Why does Seattle want to raise Uber and Lyft rates?
Uber is questioning the motivation behind a plan to raise the rates of its service in Seattle after a City Council meeting Tuesday suggested increasing driver compensation is not the ultimate goal of the proposal.
A Council committee discussed a resolution to begin crafting a new set of regulations on for-hire transportation companies in Seattle. Proposed changes include a minimum base fare of $2.40 per ride for Uber and Lyft — up from the $1.35 base fare they currently charge — and a minimum compensation for all independent contractors. The Council will also explore a mandate that transportation networks share data on fares, hours worked, number of drivers, and driver compensation.
The resolution’s stated goal is to “ensure equitable compensation for drivers, to review the administrative rules and regulations to improve customer service and lower costs to participants, and to explore ways to ensure equal market access to all participants.”
But Uber isn’t convinced that raising driver rates is really what the Council is after because the city’s taxi industry continued to come up during Tuesday’s meeting.
Tony Kilduff, a member of the City Council staff, said that the regulations are intended to “put a floor on the rates that are available to everybody so that the taxi drivers are not at a disadvantage on that price point when it comes to maintaining market share.”
“The restrictions on these taxi drivers are incredible and we are now realizing that they are competing in a new world and we want to revisit those,” added City Council President Bruce Harrell.
Alejandro Chouza, Uber’s new general manager for the Pacific Northwest, thinks that is a departure from the initially stated goal of boosting driver pay.
“If [leveling the playing field for taxi drivers] is the goal, then that’s what should be discussed,” Chouza said in an interview with GeekWire. “That’s what riders and drivers should be analyzing. That transparency, we think, is very important and then based on those goals I think there should be discussion around that, a fact-based approach to it. But just having potentially misleading statements about what you’re trying to accomplish doesn’t really serve anybody.”
An academic paper by Uber researchers and an NYU professor also alleges that increases in rates do not result in increased take-home pay for drivers because higher costs lead to fewer riders.
But Harrell stressed that the city is trying to write regulations that ensure fairness for all participants, not just the taxi industry or Uber drivers.
“We’re trying to build an industry that is fair to all and by that, I mean drivers, TNC companies, consumers, any industry participants, and be as transparent as possible,” he said.
Harrell also noted that the increase is close to the $2.14 base fare that used to be charged when UberX first launched in Seattle. He said that the city will study how the higher base fare affected consumers at that time.
Earlier this week, Uber launched a petition against the proposed changes and emailed it to Seattle-area Uber riders. The petition exceeded its goal of 5,000 signatures within a few hours.