New York City’s Gig Driver Pay Standard: Effects on Drivers, Passengers, and the Companies
A report by Dmitri Koustas, James Parrott and Michael Reich
This report examines New York City’s app-dispatch driver pay standard intended to ensure that drivers were paid no less than the equivalent of the city’s $15 minimum wage and designed to compensate drivers for all their working hours and to fully account for drivers’ expenses. New York City’s driver pay standard took effect in February 2019 and was the first such driver pay regulation in the nation. Analyzing anonymized data on 500 million trips, the report finds that in the first year of the pay standard (pre-pandemic) driver pay increased by about nine percent, passenger fares rose slightly but not much more than in Chicago without a pay standard, passenger wait times declined significantly, and some of the pay increase was absorbed by the app-dispatch companies through lower effective commission rates.
App-dispatch driver pay increased by $1.33 per trip, on average, between June 2018 and June 2019 when the policy had been in effect for a few months. Average gross hourly driver pay rose by $2.34 (8.8 percent) over this period from $28.27 to $30.75 an hour in June 2019. Based on the number of trips in 2019, aggregate driver pay would rise by $340 million a year. Pay per trip rose most for weekday off-peak times.
Passenger fares rose by 5.9 percent between June 2018 and June 2019, but it is not obvious that the 5.9 percent fare increase was due to New York City-specific policies, or to company practices implemented more broadly since passenger fares also rose in Chicago during the first half of 2019. Passenger wait times fell by one minute, or nearly 18 percent after the pay standard took effect. Driver utilization rose by two percent from 54.8 percent to 55.9 percent. Our findings indicate that New York City’s driver pay standard achieved its main objectives without significantly dampening growth in trip volume beyond what might be expected in a maturing market.