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Los Angeles Demands Higher Wages For Rideshare Drivers

An Economic Policy Institute study concluded that rideshare drivers nationwide take home an average of $9.21 an hour after expenses.

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Rideshare drivers protesting at LAX last May. (Photo: Joe Rihn)

If a proposal taken up in early October by the Los Angeles City Council becomes law, Uber and Lyft would be required to pay their drivers at least $30 an hour. That figure would consist of $15 in minimum hourly pay, plus another $15 for expenses including gas, insurance and vehicle maintenance.

The city’s proposal comes nearly a year after New York City set a minimum wage for rideshare drivers, something advocates, including driver and Rideshare United founder James Hicks, used as a template.

“We convinced [City Council President] Herb Wesson that drivers provide a valuable service to the city and that their earnings should be paired to what the rider pays,” Hicks told Capital and Main. Seattle is also considering a minimum wage for drivers and a tax on Uber and Lyft. New York City, which set a $27 wage for drivers nearly a year ago, has seen fares go up for riders, but few defections from the rideshare services, Hicks says. “Riders say they don’t mind paying a little more as long as it goes into the drivers’ pockets, rather than the company.”

Labor advocates point to a study from the Economic Policy Institute that concluded that drivers nationwide take home an average of $9.21 an hour after expenses.

The L.A. proposal aims to pay drivers for “deadheading,” or the miles a driver travels between picking up passengers. Estimates of unpaid deadheading time nationally are nearly 40 percent.

Ken Jacobs, chair of the University of California, Berkeley, Labor Center, says L.A.’s proposal and New York City’s law are both positive steps toward establishing a living wage for drivers. “It recognizes that the time between rides is part of work. That’s necessary time and a real cost to drivers. Company proposals do not pay for that. The rate should really reflect all the costs.”

David Krouse, a part-time driver for Uber in Los Angeles since February, says he would favor such a law, but only if it sets a wage floor but not a ceiling.

“If I accept every ride I average $20 per hour now, and I have to work at least three hours to cover the rental and gas,” Krouse says. “But on some rides I can earn around $40 an hour depending on the length.” One other problem is that the formula for pay is opaque right now. “We’re supposed to get paid half of what the passenger is charged, but you don’t find out how much you’re paid until after the ride is over. And the app doesn’t tell you the destination until you pick up the passenger. To deny a ride goes against your driver rating.”

Krouse also wonders how the city would enforce the minimum wage. It’s easier to track drivers in a city like New York, which is compact, than in Los Angeles, which contains 88 separate cities within one county.

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Los Angeles estimates that nearly a quarter-million rideshare drivers operate in the city limits, completing nearly 9 million trips each year. The proposal did not clarify whether the $30 hourly minimum would apply to drivers completing trips within city limits, or to drivers who live within the city limits.

In an email, an Uber representative responded to Los Angeles’ proposal to study the $30 wage by saying that the company “supports commitments on driver earnings, but we are concerned this study is based on potentially false assumptions that will fundamentally bias its conclusions, and ultimately will lead to higher costs for riders and fewer rides for drivers.” The email also said Uber wants to work with the city on “on constructive proposals that will improve drivers’ experience on the platform.” Lyft did not respond to requests for comment.

The companies have proposed a $21 minimum wage in California and paid time off for drivers. That’s still less than New York City’s ridesharing driver minimum wage of $26.51 including expenses, and it would cover only trips on the clock and exclude time between rides. The companies’ proposal also calls for sick leave and compensation if drivers are injured while on the job – but those protections would be covered under AB 5. That statewide bill, recently signed by Gov. Gavin Newsom, would reclassify many drivers as employees rather than independent contractors and guarantee that drivers earn the California minimum hourly wage, which is set to increase to $15 an hour by 2022 for large companies.

Earlier this week Lyft and Uber announced they would put $90 million toward a ballot initiative that would overturn AB 5.

Hicks, who strongly supports AB 5, said that not all drivers are happy with the idea of becoming employees, especially part-timers who value flexibility over benefits. “But it’s important to be employees in order to have solidarity, to form a union, and fight for fairer wages in every city.”


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