By Gothamist |
Ride Hail Apps Lyft and Juno Say City's Pay Rules Hurts Drivers: Gothamist
Since a minimum wage for app-based drivers went into effect last month, Juno reports in a court affidavit that rides have dropped 30 percent, resulting in a loss of earnings for drivers of 17 percent.
The filing is part of an ongoing lawsuit filed by Juno and Lyft, challenging the way the Taxi and Limousine Commission calculates the minimum wage for drivers. Under the new rules, drivers must earn minimum wage of at least $17.22 an hour based on a complex calculation that factors in the miles and amount of time each customer takes, as well as the “utilization rate” or how many cars are just driving around looking for customers.
Lyft argues the minimum wage should be based on weekly usage rates, and not per-trip data. And that basing the wage on the “utilization rate” favors Uber, the largest of the ride hailing companies. Uber is not a party to the lawsuit.
All parties are due back in court next week.
Juno argues that its data, which compares January 2019 to February 2019, is “troubling” because the company had been growing until then.
“I understand that these costs are not recoverable. Accordingly, Juno has attempted to comply with the Rule and remain a viable business going forward by passing them on through higher fares.” Juno’s CEO Ronen Ben-David wrote.
Juno also argues that its business model is unique in that it allows drivers to remain logged into the app without time restrictions, and accept trips while working for other apps. As a result, on paper, Juno has the lowest “utilization rate,” which is one of the ways the TLC calculates the minimum wage.
MD Saisul Islam, 49, drives for Lyft and Juno and said in the last month his take home pay has gone down, while he hasn’t seen a decrease in customers. “Working long hours, not making this much money," he said. He calculated last year he’d make $3,500 to $4,000 a month working five days a week. This year he has to drive seven days a week to earn $2,500 to $2.800.
Other drivers, like Tina Raveneau, 38, who’s been driving with Lyft for three years said she’s felt like once she starts making a lot of money, suddenly the number of customers slows down. She blames the company. “We feel like that's what they're doing, they're playing with the algorithm," she said. She admitted January and February are typically slow months.
Lyft disputes these driver’s assessments.
"Lyft is committed to increasing driver earnings, which is why we're concerned with what we're seeing in New York City,” Lyft spokesperson Campbell Matthews wrote in a statement. “Riders are requesting fewer rides, which means there are fewer earning opportunities for drivers. We remain committed to trying to find a better solution."
A spokesman for Uber declined to comment, but warned against extrapolating data from one week or one month. Although, he admitted Uber has not grown at the same rate since the minimum wage has gone into effect.
Uber and Lyft are both preparing for IPOs. Both companies operate at losses, keeping prices artificially low, while Uber lost $1.8 billion and Lyft lost $911 million in 2018.
A spokesperson for the Independent Driver’s Guild disputes Lyft and Juno’s assessment and said members of its group report earning more than they have in years. They said if anything is hurting drivers right now, it’s the state’s $2.75 congestion pricing surcharge, which also went into effect last month on for-hire vehicles below 96th Street in Manhattan.
“If Lyft and Juno are losing business maybe that’s because New Yorkers don’t want to drive or ride with companies that sued to block the minimum wage for drivers. New Yorkers don't like it when billion dollar companies take advantage of their workers,” Moira Muntz, a spokesperson for the Independent Drivers Guild, told Gothamist.
The cap on new ride hail vehicles for the year could also play a factor in the changes to the industry.
And not everyone is feeling the pain. The car-pool app Via reports a 15 percent increase in rides since February.
"Thanks to our extremely efficient shared-ride technology, the vast majority of drivers on the Via platform already earned more than the city's new minimum rates," Daniel Ramot, CEO of Via, told Gothamist. "This is why we did not need to increase fares for riders to comply with the TLC’s rule.”
Yellow taxi drivers have reported mixed results in the first month since the congestion pricing surcharge went into effect. Some report a 15 to 20 percent drop in revenue, while others have seen an increase in pay.
Bhairavi Desai, Executive Director of the New York Taxi Workers Alliance, said her drivers report making more money since the wage rule went into effect, but said it’s not enough, and that they app-based companies are getting rich on the back of drivers.
"They keep people poor, they made people poor, now that they have to keep them slightly above poverty, they're spending all these resources to fight it," she told Gothamist.
The Taxi and Limousine Commission declined to comment, citing the ongoing lawsuit over driver pay.