Seattle became the second big city in the nation to establish a minimum wage standard for Uber and Lyft drivers on Tuesday.
The Seattle City Council unanimously voted to adopt new regulations designed to ensure Uber and Lyft drivers earn the city’s $16.39 per hour minimum wage.
The new law requires transportation network companies to pay drivers at least $0.56 per minute when there is a passenger in the vehicle as well as a per-mile rate to cover expenses. The city says that standard will ensure drivers earn at least Seattle’s minimum wage, assuming they spend about 50% of their time waiting for rides or driving to pick up passengers. The minimum compensation standard takes effect on Jan. 1.
Previously: Debate over Uber and Lyft driver pay comes to a head as Seattle prepares to set minimum wage
The legislation is modeled after a minimum wage standard New York City passed in 2018, though Council Chair Teresa Mosqueda dismissed the connection during the hearing. Seattle hired two researchers who advised New York City officials on their legislation to recommend a minimum wage standard when crafting the ordinance approved Tuesday. Uber and Lyft backed a separate study by Cornell researchers that produced significantly different findings. The competing studies highlight the complexities of establishing a minimum wage for gig workers.
Uber and Lyft have long said New York should serve as a cautionary tale for Seattle. Increased prices and reduced ride activity in New York followed the passage of the legislation. The apps now restrict the number of New York drivers who can work at a time, leading some drivers to sleep in their cars so that they don’t miss a chance to log-on, Vice reports.
“We would ask the city not to pass this legislation and go back to the drawing board and not copycat failed systems from other cities,” said Michael Wolfe, director of the Uber-backed group Drive Forward, during public comment ahead of Tuesday’s hearing.
But advocates for the minimum wage, like the Teamsters 117 and affiliated Drivers Union, say it is a necessary protection for drivers.
“We are putting our values of wanting to lift up every worker and particularly every worker in this city into action,” Mosqueda said during the hearing.
The minimum wage is part of Seattle Mayor Jenny Durkan’s “Fare Share” program introduced in September, which increased a tax on each Uber and Lyft ride this past November. It is the latest in a series of city ordinances targeting the gig economy.
In June, the Seattle City Council unanimously approved legislation that requires food delivery companies to pay drivers $2.50 per delivery on top of their regular rates to offset costs and risks that drivers are dealing with during the pandemic. A few months earlier, the U.S. Chamber of Commerce, Uber, and the City of Seattle agreed to walk away from a lengthy and complex legal battle over a law that would allow drivers to unionize.
Council member Lisa Herbold suggested the minimum wage could be extended to other types of gig workers during Tuesday’s hearing.
“We are not going to allow contract workers in our city to be treated this way,” she said. “I hope in the future we can work on similar legislation for other drivers … such as delivery drivers of packages as well as delivery drivers of meals and food.”
Herbold said the legislation corrects for artificially low prices at which Uber and Lyft offer their services.
“Flooding the market with drivers pushes down the cost to the customer but it does so at the expense of workers,” she said. “This is much like other gig businesses, as well, where the costs of providing the service are passed off to the workers in the form of reduced earnings and benefits.”
In a statement issued ahead of the vote, Lyft warned the minimum wage will cost jobs in Seattle.
“The City’s plan is deeply flawed and will actually destroy jobs for thousands of people — as many as 4,000 drivers on Lyft alone — and drive ride-share companies out of Seattle,” the company said.
Asked about the vote, Uber referred back to a letter the company sent to the City Council earlier this month.
“Uber may have to make changes in Seattle because of this new law, but the real harm here will not be to Uber … it is the drivers who cannot work and community members unable to complete essential travel that stand to lose because of the ordinance in front of you.”
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