By Steve Wishnia

Calling the deal Mayor Eric Adams’ administration reached with Uber and Lyft to voluntarily reduce locking drivers out of their apps a toothless sham, the New York Taxi Workers Alliance plans further protests, leading up to a possible one-day strike soon.

“It doesn’t end lockouts or hold the companies accountable,” NYTWA head Bhairavi Desai told Work-Bites. “It’s a very cynical agreement between two corporations in a duopoly and the city that’s supposed to regulate them.”

Uber began locking out drivers this spring, denying them access to the app during shifts, in mid-May, and Lyft followed in mid-June. They did this to raise their “utilization rate,” the percentage of time app-based cabs are occupied by fares, to avoid having to pay the drivers a higher percentage of the fare in order to meet the city’s minimum wage.

After protests, including a NYTWA-organized march by more than 2,000 drivers from City Hall to Uber’s Manhattan office on July 17, Adams announced a deal July 31: Both companies would stop bringing on new drivers. Uber said it would begin phasing out lockouts, and promised to end them by Labor Day if Lyft maintains an annual utilization rate of 50%. Lyft “will minimize lockouts as the onboarding pause continues,” the mayor’s office said.

There’s no requirement for either Uber or Lyft to actually stop lockouts, Desai emphasizes. “Uber has learned that it can subvert regulations and not only get away with it, but have the mayor step in.”

Gaming the pay formula

The lockouts were an attempt to game the formula the city Taxi and Limousine Commission [TLC] uses to get app-based drivers paid the city’s minimum wage for them, now $34.98 an hour gross and a mere $20.29 after expenses such as gas, insurance, and maintenance. Established in 2018, it’s the only such minimum in the United States.

The formula sets the drivers’ share of the fare, both per minute and per mile, based on the utilization rate. The more cabs are empty, the higher those payments have to be to reach the minimum. At the 58% utilization rate the TLC currently bases pay on, a 2.5-mile, 25-minute trip would pay the driver $17.98. If the utilization rate fell to 51%, that payment would go up to $20.44.

By locking drivers out, Uber and Lyft could make the utilization rate look higher than it actually was.

“Is this deal a perfect solution that ends lockouts forever?” TLC Commissioner David Do wrote in his Black Car News column. “No, and I’m not pretending otherwise. It was the fastest way we could provide drivers some immediate relief…. Rulemaking can take months, the apps often challenge our pay rules in court, and new regulations can have unforeseen effects, so introducing changes to our minimum pay rule without careful consideration would be irresponsible and possibly dangerous, especially to the utilization-rate component.”

Lyft unsuccessfully sued to block the minimum-wage rule in 2018. A challenge from Uber delayed the TLC’s attempt to give drivers a raise in 2022.

Preserving the utilization-rate formula is important, Do wrote, because New York is “the only city in the country that guarantees pay for the time drivers spend without a passenger.” If drivers were paid only for time spent on trips, their pay could drop by more than 40%.

The Independent Drivers Guild, an International Association of Machinists affiliate that is partially funded by Uber, had also protested the lockouts, but praised the deal. “We want to thank Mayor Adams and Commissioner Do for listening to drivers and acting to significantly reduce these unfair lockouts as we continue the fight to protect fair pay for drivers and permanently end lockouts,” IDG director Aziz Bah said in a statement on the group’s website.

‘Oversaturation’

In New York, Commissioner Do wrote, the minimum-wage rule gives the apps an incentive to keep their utilization rate high, “because if it dips too far, Uber and Lyft must pay drivers more for each trip the following year.”

But the rule also goes against Uber and Lyft’s “oversaturation” business model. New York City has limited the number of yellow cabs since 1937, to ensure that drivers wouldn’t have overwhelming competition for fares, and owners could recoup their investments in vehicles and medallions. (The current limit is 13,587 medallions, but there were only about 9,000 yellow cabs as of June, according to TLC data.)

App-based companies, however, have no such capital investments, and therefore no limits on flooding the streets with cabs. According to TLC data, Uber and Lyft had almost 84,000 vehicles licensed as of March, 8,000 more than they did a year before. On an average day, they had about 60,500 cars on the street, almost 5,400 more than in March 2023.

But while overall trips were up, the average per car had fallen by 5%, from 11.95 fares a day in March 2023 to 11.35 in March 2024.

“The companies have benefited from the oversaturation they now seek to punish drivers over,” NYTWA says.

In March 2023, the TLC reached a compromise on pay with the app companies: It would calculate the drivers’ share based on a 58% utilization rate, as long as the actual rate was at least 53%. That, NYTWA calculates, means drivers would get paid as much as $1.69 less on a sample trip. For a six-day week with 11 trips per shift, that would add up to about $111 less; for drivers working 44 weeks a year, it would cost them almost $5,000.

The actual utilization rate never reached 58% between April 2023 and May 2024, and it hit a low of 48.7% in January, according to TLC data. Uber, which gets about three-fourths of the two companies’ trips, consistently averaged about six percentage points better than Lyft, which was below the 50% benchmark for most of that period.

The rate averaged 52.1% during the first five months of this year, before the lockouts began.

In October 2023, the TLC lifted its cap on the number of licenses for “for-hire vehicles,” which includes Uber, Lyft, and livery cabs. That put more than 10,000 new cars on city streets.

“We never want to enact supply controls,” Lyft director of public policy Megan Sirjane-Samples said in the mayor’s announcement, after stating that the company “supports an environment that allows New York City drivers to earn whenever and however they want while driving on the Lyft platform.”

Strike plans

NYTWA plans another rally at City Hall Sept. 4, followed by a march to Uber’s World Trade Center offices. It will demand an immediate and permanent end to lockouts, which will require city regulations, Desai says.

Once enough drivers sign pledges of support, the union will hold a 24-hour strike against Uber and Lyft to make those demands.

The TLC should also reset drivers’ pay rates and base them on the utilization rates before the lockouts began, Desai adds. “Something has to be done about the manipulation of data.”

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