5 Reasons The NYC Uber And Lyft Driver Hiring Freeze Is Good

  • Christian Wardlaw has 25 years of experience serving in automotive editorial leadership roles with Autobytel, Edmunds, J.D. Power, and Tribune Publishing. A married father of four, Chris is based in the Los Angeles suburbs and believes fuel cell electric vehicles will power the future.

can be reached at christianwardlaw@gmail.com
  • Christian Wardlaw has 25 years of experience serving in automotive editorial leadership roles with Autobytel, Edmunds, J.D. Power, and Tribune Publishing. A married father of four, Chris is based in the Los Angeles suburbs and believes fuel cell electric vehicles will power the future.

can be reached at christianwardlaw@gmail.com
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According to a CNN report, Uber is a money-losing business, posting a $1 billion loss during the first quarter of 2019. Nevertheless, the dominant ride-hailing company is going public at a reported initial share price of $44 to $50, which values Uber at up to $84 billion.

This initial public offering (IPO) share value is more conservative than Uber rival Lyft’s, perhaps reflective of that company’s failure to lift-off following its big Wall Street debut. As this article is published, Lyft is trading well below its IPO share price of $72.

In advance of Uber’s IPO, drivers from both companies went on strike on April 8, 2019. They are seeking better pay, increased job security, and more. Uber and Lyft, most often used by people who earn more than $100,000 annually and who live in nine of the biggest cities in the U.S., do not pay drivers well. Using a calculator on Uber’s website, a driver in Manhattan can expect to earn a minimum of $6.83 per trip, on average.

Built on the backs of people who use their own cars to provide convenient rides to the most affluent people in America, Uber and Lyft are valued in the billions of dollars. And now they are facing the possibility of increased regulation designed to achieve numerous objectives.

On February 1, 2019, New York City implemented a new rule mandating that drivers must earn a minimum wage of $17.22 per hour. In response, according to Politico, Uber and Lyft stopped hiring new drivers in that city. Uber’s hiring freeze was effective on April 1, and Lyft followed suit on April 9.

Why The NYC Hiring Freeze Is A Good Thing

Heavy traffic on New York City street
Studies claim that the rise of ride-hailing services has tripled traffic volume in major metropolitan areas. (Image by Pat McKane from Pixabay)

 

To a casual observer, this hiring freeze looks bad, as though Uber and Lyft are fading in terms of popularity with customers. The reality is different, and these are the five reasons why this action is actually a good thing.

1. Drivers Earn More

In addition to a guaranteed minimum hourly wage, fewer Uber and Lyft drivers will compete for your business. That means you might need to wait longer for a ride, but it also means that drivers can accept more passengers per hour and maximize their potential for earnings beyond that minimum hourly wage.

2. Less Traffic on Manhattan Streets

Studies show that ride-hailing services have tripled traffic volume in major metropolitan areas. This makes commuting worse for everyone. The hiring freeze reduces the number of empty Uber and Lyft vehicles on the road, and could encourage more shared-ride use as passenger wait times grow.

3. Greater Asset Utilization

With fewer empty cars on New York City streets, Uber and Lyft won’t need to bridge the gap between actual rides per hour and the new minimum wage. In other words, fewer drivers and fuller cars can ensure greater asset utilization. And Wall Street likes that.

4. Reduced Carbon Emissions

Empty Uber and Lyft vehicles emit pollution. Yes, the newer cars favored by ride-hailing drivers are far cleaner than older models, but that tripling of traffic volume in major metros is clearly a big step in the wrong direction. The freeze, which promotes greater asset utilization, helps reduce needless pollution.

5. Increased Taxi Use

Uber and Lyft have devastated New York City taxi drivers, resulting in ruined livelihoods and even driver suicides. With fewer available ride-hailing service drivers and cars, and potentially longer wait times, Manhattan residents might reacquaint themselves with traditional yellow cabs.

The Bottom Line

A woman gets into a Lyft
Ride-hailing services like Uber and Lyft are the most popular with affluent people, which means drivers should earn more money because the bulk of customers can afford to pay higher fees. (Lyft)

 

As convenient and seemingly popular as Uber and Lyft are, they remain primarily in the domain of the affluent. Consider the following statistics, reported by StreetsBlog NYC:

  • More than 2/3 of rides in America are taken in New York, Los Angeles, Chicago, San Francisco, Boston, Washington D.C., Philadelphia, Miami, and Seattle.
  • In 7 of the 9 major metros where the most Uber/Lyft rides take place, personal car ownership has actually increased.
  • In these major metros, riders earning $200,000 annually or more take an average of 45 rides annually, while riders earning less than $100,000 annually take an average of 14 rides or less.
  • In all other areas of the country, regardless of income level, riders take fewer than 6 rides annually

The bulk of Uber and Lyft users can afford to pay more for the service, and to tip their drivers.

New York City is right to demand that these companies guarantee a minimum wage for their drivers.

And frankly, it should be higher than $17.22 per hour.


About the Author

  • Christian Wardlaw has 25 years of experience serving in automotive editorial leadership roles with Autobytel, Edmunds, J.D. Power, and Tribune Publishing. A married father of four, Chris is based in the Los Angeles suburbs and believes fuel cell electric vehicles will power the future.

can be reached at christianwardlaw@gmail.com
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