Mandated Pay Increases in New York City for Drivers

Drivers – both those working on rideshare apps and those that drive for cab companies – have long complained about making a living age. Usually, these workers advocate for pay increases to make ends meet.

New York City has decided to do something about it. The City’s Taxi and Limousine Commission and the NYC Department of Consumer and Worker Protection have voted to increase the minimum pay rates for drivers.

We’ve got everything you need to know about the decision, including how it affects the rideshare industry as a whole, right here.

Breaking Down the Pay Increase

For Lyft and Uber drivers, the increase is set to be just over 7% for per-minute rates and 24% increases for per-mile rates, including a $2.26 fee to cover worker expenses.

This boost comes after an increase earlier this year of 5.3% for driver rates. 

A quick breakdown of the price increase for app drivers: 

  • An earnings component ($19.86), which matches the NYC Taxi & Limousine Commission’s (TLC) minimum earnings standard for ride-hail drivers.
  • An expense component ($2.26), which reflects average expenses incurred by e-bike workers.
  • A workers’ compensation component ($1.70), which reflects the workers’ compensation benefits that must be provided to comparable delivery workers.

Cabbies may also see increases of 23% all by the end of the year! For yellow and green cab drivers, this would be the first increase since 2012, marking a huge shift for drivers’ well-being in NYC. 

These increases combat the long cry for a better way of making a living but also aim to directly combat the exorbitant rates of inflation currently plaguing the working class.

The boost in pay is a step toward the current goal of a $25/hour baseline pay for drivers. 

How NYC Pay Increases Will Affect Delivery Drivers 

The decision will also affect delivery drivers who bring food and groceries to the doorsteps of New Yorkers. The wage is set to increase for drivers as well.

However, the decision was based on the use of a car. For delivery drivers using a bike or motorcycle, the increase may be more beneficial but leaves drivers feeling unappreciated. 

This wage increase and the wages set forth by the New York City Taxi and Limousine Commission are set forth by a few key markers

“The pay standard has three components which combine to provide drivers a minimum take-home pay for each trip after covering expenses: time, distance, and utilization. The time component of the formula ensures drivers are compensated for all time spent on the road. The distance component ensures all major expenses borne by drivers are covered. The utilization component represents the share of time drivers spend with passengers and incentivizes companies to more efficiently utilize their driver pool.”

As such, fare increases are not set to be taken from passengers in the form of higher fees or regulate contract workers by mandating a minimum wage, they are instead making for-hire services (rideshare companies) pay their drivers a minimum. 

What Drivers Have to Say About the Fair Increase

Many New Yorkers are happy to see a standard pay increase, while some still say it’s not enough. Common naysayers argue that a lot more goes into driving than people realize. Because of this, the new $23.82 minimum is simply not enough for the needs of drivers. 

From insurance costs, especially because gig working requires special rideshare insurance, to maintenance and fees, there is a lot of money going into ridesharing behind the scenes, bringing even that increased wage down to a barely livable price. In other ways, some don’t think the decision is quite enough

New Yorkers who want to voice their opinion will be able to do so at the public hearing on December 16th in which the proposal is set to be finalized following public comments.  New Yorkers may also visit to submit comments. 

What This Minimum Means for the Rideshare Industry

This pay increase is the first of its kind and is a leading move. Historically, rideshare companies do not like precedents set by governments that go against their business models (e.g., $52 million from Uber, $49 million from Lyft, $48 million from DoorDah, and $28 million from Instcart to combat California’s Prop 22). 

New York City officials may face more opposition from gig economy apps that don’t want to fork out a minimum amount for drivers.

Regardless, major cities like NYC have long been considered leaders in the rideshare industry, and trends developed there often spread.

As long as drivers are not considered employees, these laws are a critical choice to help continue improving independent contractor pay when the app-based companies lack the incentive to do so themselves. 

Regarding this proposal, Mayor Eric Adams says,

“Delivery workers have delivered for New York time and again, including during the COVID-19 pandemic — now it’s time for New York to deliver for them… This new proposed minimum pay rate would help ensure a fairer pay for delivery workers for third-party apps, providing more stability for 60,000 workers across our city. We look forward to hearing public comment on the new proposed rules as we prepare to implement the law.”

How NYC Mandated Pay Increases Can Help All Gig Workers

The rate hike proposal is not meritless but rather based on a study that analyzes the working conditions for gig workers in New York City.

The study showed that the average worker – of which 91% or non-white or Hispanic – earned an average of $14.18 per hour, including tips. When expenses were paid out, the pay was only $11.12 per hour with tips or $4.03 without tips. 

That’s just in New York City – one with an average rent cost of $2,059 for a one-bedroom and a total city wealth of over $3 trillion with more rich people than any other city in the world, according to Henley & Partners

With lower pay likely in rural areas and similar issues plaguing big cities, a change that implements more pay for drivers, even if not seen as enough by drivers themselves, will have a major impact on the rideshare industry. 

However, like any change, pushback is expected by rideshare companies, similar to a 2017 Lyft lawsuit. Regardless, many are hoping that the pay increase will also attract more drivers to get on the road, both app-based and taxi cabs.

More information should continue to roll out as the impending public hearing nears closer.