Report Finds NYC Minimum Driver Pay Standard Didn't Hit Uber & Lyft Passenger Demand
In a preliminary analysis, academics found the NYC minimum pay standard for TLC drivers didn't negatively impact passenger demand as Uber and Lyft warned
A preliminary report by authors Dmitri Koustas (University of Chicago), James Parrott (The New School) and Michael Reich (UC Berkeley) outlined several driver, passenger and Uber/Lyft earnings trends since NYC implemented the TLC minimum pay standard in February 2019. The study analyzed nearly 500 million app-based trips in NYC from August 2017 to December 2019. The report also recognizes that the impact on driver earnings over the period analyzed could be the result of a “bundled effect” of several dynamics that played out in the market.
“In order to fully understand these findings, the responses of the companies must also be taken into account. Before the pay standard policy, drivers had spent about 40 percent of their working time between rides. Soon after the policy went into effect, and in response to it, Uber and Lyft both ceased onboarding new drivers; subsequently, they also began to restrict the number of drivers on their apps during low utilization times of the day and week. For this reason, our findings in this paper should be interpreted as a bundled effect of these developments taken together.”
It also should be noted both Uber and Lyft pushed back against the report findings.
"In just the first year of the rule's implementation fares increased, tens of thousands of drivers lost reliable access to the app and there were massive driver protests against the law…It's not surprising that the same people who created the rule now have a study showing how successful it was, but the facts show otherwise." - Uber spokesperson
"This biased study ignores the real impact of these rules: supply controls resulting in ten thousand New Yorkers with no access to earning opportunities on our platform at all, plus a 25% price increase that hurts low income riders" - Lyft spokesperson
Some highlights below (Link to the full report)
Trips volumes in October 2020 are 63% of what they were in October 2019
Median gross hourly driver pay increased 8.3% or $2.34 after the pay standard, driven by increased earnings for weekday ‘off-peak’ trips (10am to 4pm).
51% of the analyzed TLC drivers work more than 32 hours per week and 74% work more than 20 hours per week. Full-time drivers (>32 hours) provided 71% of all trips in NYC.
The average base passenger fare, defined as fares less tolls and other fees, increased 5.9% and the average passenger wait time fell from 5.82 minutes to 4.79 minutes (June 2018 to June 2018). However, the authors’ analysis of Chicago app trips led them to conclude the fare increases were not specific to NYC and therefore not a result of the minimum pay standard.
Company commission rates declined from 15% in June 2018 to 12.5% in June 2019. (This is a bit of an odd figure and I am going to reach out to the authors on how they are calculating this. Most drivers would expect to see this number between 20-30% excluding tolls, other surcharges and taxes).
Overall app-based trip volumes did not experience a significant decline over the time period since the minimum pay standard was implemented.
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I would like to see the TLC driver data from March 2020 to the present. TLC minimum pay standard started in February 2019, Uber and Lyft did away with surge and added driver on line time on the app platform. all these changes made it harder for drivers to make money.