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Uber Exploited, Lyfted Down: How Ride-Share Companies Cheat Drivers Out of Minimum Wages

Issue 251

Peter Rugh Oct 6

It was a hard-won victory, and one New York City’s app-based drivers now find themselves fighting to preserve. Last August, the City Council passed a law requiring the city’s Taxi and Limousine Commission to set a minimum wage for drivers with app-based taxi services like Uber and Lyft. The TLC’s minimum, $17.22 an hour after expenses, went into effect in February. But some drivers say they’re now making less money, as app-based companies tweak their algorithms to avoid having to pay that much.

“It’s never been worse,” Tina Raveneau of Brooklyn tells The Indypendent. Attracted by the flexibility the work seemed to offer, the 39-year-old single mother began as an app-based driver for Lyft two and a half years ago. She now finds herself struggling to pay bills and worries she’ll have to go on government assistance.

Lyft filed a lawsuit against the TLC in January, attempting to prevent the minimum wage from going into effect. After a state Supreme Court judge dismissed the suit in May, Lyft and later Uber took another route to escape the new requirements. They have both narrowed when and where drivers can sign in to their apps to work. Raveneau can get onto the Lyft app during the morning rush hour, but not during the time she is available.

She switched to Uber, but in mid-September, Uber began bumping drivers off the app if they don’t get to a “high-demand zone” within 30 minutes of dropping off a fare. Drivers say they are not being told when they have been bumped.

“I would think that I was working, but I wouldn’t really be working,” Raveneau said. But with no ride alerts coming into her phone as she drove around, it didn’t take her long to catch on to what was happening. The TLC has “all these regulations,” she says, “but drivers are still driving around, praying that they can get to a hot spot so that they can make money.”

The rideshare minimum wage is calculated based on utilization rate, the percentage of time the vehicle has a fare. The formula was proposed by Michael Reich of the University of California at Berkeley and the New School’s James Parrott, who conducted a study on app-driver earnings for the TLC last year and found that Uber and Lyft’s predominately immigrant drivers were earning $14.17 and $13.88 an hour respectively, less than the $15 minimum for New York City. The TLC adopted pay regulations meant to account for driver costs like gasoline and to compensate for the amount of time spent behind the wheel cruising without a passenger.

The minimum-wage law was part of a package of bills the Council enacted last August intended to help drivers. Another bill largely stopped the city from issuing new licenses for “for-hire vehicles,” the category that includes app-based cabs.

The two rival unions organizing drivers took opposing positions on that cap. The New York Taxi Workers Alliance, which uses a worker-center model to organize yellow-cab, black-cab, car-service and app-based drivers, supported it, saying that Uber and Lyft’s business model of flooding the city with vehicles had slashed drivers’ incomes. The Independent Drivers Guild (IDG), an International Association of Machinists affiliate that worked out an agreement with Uber in 2016 for a voice in the workplace without collective bargaining or employee status, argues the license cap is bad long-term policy. It advocates for capping the number of new drivers instead.

“Limiting TLC vehicles while continuing to license thousands of new TLC drivers is blocking thousands of drivers from owning their own vehicle and makes them slaves to the leasing and app companies,” an IDG spokesperson told The Indy via email.

The IDG lobbied hard for the minimum-wage bill, collecting 17,000 petition signatures from drivers but does not advocate making app-based drivers employees instead of independent contractors. In September, after the California legislature passed a bill drastically narrowing when workers can be defined as independent contractors — who don’t have to be paid minimum wage and can’t legally form unions — Uber said it would not change. Drivers’ work is “outside the usual course of Uber’s business,” the company’s head lawyer argued, because it’s not a taxi company, it’s an app. 

Despite the contractor status of its members, the IDG spokesperson noted, it has won driver benefits such as vision, telemedicine, a death benefit and free English-language classes from Uber.

Under the TLC’s minimum-wage rule, when drivers fail to earn a base pay of $17.22 an hour after expenses, the app companies are required to make up the difference. The TLC projected in January that it would increase earnings for the city’s 80,000-odd app-based drivers by a total of $737 million this year, more than $9,000 each.

“Until we took needed action last year, it has been Uber and Lyft’s business model to oversaturate the market while promising drivers that they could succeed despite these companies’ stacking the deck against them,” acting Commissioner Bill Heinzen wrote in an email to The Indy. “The mayor, TLC and City Council put in place smart policies to address the problems these companies created, and they are finally being forced to experiment with ways to run their businesses in an environment of accountability. We will continue to fight on behalf of drivers until they are able to make ends meet.”

The TLC doesn’t yet have figures on drivers’ incomes since Uber and Lyft began dropping drivers from the app when demand goes down, but at a Sept. 10 City Council hearing, Commissioner Bill Heinzen said total driver earnings had risen $225 million in the first five months the rules were in effect. The IDG says that means the collective increase this year will fall $197 million short of the commission’s projections.

In an email to The Indy after this article was initially published, a TLC  spokesperson wrote that it has done “a deep review of the data we’ve collected so far, and app drivers are taking home an average of $750 more per month than they would have without the pay standard.”

The TLC has “started to shift their language,” says IDG executive director Brendan Sexton. “Instead of saying ‘minimum pay per hour,’ they’re starting to say ‘average pay per hour,’ which completely changes the whole dynamic of what the minimum pay was. That’s like having a McDonald’s where one person makes $20, another makes $15 and another makes $10 — on average, sure, we’re all making $15 an hour.”

The wage law was meant to set a consistent minimum pay base for all drivers.

The IDG is calling for the TLC to be abolished and for the City Council to step in and close the regulatory loopholes Lyft and Uber are exploiting.

On Sept. 17, it organized a slow-motion motorcade that ground morning rush-hour traffic to a standstill as it oozed over the Brooklyn Bridge and along FDR Drive to Gracie Mansion, Mayor Bill de Blasio’s residence. An outraged Daily News editorial board called on the city to “bring down the hammer” if drivers attempted such a protest again. “Suspend ride-hail licenses,” read an op-ed published the following day. “Make arrests.” 

But drivers like Raveneau say they will keep fighting until they are paid a wage they can live on. “We’re the drivers who move New York,” she says. “We should come first.”

This article has been updated to reflect new comments from the Independent Drivers Guild and from the Taxi and Limousine Commission.

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