An Earnings Standard for New York City’s App-Based Drivers: Economic Analysis and Policy Assessment
By James A. Parrott and Michael Reich
Uber, Lyft and other app-based companies have experienced stunning growth in New York City and the nation in the past five years. Yet the full-time drivers for these companies are not doing well at all. What should be done?
Dr. James A. Parrott of the Center for New York City Affairs, New School, and Dr. Michael Reich of the University of California, Berkeley have prepared a report on the need for and effects of a minimum driver pay standard that would apply to the app-based drivers affiliated with Uber, Lyft, Via, and Juno. The New York City Taxi and Limousine Commission would enact and implement the pay standard. The TLC contracted with Drs. Parrott and Reich to prepare their report.
The report draws on the most extensive industry data yet provided to academic scholars: on rides, fares, driver pay, and hours for all four companies, as well as a driver survey on vehicle ownership and costs. Parrott and Reich find evidence of low driver pay, inefficient use of driver working hours and high company mark-ups over costs in New York City. The authors conclude that “the app companies could easily absorb an increase in driver pay with a minimal fare adjustment and little inconvenience to passengers.”
The TLC’s proposed policy calls for a minimum pay standard of $17.22 per hour, the independent contractor equivalent of $15 per hour plus paid time off. The pay standard would be the first in the U.S. to apply to independent contractors. The TLC policy would increase driver pay for 85 percent of the drivers currently paid below the $17.22 standard. These drivers would receive an additional $6,345 per year. The net (after-expense) pay increase among these drivers would average 22.5 percent.