SEATTLE – Uber fares in Seattle will likely increase by 50% in the next few months the company says, as the city’s new minimum wage law for ride-hailing drivers goes into effect on Friday.
A spokesperson with Uber says fares will increase starting Jan. 1 when they add a new 61-cent surcharge to cover costs of paid sick time and a new mandated 75-cent fee which overall will lead to an increase in fares of about 24 percent.
It’s the first of three planned fare increases over the first three months of 2021 that could see fares be up to 50% higher by April 1 when the compensation for drivers fully phases in.
In September, the Seattle City Council passed a new minimum wage standard for Uber and Lyft drivers requiring the rideshare companies to pay drivers at 56-cents per minute for time spent on the platform, plus compensation for expenses like cleaning. The bill also includes tip protection to ensure all tips are given directly to drivers.
The new wage requirements were passed to keep help ensure that Uber and Lyft drivers in Seattle are earning similar to what other workers in the city are earning, as minimum wage is also set to increase in Seattle on Jan. 1.
Under Seattle’s Minimum Wage Ordinance, which went into effect on April 2015 and increases each year on Jan. 1, the minimum wage will increase on Jan 1, 2021 to $16.69 an hour for companies with 501 or more employees.
Companies with 500 or fewer employees must pay employees at least $15 an hour if they pay $1.69 an hour towards medical benefits and/or the employee earns $1.69 an hour in tips. If they do not, the company must pay employees at least $16.69 an hour.
Uber claims with ridership already in steep drops since the pandemic and continuing company expenses for insurance, maintenance and card processing fees, “there is just not room for us to incur more costs and run a viable business.”
“We know that any price increase is frustrating for customers, and we continue to look for new ways to reduce prices while complying with the City Council’s laws,” said Uber spokesperson Harry Hatfield. “There were progressive ways to create earnings protections for drivers without harming Seattlites that rely on ridesharing, and we are disappointed that the City Council was not more open-minded in their deliberations.”