Seattle Considers Raising Rates for Uber and Lyft Rides to Boost Drivers Pay

Seattle never ceases to lead the way for blanking out the rideshare advantage over taxi's as well as how rideshare pays its drivers. While it is currently defending its recent rule allowing Uber drivers to Unionize in the appeals court, the city of Seattle now intends to set a minimum ride fare fee that will assure drivers of a minimum income.

The new regulation is being processed and will be introduced next week. The city intends to set a minimum ride fare fee of $2.40 as well as set a minimum compensation amount for the rideshare drivers of Uber and Lyft. At the moment, both Uber and Lyft have set their base fare at $1.35 in Seattle.

The new regulation was drafted with the help of the Uber drivers' union Teamsters Local 117, although the union is not yet official due to ongoing legal debate.

Leonard Smith, director of organizing at Teamsters 117, told the press that "If Uber is part of the transportation system here in the city, then the people working within it should at least be close to making what Seattle has determined should be the minimum wage. In order to do that, since the industry itself doesn't seem inclined to go ahead and help the drivers make more money, the rates should be set the same way that the city and the county set rates for other forms of public transportation."

Only last fall Uber showed the city of Seattle that the average gross income of an Uber driver in Seattle was around $19 to $21 per hour. They then postulated that the expenses per hour ranged between$2.94 to $6.46 per hour, which means that the average net income is around $15 per hour, which stands in line with Seattle's minimum wage.

This calculation has come under attack many times, including the famous and yet incorrect MIT study showing that an Uber drivers net income is closer to $4 than $15. However, in reality, the average driver will earn around $9 net per hour when driving a non-strategized shift.

Uber claims that the Teamsters 117 involvement is for taxi drivers and that they are trying to make sure the taxi driver industry does not die out in the face of a successful rideshare industry.

Smith retaliated to this claim that "What we look at is the worker … and the people driving taxis are also driving Uber and Lyft. It's all the same. They're trying to buy as much time as they can until they can get rid of drivers altogether. But in the meantime, there are people out there that have families to feed."

This is a list of the proposed regulations:

  • The city will regulate a set of minimum charges, including the minimum base fare of $2.40 for all operators in the for-hire transportation industry
  • They Demand that Uber and Lyft provide data on fares, hours worked, number of drivers, and driver compensation
  • They set a minimum compensation level for independent contractors
  • They define a regional license system for all for-hire transportation operators
  • They Level operating fees
  • They also set an optional avenue to convert rideshare vehicles into taxis
  • They establish a bill of rights for drivers and passengers

Uber is fired up to oppose these regulations

In response to the new set of regulations, Uber has called on all of its local drivers to come out in a show of force and oppose the regulations. Uber started off with a petition, and so far 5,000 drivers have signed it. According to Uber, the regulations are hiding disturbing facts such as the per-mile rate being increased, which will cancel out the minimum fare and make the rides more expensive.

Uber's GM for Pacific Northwest, Alejandro Chouza told the press that "Nearly doubling the per-mile rideshare rate in Seattle will significantly increase costs for riders. Research and our experience show this will mean fewer trips and therefore less work for drivers. Regulating fares could also eliminate the financial incentive to share rides and potentially put more drunk drivers on the road."

Caleb Weaver, Uber's public affairs manager in Washington state also stated that "Nowhere else in the United States is there a minimum fare for TNCs."

The City Council's governance, equity, and technology committee, the new regulation was proposed by the Council President Bruce Harrell, the main issue that Uber is contesting is the language used to define the minimum fare which includes "establish a set of minimum charges across all segments of the for-hire transportation industry to ensure fair market access to all participants, could include setting a minimum base fare rate of $2.40 or legislation establishing minimum compensation for independent contractors."

There is a noticeable similarity to the proposed minimum fare and the current taxi meter start rate, which is $2.70.

Uber has sent all of its customers an e-mail stating that "The City wants to double your rates." They also opened up a petition on the website: which has so far reached 7,800 signatures. Uber states in their petition that a minimum fare would "make rideshare unaffordable for many existing riders and reduce the number of trips that thousands of drivers rely on for income."

According to Uber, the new minimum rate will level the competitive market and create an equal opportunity between taxis and rideshare drivers. This might sound like a nice thing, but I reality is damaging to customers since it does not allow services to reduce the price for a fare, even a short one. Currently, Uber's minimum fee is $1,35, which does give its drivers an advantage of taxi's.

According to Smith, "If everybody is charging the same rate, then the drivers aren't bearing the burden of this competitive atmosphere that's out there, and then [Uber] gets to compete on service … which is really what you want. You want these operations competing on the quality of the service not how little they can pay people for doing the work."

My take:

You can argue in favor of the price or n favor of the service, but in reality, the service should be the same no matter the price. The concept that people will compete on the service is stupid since the price is what counts at the end of the day. Some people want a fast ride, with no frills attached, a cheap way to get from one-point to another. This is a fact, and it works, especially when you look at the low-cost air industry. If we compare rideshare and taxi's to low cost and standard flights, you get to see the main difference. Uber has both services; it has a low-cost service; UberX and UberPOOL, as well as a more luxurious service UberBlack and UberSUV. There is a categorization of service and price already in effect. If taxies are all low cost, then instead of raising the minimum fee to $2.40, and taking into account the pockets of the customers, the City of Seattle should lower the minimum taxi rate to $1.35 and that way, taxi's can compete with Uber and compete in service as well.

Seattle would be wise if it would just say it wants to regulate rideshare like taxis. It wants the rideshare drivers to be licensed, it wants a minimum fare and it wants income based on ride fares. That way they would end the constant pain and turmoil of handling lots of little cases in a constant stream of legal battling.

Seattle and NYC can go hand in hand. However, they are both right in their approach. In my opinion, Uber is a taxi service without the fleet. They own the rank, they are the rank, and just like any taxi rank, they connect drivers to passengers. The next feature that will seal this deal is Uber Wave, where a passenger can hail a car by waving at them, just like a taxi. With Uber Wave you hail a car anywhere, and then your app and the cars app will pair the moment you enter it, sealing the ride in the app. (How’s that for an idea).