Lyft and Uber are halting onboarding for new drivers in New York City following last year’s historic vote that lifted the wage minimum for drivers ride-hailing companies late last year, Politico reported Monday.
The news comes after New York City’s Taxi and Limousine Commission in December passed new rules governing the minimum wage for ride-hailing companies, ensuring that drivers make a liveable wage, that went into effect at the beginning of February.
This minimum takes into account that independent contractors, i.e. the workforce on which ride-hailing companies rely for their business, would need to make a little over $17 per hour, after taxes and expenses, to earn the equivalent of city’s $15 minimum wage.
According to Politico, the new rules ding companies for having too many active drivers on city streets that aren’t actually shuttling passengers. Essentially, the rules are meant to help limit the number of roaming vehicles while also ensuring that drivers make a livable wage. The site noted that “[t]he higher a company’s utilization rate, the less it has to pay drivers to meet the new wage floor requirement.”
Uber said in an update on its website that as of the start of April, the company is “not accepting new for-hire vehicle driver sign-ups in New York City, due in part to new TLC regulations.” While Uber stopped onboarding new drivers on April 1, Lyft continued to bring on drivers for roughly three weeks before ultimately following suit April 19.
“Because of TLC regulations, we’re currently not accepting new drivers in New York City,” a Lyft spokeswoman told Gizmodo in a statement by email, adding that the company currently has a waitlist of drivers waiting to apply to drive for the company. An Uber spokesperson told Politico that it too would again start onboarding new drivers once “drivers exit the industry and demand from riders increases.”
Both Lyft and Uber have expressed frustration with the rules. In a statement in December, an Uber spokesperson said that the “implementation of the City Council’s legislation to increase driver earnings will lead to higher than necessary fare increases for riders while missing an opportunity to deal with congestion in Manhattan’s central business district.”
Lyft, meanwhile, argues that the new rules set an uneven playing field for underdog ride-hailing companies while essentially benefitting Uber. A spokesperson for the company told Gizmodo that it feels it had to cut off hiring in order to compete with Uber. But it appears that Lyft’s gripe just boils down to the fact that Uber is a much larger competitor and both companies have to play by the same set of rules, at the moment.
At the end of the day, as Politico noted, the rules appear to be doing their job. And if there arises a need for additional ride-sharing vehicles on New York City streets, it’s clear the companies looking to profit off of the labor of a workforce of independent contractors will be more than happy to step in.