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New York Passes Minimum Wage Law for Uber, Lyft Drivers, Hikes Costs To Riders

What happens when prices are increased by fiat? They go up, usually, and in this case they may increase traffic congestion, too.

Rafael Ben-Ari/NewscomRafael Ben-Ari/NewscomNew York City's Taxi and Limousine Commission (TLC) has never been friendly to Uber, Lyft, and other ridesharing services. The TLC sees a large part of its purpose as propping up the market in taxi medallions, a special license that grants the owner the right to operate a cab in Gotham. As Reason's Jim Epstein documented years ago, the value of those medallions once was more than $1 million. It's not exactly clear what they fetch these days, but it's much, much lower. In August, the city froze the number of drivers allowed to drive for rideshare services, and now the TLC has imposed a wage hike:

The new rules, the first city-wide regulations in the nation, were passed Tuesday and are expected to go into effect in mid-January. They would give drivers for services such as Uber and Lyft a minimum hourly wage of $17.22 after expenses, the commission says.

About 96 percent of the city's 80,000 drivers who work for ride-sharing services would get a raise [of about $10,000 a year], the commission estimated....

The commission's formula factors in drivers' total working time and time spent transporting fares to increase efficiency and reduce the time drivers spend circling busy areas while awaiting fares.

That's going to be complicated enough to figure out, but it's likely that fares will increase. That's what tends to happen when prices are raised by fiat, especially if an employer can't automate its way out of a such an edict.

But it gets better. Not only will prices likely rise, congestion might actually get worse, too.

The formula, which uses a minimum per trip formula, could actually increase congestion because it encourages drivers to take more short rides in Manhattan's central business district, rather than longer ones to other boroughs, the ride-sharing companies say.

More here.

As Christian Britschgi noted for Reason, congestion fell in cities such as San Francisco as ridesharing increased. Also in the mix: New York's subway system is falling apart and major lines are undergoing long shutdowns and delays for repairs. Britschgi has observed that rideshare caps are likely to have the effect of concentrating services in the busiest parts of town, thereby reducing one of the great benefits provided by Uber and Lyft: easy transport options for people living in more far-flung parts of the city, where they have historically been poorly served by traditional cabs.

Uber and Lyft have been nothing short of a godsend for the cities in which they operate (even if they are not above shady behavior, including working with governments to screw over each other and competitors). It's appalling to see such positive disruptors get whittled down by political bosses trying to reassert a status quo that was clearly worse for riders (for a look at how much Uber drivers make, go here).

Watch "Uber and the Great Taxicab Collapse," produced by Jim Epstein for Reason in 2015.

Photo Credit: Rafael Ben-Ari/Newscom

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  • Ken Shultz||

    I installed the Met Opera on Demand app on my Roku TVs. Now I can only think of two reasons to go to New York City.

    Museums and running a hedge fund.

  • DenverJ||

    Yup yup. Muslims and hedgehogs.

  • n00bdragon||

    Tails: Ramadan's over Sonic you can stop fasting now.

    Sonic: It is never not time to fast.

  • Earth Skeptic||

    Watched a PBS show about future flood risk in NYC, and whether it is worth saving (of course!). But as they bragged over and over about how NYC is the financial capital of the world, I wondered what it would take to move all those mega-millionaires and their minions. Nothing tangible links finance to NYC, since it can now be done anywhere. Just build a new center with enough hookers and shiny things, and they might migrate en masse.

    As for museums, hard to imagine the revenue from those keeping a city alive.

  • Last of the Shitlords||

    Plenty of talent in Vegas. Plus lots of room to build. Prostitution is even legal in most of the state.

  • colorblindkid||

    Most of Manhattan is actually pretty high above sea level, especially midtown and the places most of the rich people live. It is low-lying areas of the outer-boroughs that are at risk of flooding, and the rich people already don't live there.

  • colorblindkid||

    Most of Manhattan is actually pretty high above sea level, especially midtown and the places most of the rich people live. It is low-lying areas of the outer-boroughs that are at risk of flooding, and the rich people already don't live there.

  • BYODB||

    They would give drivers for services such as Uber and Lyft a minimum hourly wage of $17.22 after expenses


    Boy, I wonder how many EMS personnel are going to jump ship to go drive for them now. Nah, probably zero since I'd bet they're unionized in NY. That was the real error of the ride sharing services, they valued the consumer.

  • ||

    It's the opposite of those old Lite beer "taste's great, less filling" commercials. Try New York City transit, "more expensive, extra congestion!"

  • CE||

    Were we directed from City Hall how much to pay taxi drivers and how many taxi drivers to hire, we would soon want for taxi rides.

  • Mr. JD||

    A Democrat is someone who wants to make sure that all of history's greatest mistakes are repeated.

  • Bubba Jones||

    I am unclear on the downside of having more uber in high demand areas.

  • Overt||

    It's not necessarily that you will get more drivers. It is that those drivers won't want to do a trip across town or across a bridge. So you will have lots of drivers happy to get you a few miles, but none helping you get to brooklyn.

  • mlwjr||

    This is miguided for sure but I would I find the claim streets are less congested after Uber enters the market. Chicago streets are slammed with ride share drivers

  • mlwjr||

    Find it questionable

  • Kevin Smith||

    Chicago streets are no more slammed than they were before, just because you see an Uber sticker doesn't mean they wouldn't have been on the road anyway. It's honestly just that so many people Uber on the side. I used to work at a charity verifying income, and probably about a third of the applicants had a regular paycheck and an Uber or Lyft paycheck

  • Gracchus||

    But it gets better. Not only will prices likely rise, congestion might actually get worse, too.

    How would a minimum wage increase congestion? I get that it will raise fares for consumers, but wouldn't that decrease the number of rides taken, therefore reducing profits for ride-share companies and overall traffic congestion?

  • DenverJ||

    Pricier ride share = more people deciding to drive their own vehicle instead of ride sharing.

  • Gracchus||

    Pricier ride share = more people deciding to drive their own vehicle instead of ride sharing.

    That might be true in smaller cities and the suburbs, although I doubt those are heavily dependent on ride-sharing so odds are that there's only gonna be a marginal increase, if any, in those areas.

    In big cities like NYC, though, I doubt it will increase personal driving enough to offset (let alone eliminate) the reduction in ride-share drivers on the streets.

  • Gracchus||

    Pricier ride share = more people deciding to drive their own vehicle instead of ride sharing.

    That might be true in smaller cities and the suburbs, although I doubt those are heavily dependent on ride-sharing so odds are that there's only gonna be a marginal increase, if any, in those areas.

    In big cities like NYC, though, I doubt it will increase personal driving enough to offset (let alone eliminate) the reduction in ride-share drivers on the streets.

  • DenverJ||

    I gotta go downtown. It's totally a pain. But I can grab an uber for $40. Now the price is $70. Suddenly, it's worth the extra hassle and expense of driving my own car and paying for parking.

  • Overt||

    The point is explained in literally the next sentence. Because the new fares encourage small trips over longer trips, 1) the Uber drivers will all pack in areas with high density and not leave- just getting people place to place in that area and 2) because it is now more expensive (either price, or time or both) to uber a longer trip, people are more likely to drive themselves.

  • DenverJ||

    "What happens when prices are increased by fiat? They go up..."
    I mean, if prices are increased by any means, they're going to go up. It's kind of a tautology.

  • Eddy||

    Great news - now that the Catholic Church has abdicated its moral authority, it's left room for more hip, enlightened religions.

    ...and they said, These be thy gods, O Israel, which brought thee up out of the land of Egypt.

    "Liberal Lutheran pastor and author Nadia Bolz-Weber has encouraged women to send her their purity rings to be melted down and recast into a golden vagina in protest of evangelical purity culture.

    "On Twitter, Bolz-Weber, founding pastor of Denver's House for All Sinners and Saints, issued a call for people to send her those rings "for a massive art project."...

    "The website states that those who send in their rings will then receive a "certificate of Impurity as well as a SHAMELESS, impurity ring....

    "She is scheduled to have a new book published next January titled Shameless: A Sexual Reformation...Earlier, she sparked controversy after she said there should be no shame in consuming pornography, especially if it is "ethically sourced.""

  • lap83||

    "especially if it is "ethically sourced.""

    Their substitute morality always manages to sound even more stodgy than the one they're trying to replace

  • Eddy||

    And when the people saw that Moses delayed to come down out of the mount, the people gathered themselves together unto Aaron, and said unto him, Up, make us gods, which shall go before us; for as for this Moses, the man that brought us up out of the land of Egypt, we wot not what is become of him.

    And Aaron said unto them, Break off the golden earrings, which are in the ears of your wives, of your sons, and of your daughters, and bring them unto me.

    And all the people brake off the golden earrings which were in their ears, and brought them unto Aaron.

    And he received them at their hand, and fashioned it with a graving tool, after he had made it a molten hoo-ha: and they said, These be thy gods, O Israel, which brought thee up out of the land of Egypt.

    And when Aaron saw it, he built an altar before it; and Aaron made proclamation, and said, To morrow is a feast to the Lord.

    And they rose up early on the morrow, and they did form drum circles, and consciousness-raising groups, and they did worship the hoo-ha which they had made.

  • Eddy||

    And the Lord said unto Moses, Go, get thee down; for thy people, which thou broughtest out of the land of Egypt, have corrupted themselves:

    They have turned aside quickly out of the way which I commanded them: they have made them a molten hoo-ha, and have worshipped it, and, seriously, WTF is this shit?

    And Moses smote the drum-circles, and the consciousness-raising groups, and cast the golden hoo-ha into the fire and reforged it into some tasteful golden vases.

  • Bax||

    "smote"

  • Earth Skeptic||

    If only NYC bureaucrats would take direct control of all transportation devices, and assign rides after the customer applies in person at a central location, staffed by union workers and affirmative action hires. Now THAT would be justice.

  • Chipper Morning Baculum||

    So now Stossel's videos are getting banned from youtube.....

  • lap83||

    Right after "the creepy line" videos were published? Just a massive coincidence, I'm sure

  • ||

    "About 96 percent of the city's 80,000 drivers who work for ride-sharing services would get a raise [of about $10,000 a year], the commission estimated...."

    This sentence infuriates me.

    Fricken communism by other means.

  • frankania||

    What a surprise! Dumb newyorkers voted a socialist into their congress, so watch all the businesses leaving for Texas or Puerto Rico ...

  • SIV||

    From the "Get Woke Go Broke"-department:

    Millennial "Journalists" Reduced to Turning Tricks and Eating Out of Dumpsters

    "It's unethical," he added. "You're hiring them to be disposable cogs."

    Still not tired of winning.

    I have great faith that KM-W won't be hiring any of Robbie Soave's unemployed Vox-buddies.

  • ||

    "But last week, Mic was the latest of its ilk to crash and burn. More than 100 employees were fired, amid word that its staffless shell would be sold to another media company."

    It still has value?

  • SIV||

    It's a brand and they have proprietary clickbait technology. Mic was sold to the outfit where ENB used to pen feminine hygiene product comparos before reason brought her on board to cover the whore-beat..

  • Chipper Morning Baculum||

    SIV only knows this because that's where he went for info to find the best brand of feminine hygiene product to use on bleeding chicken cloacas.

  • Rich||

    Luxembourg to become first country to make all public transport free

    [All] tickets will be abolished, saving on the collection of fares and the policing of ticket purchases. The policy is yet to be fully thought through, however.

    Do tell!

  • SIV||

    Reason should be happy. The Luxembourgers won't even have to jump the turnstiles for the free fares unlike the poor minorities have to in D.C.

  • Eddy||

    Luxemburghers? Luxemburgers? Luxembourgeois?

  • Don't look at me!||

    Not like bums and kids will ride around aimlessly taking up seats because it's free.

  • Sevo||

    "Not like bums and kids will ride around aimlessly taking up seats because it's free."

    Well, it's raining and cold out there, warm and dry in here. This seat is not well padded, but it beats a park bench in the rain, and once that guy moves, I can lean against the window and get some shut-eye.
    Nope, not well thought-out. Not thought out at all.

  • Sevo||

    "The policy is yet to be fully thought through, however."

    Don't worry. Bernie's in charge. What could go wrong?

  • Chipper Morning Baculum||

    Spoiler alert: All of Luxemburg's public transit needs are met by a couple of Segways.

  • Rat on a train||

    Are they running empty transport or paying people so much that the €2 per passenger doesn't cover?

  • TxJack 112||

    Clearly the commission is attempting to drive ridesharing services out of business by forcing up the price of service. Wonder how much the Cab companies paid members of commission for passing the legislation? NYC one off the most corrupt cities in US

  • J Neil Schulman||

    Nick, I lived on the Upper West Side of NYC from 1970 to 1975 and across the river in Jersey City in the mid to late 1980's. In this later period I occasionally drove my car into Manhattan to meet with editors. On one occasion I stepped out of my car parked in a yellow zone for under 60 seconds to drop a package off with the lobby desk and by the time I returned the car was hooked up and towed. On another occasion I locked a Pierre Cardin trench coat into the trunk of my car while I had an editorial meeting and when I returned the trunk was broken into and the coat was gone.

    So I wrote a few jokes.

    You hear that New York and New Jersey are merging? The combined state will be called New Jerk.

    If you have a heart attack while driving in New York it's faster than waiting for paramedics to park illegally and ask to be towed to a hospital.

  • vek||

    A few things: The average wages of NYC drivers is already over that. So it's kind of like saying if the Feds put in a national minimum wage of $5 an hour that it will bork things... Not really, as market wages are already above that anyway.

    If they're changing the formula by law for how fares are calculated, that may change driving habits though.

    As far as them capping the number of drivers, that will be "bad" for consumers, and I don't support it by government... But the thing is the only reason that is getting traction is because Uber and Lyft have been so stupid in how they're managing driver onboarding. They have legit flooded the market in many areas, which has cratered wages. NYC you still make decent money if working decent times, but it's not what it used to be in any major city.

    How do I know? I've done it on the side a bit because I wanted to pull in a few extra bucks to buy an investment property.

    In Seattle it is exactly the above. The income is still ok, way above $17 an hour, and NYC is even higher... But it's horribly flooded, and for no good reason. U/L should be limiting their driver numbers on their own, as that is what is needed. Customers don't notice or care when a pickup goes from 3:45 to 3:15, yet it has dropped driver income 20%+ by my reckoning in the last year and change. A good company would balance interests to retain good workers. Once I snag my investment property, I'm donezo because the money isn't there anymore like it used to be.

  • ||

    I'm not sure why you say that this is a failure. If the market is flooded, and drivers are no longer making the money they used to, they will voluntarily stop driving and prices will have to rise. Your post kind of reads like "That restaurant is too crowded, so nobody goes there anymore."

  • vek||

    Well, frankly, at the end of the day it is a question of how many desperate people there are. The economy is still a lot weaker than people like to think as far as labor force participation... And around where I live, most all drivers tend to be unskilled immigrants to boot, which are willing to work for dick.

    At the end of the day, I guess it comes down to do you think driving jobs should be outright minimum wage work, filled by the most incompetent people in the job market, the kind of people who fuck up your order at McDonald's 100% of the time... Or should it pay something slightly higher than that, to get better people to do those jobs, since you're kinda trusting them with your life and all... U/L don't care either way. They bottom out driver income by unnecessarily low rates, and flooding the driver market, as much as they think they can in most markets.

    Personally I think driving professionally "should" be a slightly above minimum wage gig, on account of the skill required to do it well. Historically that's what it has been, but U/L have turned it into a LESS than minimum wage gig in some markets, although it is still middlin' in some spots too. It's kinda like how I don't know what being a brain surgeon SHOULD pay exactly to the dollar... But I'm pretty sure it should pay better than being a lawn guy. That's how I feel about driving versus burger flipping level work.

  • vek||

    Also, PRICES won't rise, because driver income isn't 1:1 with prices, how much down time you have is a huge factor, and this is what flooding undermines. There is no price advantage for riders, but a flooded market may get your car there 23 seconds faster because there are more drivers everywhere.

    Uber and Lyft have artificially low prices right now as far as fares go. They're losing billions a year subsidizing the prices customers pay to begin with, and since they don't really have high costs for getting new drivers on board, they just churn people through as drivers. Problem is they're incompetent, and most burn out and quit really fast.

    It's very much NOT the way most businesses run. You don't want endless poorly trained, low performing workers, providing bad service to customers, constantly turning over in most industries... Which is why companies try to retain good workers. You also don't want to lose billions a year...

    With Uber and Lyft I think part of it is sheer incompetence, some of it is just not giving a shit about their drivers, or indeed their riders much either. Either way, I don't think it's good long term business.

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