protecting drivers, and this important rule reflects that reality.”
“We are confident that we are well within our legal authority in implementing this important rule, and we are vigorously fighting this lawsuit.”
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