On December 8, economists released a report that says the policy that raised driver pay in New York City in 2018 did not significantly increase fares for riders.
When regulators initially suggested implementing the pay rules, Uber and Lyft claim such a move would lead to higher than necessary fare increases for riders. The report, titled New York City’s Gig Driver Pay Standard: Effects on Drivers, Passengers, and Companies, tells a different story.
Economists from the University of Chicago, The New School, and the University of California at Berkley looked through data from 500 million trips from 2018 and 2019. They found that drivers received a pay increase of about nine percent, or $1.33, per trip in 2019. At the same time, passenger growth continued, and wait times decreased.
According to James Parrott, one of the authors of the report and a director at the Center for New York City Affairs at The New School, “The first year of experience under the New York City driver pay standard (before the pandemic) shows that driver pay rose, more efficient use was made of drivers’ time, passengers paid a little more but waited a minute less on average for a car to arrive. While the companies’ commission rate declined, they still made a lot of money from their app-dispatch business.”
Now, regulators in various states, including New York, California, and Washington, are looking into more pay protections for drivers. The report notes that if drivers are given more protections, it won’t hurt riders, but it could decrease companies’ commission rates.
According to an Uber spokesperson, New York’s policy did lead to an increase in fares for riders in the first year. He also discussed the pay rules that forced Uber and Lyft to restrict how many drivers could be on the app: “In just the first year of the rule’s implementation fares increased, tens of thousands of drivers lost reliable access to the app and there were massive driver protests against the law. It’s not surprising that the same people who created the rule now have a study showing how successful it was, but the facts show otherwise.”
To stress his point, the Uber spokesperson pointed to an article in the New York Times from January that showed some airport trips costing as much as $120. Lyft also questioned the validity of the study, believing the research is biased.