Uber’s competitors Juno and Lyft in court filings this week said fewer riders are using their services since New York City began implementing its new minimum wage law for drivers, the first of its kind in the country.
Juno said it has seen a 30-percent decline in ride requests since the rules were implemented at the beginning of February, resulting in a 17-percent decrease in driver earnings per hour.
Lyft reported a similar struggle, saying in a filing that it has seen a “significant decrease in the frequency with which passengers requested rides [and] the total number of rides in the market,” which has created fewer “earning opportunities” for drivers. The company did not provide specific numbers.
“Lyft is committed to increasing driver earnings, which is why we’re concerned with what we’re seeing in New York City,” a Lyft spokesperson told The Hill. “Riders are requesting fewer rides, which means there are fewer earning opportunities for drivers. We remain committed to trying to find a better solution.”
The two Uber competitors are suing the New York City Taxi and Limousine Commission (TLC) over its implementation of the new pay rules, saying they foresee significant losses under the current terms – for drivers as well as for the businesses.
The new rules, which passed in December, require ride-hailing app drivers to make at least $17.22 per hour after expenses. The stated goal of New York City regulators was to increase average pay for drivers by about $9,600 per year without disrupting passengers’ experiences.
The commission was seeking to protect drivers from being underpaid by their companies after reports indicated ride-hailing app drivers were being paid significantly less than minimum wage.
But Lyft and Juno argue the rules will allow Uber to solidify and expand its already-dominant position in the market, and could ultimately result in lower wages for drivers.
Right now, the rules take into account the amount drivers are paid per mile and per minute, also known as a “utilization rate.” The calculation rewards drivers for taking more customers, leaving Uber’s smaller competitors at a disadvantage, Lyft and Juno say.
Juno in court documents filed Tuesday claimed it will have to raise its fares and pay its drivers less to comply with the rules, while Lyft has estimated it would have to pay an additional $2.5 million per week to remain compliant while keeping passenger rates the same.
“Lyft remains committed to increasing driver earnings,” the Lyft spokesperson said. “It is critical for drivers and riders that competition among platforms is preserved, and that regulations enable companies to compete fairly for riders and drivers.”
The Independent Drivers Guild, which led a two-year campaign seeking to pass the minimum pay rules, told The Hill that it has heard positive reviews from drivers about the rules.
“Most app-based drivers report they are making more take home pay than they have in years thanks to the new minimum wage rules and they are finally feeling some hope,” said Moira Muntz of the Independent Drivers Guild, which represents more than 45,000 for-hire vehicle drivers in New York City.
“Drivers want competing apps in the industry, but suing to stop a desperately needed minimum wage was a huge blunder,” Muntz said.
Uber declined to share its numbers on ridership and driver wages since the rule’s implementation.Both Uber and Lyft have been spending significant amounts of money to lower their rider costs as they race to go public, resulting in losses for both companies.
Lyft and Juno are due back in court to make arguments on Monday.