💵🔐 Summary & Highlights Of TLC Hearing On Driver Pay, Lockouts
💵🔐 Summary & Highlights Of TLC Hearing On Driver Pay, Lockouts
Yesterday's three hour long NYC TLC hearing on proposed driver pay rules, was filled with insightful and passionate testimony from drivers, the TLC and Uber itself
Yesterday’s New York City Taxi & Limousine Commission (TLC) hearing lasted nearly three hours and revolved around the threat of driver “lockouts”
Hearing was in response to Uber’s successful lawsuit blocking a previously proposed TLC driver pay raise
Utilization rate was key & technical debate point
Driver testimony was universally against “lockouts”
Other topics mentioned including capping TLC drivers licenses and how to measure inflation going forward
TLC implied that utilization calculation would be adjusted ahead of March 8th vote
Yesterday’s New York City Taxi & Limousine Commission (TLC) hearing had a lot of impassioned (and insightful) in-person testimony. The hearing was in response to Uber’s successful lawsuit blocking a previously proposed TLC driver pay raise. The ruling Judge in that case essentially stated the TLC needed to present a more robust justification around how it came up with its methodology & inflation calculations.
NYC TLC Chair & Commissioner David Do began the meeting with an interestingly blunt criticism of Uber’s successful legal action against the regulator, but concluded the meeting on a more conciliatory note. The core discussion point of the hearing revolved around fears that driver “lockouts”, or the inability for a TLC driver to log onto the Uber/Lyft app at a time of their choosing, would occur due to TLC (re)implementing a utilization rate requirement.
TLC Assistant Commissioner for Policy James DiGiovanni gave an insightful presentation on utilization rates, why the metric exists and its role in the overall driver minimum pay calculation (his full presentation runs from 04:30 to 19:58 in the uploaded TLC recording).
The finalized driver pay rules (including utilization rate language) will be voted on during a 📅 Wednesday, March 8th Board of TLC Commissioners meeting.
“Uber’s litigation used up City resources, your time, your income and it has a major cost to all of us…”
- David Do, NYC TLC Chair & Commissioner
Our goal below is to summarize and highlight (in a concise, but informative way with short video clips), the nearly three hour long meeting for our readers, who weren’t able to attend. At the end of the meeting, it appeared the TLC would perhaps adjust the utilization rate requirement from a specific number (i.e., 56%) to a utilization “band” (i.e., 50% to 60%), ahead of a vote - this is just our speculation.
Utilization Rate
Before we begin, here is quick reminder of what the utilization rate is 👇.
There are three key inputs the TLC uses when calculating the TLC Driver Minimum Pay Standard for high-volume for-hire services (currently only applicable to Uber & Lyft):
Per Mile Rate: Compensation for distance travelled. Estimates driver expenses, such as fuel, maintenance & insurance
Per Minute Rate: Compensation for time. Solves for “net wage” that’s benchmarked to New York State & City gross minimum wage rules
Utilization Rate: Essentially how busy a driver is kept. Time with a passenger(s) ➗ total hours “online” waiting for / travelling to a trip plus time with passenger(s)
🗣️ TLC Meeting Highlights
🛑 “No” To Lockouts
A point of near universal agreement at the meeting is that no one wanted Uber/Lyft “lockouts” (a/k/a Uber Planner or Scheduler), including Uber itself, to return. The differences stemmed from the varied opinions on how to ensure that doesn’t happen.
⭐ Uber Says “No Concern” At 53%, Needs TLC Help ⭐
Uber’s Josh Gold, a Senior Director of Public Policy & Communications, gave testimony that TLC’s proposed 56% utilization requirement may force it to institute lockouts because it didn’t (& legally can’t) have visibility into Lyft’s data. Uber basically, according to Gold, is threatening driver “lockouts” because it genuinely doesn’t know if it will meet the 56% utilization rate requirement (on a consistent basis), without more information from the TLC.
Of note, although technically a 58% utilization rate calculation is used in the pay formula, Uber and Lyft have to maintain a 56% utilization rate based on the current TLC proposal.
As the clip below shows, the Commission was…not pleased…with his testimony but Gold does, in our view, make some interesting points. Of course Gold, as an Uber spokesperson, will argue for a lower utilization rate requirement, but that doesn’t mean the points he’s making aren’t worthy of consideration.
Gold’s key points were:
Uber would NOT have to enforce lockouts if the utilization rate “floor” was set to 53%
Previous proposed utilization rate “bands” (i.e., 52% to 64%) was better approach
If the TLC doesn’t provide more ongoing utilization data transparency, it’s hard for Uber to understand its compliance with driver pay rules
Uber doesn't have insight into Lyft's data, making it difficult to understand TLC's utilization rate calculation (an industry metric)
TLC has other mechanisms to solve for utilization rates, such as limiting supply of for-hire vehicles (a/k/a TLC Plate Cap)
“There is no concern about falling below 53% [utilization rate]”
- Uber Executive Josh Gold implying if utilization rate “floor” went from 56% to 53%, there would not be a need to institute NYC “lockouts”
⭐ Drivers Hate Lockouts ⭐
Every TLC driver who testified clearly communicated their nervousness around the prospects of “lockouts” returning.
Below we highlight notable testimony.
“A pay raise is great, but if we’re locked out we don’t see a pay raise.”
- NYC TLC Driver Eric Dorfman
“We should not be collateral damage to the policies of the TLC.”
- NYC TLC Driver Israel Acevedo
“When Uber came to the industry we were very happy …TLC should now put the genie [Uber] back in the bottle or protect us from the genie.”
- NYC TLC Driver Mohammed Mohammed
“I’m a mother of seven children…Who do [I go to talk to] and tell them, listen I have problems…how do I support my kids…We are just as minority group, we are sitting here to be regulated by every agency…there are so many people that cannot even speak because they’re so afraid, because this is such a formal company”
- NYC TLC Driver & driver advocate Arifa Tirmizi
🔒 Cap Licenses
Another point brought up by several individuals giving testimony was the need to “cap”, or limit the issuance of NYC TLC driver licenses. A NYC TLC license is a commercial license that allows an individual to operate an NYC TLC regulated vehicle - from yellow cabs to Uber/Lyft to black car & livery community bases.
We actually think it’s an idea that is worth listening to, related to future risks posed by DOUBLE SHIFTS. Historically yellow cabs 🚕🚕 had two drivers doing 12 hour shifts with one taxi - essentially it created two active vehicles out of one (i.e., 13,500 yellow cabs become 27,000 active vehicles). Right now as the medallion taxi industry begins to recover, our research indicates many yellow cabs are only running a single shift ON TOP OF 5,000+ being inactive.
In addition, although the TLC Plate Cap, helpfully addresses the same issue via regulating the supply of vehicles, a risk the non-medallion TLC industry runs is once drivers get busier (i.e, earn more money), excess earnings may flow to newly minted double shift drivers (i.e., TLC drivers working for Uber/Lyft begin working double shifts).
Obviously, an effective utilization rate (i.e., not resulting in immediate lockouts, but preventing excess earnings going to driver/vehicle oversupply) can help prevent a lot of driver earnings damage related to “double shifts”. Between the TLC Plate Cap and an effective utilization rate, a TLC drivers license cap may not be necessary. However, it is another viable approach to protect driver earnings versus (or in conjunction with) instituting a utilization rate.
“We want to bring respect back to this license. We want to bring value back to this license…If you put a cap on this license, if you slow it down the drivers are going to make money.”
- NYC TLC Driver & driver advocate Raul Rivera
“When you raise pay the supply of workers increases, more people want to drive…so you have more people on the road chasing the same number of rides.”
- Independent Driver Guild (IDG) Policy Director Andrew Greenblatt
🧮 U vs. W Inflation
We also thought it was worth highlighting discussions and debates around which inflation index is used used by the TLC in pushing through annual rate increases. As mentioned above, TLC Assistant Commissioner for Policy James DiGiovanni gives a strong presentation explaining this topic (his full presentation runs from 04:30 to 19:58 in the uploaded TLC recording).
Next Steps
At the end of the meeting the TLC Chair & Commissioner states:
“I heard you all loud and clear…that lockouts are not the way to go…this is not something imposed by the TLC…However, we will look at adjusting the rule in the next week before our vote and ensure that it’s a more fair utilization band. ”
- David Do, NYC TLC Chair & Commissioner
Ahead of next 📅 Wednesday, March 8th Board of TLC Commissioners meeting we speculate a utilization rate “band” will be proposed, which will help prevent “lockouts”.
As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.
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