Seattle considers raising rates for Uber and Lyft rides to boost driver compensation
Uber and Lyft rides could become more expensive in Seattle. The city is considering setting a minimum fare per ride and other regulations in an effort to ensure drivers are compensated fairly.
The Seattle City Council is expected to introduce a resolution this week to start the process toward enacting new regulations that could change how on-demand transportation companies operate in the region. The city will explore a minimum base fare of $2.40 per ride for Uber and Lyft and a minimum compensation for all independent contractors, which includes drivers for transportation networks.
Both companies already have base fares of $1.35 in Seattle.
Uber is responding to the resolution with a show of force. The company launched a petition against the proposed changes and emailed it to Seattle-area Uber riders Monday. The petition exceeded its goal of 5,000 signatures within a few hours. Uber says that the City Council intends to go beyond the minimum fare outlined in the resolution by increasing the per-mile rate, based on early discussions.
“Nearly doubling the per-mile rideshare rate in Seattle will significantly increase costs for riders,” said Alejandro Chouza, Uber general manager for the Pacific Northwest, in a statement. “Research and our experience shows this will mean fewer trips and therefore less work for drivers. Regulating fares could also eliminate the financial incentive to share rides and potentially put more drunk drivers on the road.”
Teamsters Local 117, the labor group that represents taxi and truck drivers, as well as other workers, helped the city craft the resolution. The group also worked with the City Council to create Seattle’s landmark law that allows Uber and Lyft drivers to unionize. That law passed in 2015 but has not gone into effect because it is stalled by lawsuits.
“If Uber is part of the transportation system here in the city, then the people working within it should at least be close to making what Seattle has determined should be the minimum wage,” said Leonard Smith, director of organizing at Teamsters 117. “In order to do that, since the industry itself doesn’t seem inclined to go ahead and help the drivers make more money, the rates should be set the same way that the city and the county set rates for other forms of public transportation.”
Last fall, Uber published a blog post claiming that the median driver in Seattle makes between $19 and $21 per hour before expenses. Uber estimates expenses range from $2.94 to $6.46 per hour. Based on those numbers, take-home pay for Uber drivers doesn’t deviate far from Seattle’s $15 per hour minimum wage.
Nationally, the actual compensation for Uber and Lyft drivers is in dispute. A study by MIT researchers found that drivers’ median pre-tax profit was $3.37 per hour. Uber CEO Dara Khosrowshahi publicly challenged the methodology of the study as flawed and its lead researcher told Reuters he intends to re-run the analysis.
Still, the wide variation in results shows that Uber driver compensation is not fully understood and the subject of intense debate. Uber is working with the Seattle City Council to verify the compensation data the company shared last fall.
Uber accuses Teamsters 117 of pushing these and other regulations to benefit the taxi drivers who are members of the group. Smith says that claim is a distraction.
“What we look at is the worker … and the people driving taxis are also driving Uber and Lyft,” he said. “It’s all the same.”
Smith also fired back, accusing Uber and Lyft of biding their time until autonomous technology is advanced enough that drivers aren’t necessary.
“They’re trying to buy as much time as they can until they can get rid of drivers altogether,” he said. “But in the meantime, there are people out there that have families to feed.”
Some of the regulations proposed in the Seattle City Council’s resolution:
Establishing a set of minimum charges, like a minimum base fare of $2.40 for all operators in the for-hire transportation industry
Requiring Uber and Lyft to provide data on fares, hours worked, number of drivers, and driver compensation
Establishing minimum compensation for independent contractors
A regional license system for all for-hire transportation operators
Leveling operating fees
Creating an optional avenue to convert for-hire vehicles into taxis
Establishing a bill of rights for drivers and passengers
Uber expects the resolution to be introduced Monday and voted on by the full City