Uber will charge customers about 25% more on each trip starting Jan. 1, as Seattle’s new minimum wage law for ride-hailing drivers goes into effect.
By April 1, as the compensation for drivers fully phases in, fares could increase by 50% compared to today’s prices, said Harry Hartfield, a spokesperson for Uber.
The new wage requirements, unanimously approved by the Seattle City Council in the fall, are meant to keep compensation for Uber and Lyft drivers on par with other workers in the city who will earn at least the $16.69 minimum wage starting next year.
Lyft hasn’t announced an immediate price increase but could do so in the future, said CJ Macklin, a company spokesperson.
As ride-hailing companies like Uber and Lyft have grown in recent years, Seattle has sought to level their impact on traffic and improve conditions for drivers, many of whom come from communities of color and don’t speak English fluently.
And as the coronavirus pandemic has raged on, drivers, who have greater exposure to the virus, have been caught between uncooperative companies, a fragile state unemployment system, and language barriers, while facing meager earnings during the pandemic without basic worker protections.
The tech companies classify drivers as independent contractors, not employees — a distinction that has exacerbated some of these issues.
“For drivers who have seen nothing but pay cuts as the cost of living in Seattle has gone up over the years,” the legislation is “a big victory and a big step in the right direction,” said Will Pittz, a spokesperson for Teamsters 117, which supported the legislation. “This is important for drivers who are trying to put food on the table on the table and pay rent.”
Even before the pandemic, some drivers said they were not earning a living wage when accounting for costs such as gasoline, vehicle maintenance and cellphone service plans for an app-based job. Competing studies, using different methodologies, have found vastly disparate average earnings.
Ahmed Mahamud, 46, an Uber driver from Federal Way, said he’s looking forward to the wage increases, as he’s responsible for nine children, along with his wife who works part-time.
“I believe this will help my family to live,” Mahamud said.
Researchers from The New School and University of California, Berkeley, in a city-commissioned study, determined that drivers make about $9.73 per hour after expenses.
However, Uber points to a study from Cornell University’s Industry Labor Relations School that found the median driver made about $23 an hour after expenses. That study uses a different definition of working time and makes different assumptions about driver expenses, among other differences.
Uber blamed its decision to raise prices on the City Council, saying there were “progressive ways to create earnings protections for drivers” without harming those in Seattle who rely on ride-hailing.
“We know that any price increase is frustrating for customers, and we continue to look for new ways to reduce prices while complying with the City Council’s laws,” Hartfield said.
While travel has been more limited during the coronavirus pandemic, riders will likely notice a difference.
For example, a trip from the University of Washington Husky Stadium to SeaTac International Airport that averages about $40.95 now will rise to about $51.99, not including other fees. The average fare from Rainier Beach to Downtown will go from $26 to $33.
A spokesperson for Mayor Jenny Durkan, who proposed the wage increase, defended the new benefits for drivers, many of whom are immigrants, refugees and people of color.
While Uber is choosing to increase its prices, the mayor believes Seattle “must set a fair wage floor standard to create a living wage and add critical benefits and basic worker protections for Uber and Lyft drivers, many of whom have seen their livelihoods decimated by the COVID-19 pandemic and resulting economic downturn,” Kelsey Nyland said.
Under the new rules, drivers will earn a gross hourly pay of about $30.30 per hour, before expenses. The legislation will set new per-mile and per-minute rates for drivers while they’re carrying passengers, which are meant to be high enough to compensate for job-related expenses, time spent waiting for rides and time driving to pick up passengers.
For short trips and cancellations, drivers must be paid a minimum of $5.
Companies must also pay all tips to drivers and either supply or reimburse them for a “reasonable amount” of personal protective equipment and disinfecting supplies.
Uber’s price increase will also account for new city-mandated paid sick time for gig workers, Hartfield said.
The Seattle City Council voted this summer to require that companies, such as Uber and Lyft, and delivery services such as DoorDash and Postmates, offer paid sick days until the city’s declared coronavirus emergency ends.
Workers in Seattle are eligible to receive five sick days upon employment and accrue one sick day for every 30 days worked thereafter. The amount each worker gets on a paid sick day varies, depending on the driver’s average daily income in their top-earning month since October 2019.
Uber raised concerns about that measure too, saying at the time that the emergency measures would “single out one sector without meaningful input from the public or groups that may be affected.”
Rachel Lauter, executive director of Working Washington, a labor advocacy organization, said it doesn’t make sense for Uber to alienate customers by increasing prices “in a fit of spite over having to raise pay for workers.”
“Raising pay for gig workers is wildly popular and desperately needed — especially in this time of wrenching economic change and extreme income inequality,” she said.