Uber, Lyft Claimed Record Share of Fare Dollars While Drivers Struggled Through COVID Crisis
A new UCLA study finds ride-hail companies have been claiming a bigger piece of the pie ever since drivers began receiving a city-guaranteed minimum wage in 2019 — peaking in April 2020.
Numbers reported to the city Taxi & Limousine Commission show that app companies such as Uber and Lyft have taken a bigger bite out of riders’ fares after New York City set a minimum wage for drivers in 2019 — peaking during the worst of the COVID crisis.
A new report from the University of California - Los Angeles Labor Center found a growing gap between rider fares and what drivers got paid that reached a peak of 21.4% in April 2020. The report was commissioned by the New York Taxi Workers Alliance, a union representing taxi and app-based drivers.
App companies claimed more fare dollars even as drivers struggled to get business and scrambled to buy costly plastic dividers, PPE and disinfectant on their own dime, all while risking their and their loved ones’ health, noted Bhairavi Desai, executive director of the Taxi Workers Alliance.
“Drivers during that month of April 2020 – everybody felt that death was imminent, and drivers were frontline workers exposed to COVID at a higher rate,” said Desai. “And the few that had the desperation to go out to work were not rewarded for their essential labor – they were actually exploited.”
The report is based on Taxi and Limousine Commission data self-reported by ride-share companies, covering approximately 50 million rides between 2019 and 2022.
The researchers looked at the period after New York City established a minimum pay rate for app-based drivers beginning in February 2019, which gave drivers an estimated gross hourly earnings of at least $27.86 per hour, before expenses, for an estimated net income of $17.22 per hour. They analyzed rides that began and ended within New York City in February and October 2019, April 2020 and April 2022.
They found that the companies started boosting their share of passenger fares in the months after the rollout, as measured by the difference between what passengers paid and drivers received. That gap jumped from 9% during the first month of the pay guarantee to 16.1% in October 2019, and peaking at 21.4% in April 2020, the pandemic’s deadliest month in New York.
By April 2022, the share collected by the companies decreased slightly, to 20.7%.
The app companies reaped a larger share of passenger dollars even as fares stayed essentially flat, the researchers found: the average passenger fare, before fees and tips, was nearly the same in February 2019 ($12.22) and April 2020 ($12.32). Meanwhile, drivers were taking home a dollar less per trip: $9.80 in April 2020 compared to $10.99 in February 2019.
The report recommended that any increase in the passenger fare should come with a proportional increase in driver pay. It also calls for a cap on how much money ride-hail companies can claim out of passenger fares, as well as transparency about where the money goes.
“If passengers are feeling like their fares are increasing, some of that did go to their drivers, but the companies also took more than they were even two years earlier,” said Saba Waheed, a researcher at the UCLA Labor Center.
Drivers, like many service workers, suffered a profound loss of income during the COVID crisis: There were 4 million for-hire vehicle rides in New York City in April 2020, compared to more than 16 million in February 2019.
Spokespersons for Uber and Lyft disputed the researchers’ analysis.
“Drivers have seen their earnings go up over the past several years, and with expenses like high gas prices starting to come down, they are now keeping even more,” said Lyft spokesperson CJ Macklin, noting that the city has passed two increases to the pay standard, with a third under consideration. “Commission caps like those discussed in the report only serve to dramatically increase rider prices and depress demand, disproportionately hitting lower-income communities and leading to fewer rides that ultimately undercut driver earnings overall.”
Freddi Goldstein, a spokesperson for Uber, noted that “without seeing the study it is hard to know where these students failed to carry the one,” she said in reference to the researchers. “Our take rate in April of ‘22 was 16.4%. In contrast, government-imposed fees made up more than 18% of rider payments.”
Waheed acknowledged the TLC data is limited in certain respects. The available data does not identify individual drivers, account for rates charged for premium services, such as Uber XL or Lyft Lux, or so-called fare “boosts” and “surges.”