Uber Drivers Say They Are Struggling: ‘This Is Not Sustainable’
By Arthur Z. Schwartz
Uber, Lyft Claimed Record Share of Fare Dollars While Drivers Struggled Through COVID Crisis.
Numbers reported to the city Taxi & Limousine Commission show that app companies such as Uber and Lyft have taken a bigger bite out of riders’ fares after New York City set a minimum wage for drivers in 2019—peaking during the worst of the COVID crisis.
A new report from the University of California-Los Angeles (UCLA) Labor Center found a growing gap between rider fares and what drivers got paid that reached a peak of 21.4 percent in April 2020. The report was commissioned by the New York Taxi Workers Alliance, a union representing taxi and app-based drivers.
App companies claimed more fare dollars even as drivers struggled to get business and scrambled to buy costly plastic dividers, PPE and disinfectant on their own dime, all while risking their and their loved ones’ health, noted Bhairavi Desai, executive director of the Taxi Workers Alliance.
“Drivers during that month of April 2020 felt that death was imminent, and drivers were frontline workers exposed to COVID at a higher rate,” said Desai. “And the few that had the desperation to go out to work were not rewarded for their essential labor—they were actually exploited.”
The report is based on Taxi and Limousine Commission data self-reported by ride-share companies, covering approximately 50 million rides between 2019 and 2022.
The researchers looked at the period after New York City established a minimum pay rate for app-based drivers beginning in February 2019, which gave drivers an estimated gross hourly earning of at least $27.86 per hour, before expenses, for an estimated net income of $17.22 per hour. They analyzed rides that began and ended within New York City in February and October 2019, April 2020 and April 2022.
They found that the companies started boosting their share of passenger fares in the months after the rollout, as measured by the difference between what passengers paid and drivers received. That gap jumped from 9 percent during the first month of the pay guarantee to 16.1 percent in October 2019, and peaking at 21.4 percent in April 2020, the pandemic’s deadliest month in New York.
By April 2022, the share collected by the companies decreased slightly, to 20.7 percent.
The app companies reaped a larger share of passenger dollars even as fares stayed essentially flat, the researchers found the average passenger fare, before fees and tips, was nearly the same in February 2019 ($12.22) and April 2020 ($12.32). Meanwhile, drivers were taking home a dollar less per trip: $9.80 in April 2020 compared to $10.99 in February 2019.
The report recommended that any increase in the passenger fare should come with a proportional increase in driver pay. It also called for a cap on how much money ride-hail companies can claim out of passenger fares, as well as transparency about where the money goes.
Drivers, like many service workers, suffered a profound loss of income during the COVID crisis. There were four million for-hire vehicle rides in New York City in April 2020, compared to more than 16 million in February 2019.
Spokespersons for Uber and Lyft disputed the researchers’ analysis. “Drivers have seen their earnings go up over the past several years, and with expenses like high gas prices starting to come down, they are now keeping even more,” said Lyft spokesperson CJ Macklin, noting that the city has passed two increases to the pay standard, with a third under consideration. “Commission caps like those discussed in the report only serve to dramatically increase rider prices and depress demand, disproportionately hitting lower-income communities and leading to fewer rides that ultimately undercut driver earnings overall.”
But the New York Times confirmed the UCLA interpretation of the data. It found that Uber and Lyft drivers now earn less in fares and tips than taxi drivers, according to new data from the Taxi and Limousine Commission, which regulates both groups. During the month of September, Uber and Lyft drivers earned an average total of $5,046, including $277 in tips, while those in taxis earned $5,844, including $865 in tips.
Drivers have increasingly battled with Uber, which sued the taxi commission to block a raise for Uber and Lyft drivers in December. Uber argued the raise could cost the company an additional $21 million to $23 million per month, and that it could force it to raise passenger fares by 10 percent.
In response, drivers organized two strikes, one in early December and another in early January and urged customers to boycott the Uber app. In late January dozens of drivers gathered outside Uber’s office in Lower Manhattan, shouting “Shame on Uber.” Still, Uber prevailed in its lawsuit after a state court judge said the city had failed to sufficiently justify the increase. The ruling will also apply to drivers for Lyft, which was not part of the lawsuit.
Many drivers said the higher fares had benefited Uber more than them. “Don’t think what they charge you is what goes to the driver’s pocket,” said Ibrahima Gory, 56, who began driving for Uber in 2014.
The app services make money by charging passengers as much as they can—and paying drivers as little as possible. The point of the business is to squeeze both the driver and passenger as much as possible because the companies make more money.
Uber, which arrived in New York in 2011, was once seen by many drivers as a better alternative to the yellow cabs that had long ruled city streets. App services like Uber and Lyft offered bonuses and incentives to drivers to switch, and they allowed those who could not afford a taxi medallion—city-issued permits that peaked at more than $1 million in 2013—to drive their own cars.
As riders and drivers embraced the apps, the taxi industry plummeted. Taxi owners, many of whom had borrowed hundreds of thousands of dollars to buy medallions at an inflated price, were drowning in debt. In desperation, some were pushed to suicide. Then, the pandemic decimated their business.
Currently, there are about 173,000 licensed for-hire drivers in the city, down from 204,000 in early 2020 before the pandemic, according to the taxi commission. The total number of for-hire vehicles, most of which are affiliated with Uber and Lyft, also shrank from 125,000 to about 100,000 during the same period.
“There weren’t enough trips for everyone at the height of the pandemic, so drivers had to switch to other industries to make a living,” taxi commissioner David Do told the New York Times. This resulted, he said, in “a major reduction and attrition in the numbers of drivers and vehicles.”
In 2018, the City Council passed a bill to to establish a minimum pay standard for app service drivers. Since then, the taxi commission has significantly raised wages for Uber and Lyft drivers, who had been scheduled to receive an increase in March that would have been the third since 2020 to help offset rising expenses and costs from inflation. In January, metered taxi fares increased for the first time in a decade.
“The minimum pay standard has really changed the industry,” Mr. Do said to the Times. “Drivers are making more across the board.” But now Uber and Lyft have sued to stop their driver’s pay increases. They want it both ways; they are taking more and forcing the drivers to work for less.
Many drivers, who invested heavily in cars that they use for Uber/Lyft trips, thought driving for a ride-hailing service would be a lucrative career. Because of that investment, drivers cannot return to the yellow cab taxi industry, even if working conditions might have improved since they left.
Last summer yellow-cab drivers went on a hunger strike to get the City to address their plight. Maybe this year it will be Uber and Lyft drivers.