📈🤷 TLC Announces 3.5% Driver Pay Increase, As NYC FHV Insurance Costs Increase 10% to 30%+
TLC driver pay increase is welcome, but grossly underestimates true cost of doing business as a NYC TLC-licensed driver. Insurance costs have gone up 10% to 30%+ year-over-year for most
TLC announced that NYC drivers who work for Uber and Lyft will get a 3.49% raise in their minimum per-trip pay starting on March 1st
amNY says increase brings pay for a sample 30 minute, 7.5-mile trip to about $27.70, or ~$1 more than current rates
AutoMarketplace believes inflation index used in TLC Driver Minimum Pay calculation does not accurately reflect real cost of doing business in NYC
TLC commercial insurance costs, a major expense for many NYC drivers and fleets, has increased between 10% to 30%+ from 2023 to 2024
Quick EV TLC Plate Update
Before we discuss today’s TLC driver pay increase announcement, we know many of our readers want to know what happened in today’s court hearing about EV FHV Licenses (EV TLC Plates). At this time, we do not have any confirmed updates, but we will share them as soon as we have any.
🥳 TLC Driver Pay Increase
It’s been a busy day in NYC TLC land, from a much anticipated court hearing related to the New York Taxi Workers Alliance (NYTWA) lawsuit questioning the TLC’s authority to fully reinstate the EV exemption to the FHV License Pause (TLC Plate Cap) to the regulator announcing a driver pay increase.
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amNY reported on the details of the the annual inflation adjustment (“driver pay increase”) to the NYC TLC Driver Minimum Pay formula. Basically, every March 1st, TLC-licensed drivers who work for Uber and Lyft (“high-volume for-hire services”) have the minimum pay formula their wages are protected by, adjusted for inflation.
The TLC announced that NYC drivers who work for Uber and Lyft will get a 3.49% raise in their minimum per-trip pay starting on March 1st. amNY said the increase brings pay for a sample 30 minute, 7.5-mile trip to about $27.70, nearly $1 more than current rates.
“Our minimum pay standard ensures that our hardworking drivers aren’t just spinning their wheels and going nowhere because of inflation…The adjustment can mean the difference between falling behind on rent or food due to rising costs and keeping up with the economic times. I’m proud to be part of the agency that first required this and it’s a pleasure to be able to let drivers know that they’ll be getting an increase.”
- TLC Chair & Commissioner David Do
“An annual CPI adjustment is something every working person should have, and especially meaningful for Uber and Lyft drivers who bear the costs of operations while the companies take the lion’s share of the revenue…We are proud today to celebrate as Uber and Lyft drivers get their 2024 CPI adjustment. New York City’s minimum pay standard is a model for the rest of the country. Next up for us, is to get the same income protection for other taxi and FHV drivers.”
- Bhairavi Desai, President, New York Taxi Workers Alliance
Please, Sir, I Want Some More
Most TLC-licensed drivers will gladly take the 3.5%, or ~$1 minimum pay protection increase, and it’s good of the TLC to have created this inflation adjustment mechanism. In addition, after holding a public hearing (🤔) last year, the TLC reduced their originally proposed utilization rate (UR) floor for Uber/Lyft from 56% to 53%. In retrospect, this was a big deal!
If that had not been done, we’d already likely have NYC driver “lockouts”, as Uber’s Josh Gold correctly warned last year. That being said, Uber/Lyft NYC driver waitlists continue to grow, implying UR is probably starting to get uncomfortably close to the revised 53% UR floor (note: our speculation). A ~$1 minimum pay increase might not sound like a lot, but that will also impact Uber/Lyft’s ability to onboard new drivers.
All that being said, anyone who understands the expenses of a NYC TLC driver or fleet will know a 3.5% inflation adjustment does not reflect the true and increased cost of doing business in NYC from 2023 to 2024. In fact, it’s not close, specifically related to increased vehicle insurance costs, a major expense for drivers and fleets.
With TLC insurance renewal season in full swing, this is a topic that we’ve covered recently. Specifically, INSHUR Co-Founder & CEO Dan Bratshpis and Next Century Insurance President Gavriel Gavrilov both gave some great insights about the NYC for-hire transportation (TLC) insurance market and what’s causing insurance premiums to go up 10% to 30%+!
How Was 3.49% Calculated? CPI-W Inflation
Based on our understanding, TLC uses the CPI-W inflation index for the NY-NJ-PA metro area. This index relates to Urban Wage Earners and Clerical Workers for the NYC metro area.
“CPI-W is designed to measure price changes faced by urban wage earners and clerical workers. Population coverage is the only difference between the CPI-U and CPI-W.”
- U.S. Bureau of Labor Statistics (BLS)
Looking at the change in the CPI-W index from Dec 2022 to Dec 2023, we get 3.49%, which exactly matches TLC’s announced driver pay increase. For those who want track the CPI-W index for New York-Newark-Jersey City, NY-NJ-PA click here.
NYC TLC Inflation Index?
We believe TLC’s reliance on using the above regional CPI-W index vs. creating an NYC TLC-specific one, especially the cost of NYC for-hire commercial liability insurance, is causing the regulator to underestimate the real inflation drivers and fleets are experiencing.
Also, for those who might be a little more in the weeds, NYC is famously Uber and Lyft’s only North American market, where the cost of commercial insurance falls mostly on drivers and fleets (notably as it relates to “Uber X” drivers). In our view, this will likely make the rideshare companies NYC businesses particularly profitable vs. other North American markets.
If Uber and Lyft were subject to a NYC TLC-specific inflation index, the TLC Driver Minimum Pay formula would more accurately reflect the cost of doing business. Uber and Lyft would obviously hate this, but if we’re being intellectually honest, they need to be compensating drivers for the increased cost of TLC liability insurance.
AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube ▶️
You guys are always hitting the nail on the head. Why can’t you guys lead the TLC? Lol