Seattle Mayor Jenny Durkan is releasing more details about proposals that would set a minimum wage for Uber and Lyft drivers and tax the companies to pay for transit, housing and driver protections.
Both ideas have been in the works for a long time. The Seattle Times reported this spring that city officials had been drafting proposals to tax the rideshare companies in late 2018. The Times and other outlets reported this week on further conversations with the companies about a potential proposal for minimum driver pay.
Durkan released more details to media Wednesday about the city’s plans.
NEW PER-RIDE FEE
The proposed tax is the more straightforward, if controversial, idea. Uber and Lyft already pay the city 24 cents per ride to fund wheelchair-accessible taxis and rideshare licensing. Durkan wants to impose an additional 51 cents per ride starting July 2020.
“Uber and Lyft have a significant impact on the city of Seattle and its transportation infrastructure,” Durkan said, adding the companies “rely on our rights-of-way and our curb space.”
The bulk of the tax, $56 million over five years, would be used to close the funding gap for Seattle’s Center City streetcar connecting the First Hill and South Lake Union lines. The idea is people who use Uber or Lyft for short trips downtown may be more inclined to take the streetcar when it’s completed in 2025, getting some rideshare vehicles off congested city streets.
About $17.75 million would go toward creating and operating a “Driver Resolution Center.” It would be a way for drivers and the companies to resolve disputes about deactivation.
Specific details about what the center would look like are scarce. Durkan and other city officials say if the legislation is approved, the city’s Office of Labor Standards would put out calls for organizations who can put together a neutral arbitration process and help represent drivers. That likely would take several months to set up after the tax goes into effect.
Another $52 million would be leveraged to build 500 units of affordable housing, Durkan said.
Uber and Lyft have resisted increased taxes, saying it could decrease trips.
Drive Forward is a driver advocacy group partly created and funded by Uber. They also oppose the tax increase, saying it will result in price hikes for riders.
“It will make a transportation option Seattleites rely on every day less affordable and take tens of millions of dollars out of drivers’ pockets,” said Michael Wolfe, Drive Forward executive director.
Durkan said she thinks the companies might swallow the 51-cent fee increase because it would come at the same time as a minimum wage. Wolfe, who also drives, disagrees.
“Companies are going to pass that along,” he said.
MINIMUM WAGE MANDATE
Durkan’s minimum wage proposal is murkier. Her plan is to mandate that app-based drivers be paid Seattle’s minimum wage plus benefits and expenses, but it’s not yet clear how that would be calculated.
Seattle currently requires large employers to pay $16 an hour.
Durkan says the city will immediately commission an independent study to determine the best way to compensate drivers. The study would include a community engagement process.
“There’s a whole range of factors that you really need an independent person to look at,” Durkan said. “So that we’re not arguing about whose model is right.”
Rideshare drivers are only paid for the time they have a passenger in a vehicle. The city may look to compensate them for time spent waiting for rides or heading to passengers.
Uber and Lyft both have said they would support minimum “earnings” for drivers. Drive Forward has proposed a minimum hourly guarantee of $27.50.
While the minimum wage mandate and the proposed tax increase would go before the City Council this fall, Durkan says the goal is to complete the wage study before April 2020.
A consultant has not yet been hired and Durkan could not yet provide an estimate on the cost of the study.
Underlying these proposals is growing unease in the gig economy.
Driver Jake Lindsay says he’s “grown increasingly frustrated with riders paying more and more and drivers taking less.”
Lindsay volunteers with the App-Based Drivers Association, another driver group created by Teamsters Local 117. The union supports the mayor’s proposals.
Platforms like Uber and Lyft have long faced questions about the drivers that propel them. California recently paved the way for drivers to be reclassified as employees instead of independent contractors. With the support of the Teamsters, Seattle passed a law in 2015 allowing drivers to unionize; that’s been tied up in court. Other cities also have passed taxes on rideshare companies similar to Seattle’s proposal.
Meanwhile, Uber and Lyft both went public this year and face increasing pressure from investors as the companies fail to turn a profit.
Lindsay said he wasn’t familiar with the mayor’s minimum wage proposal, though he said it’s “unconscionable” that drivers can make less than the minimum wage. He also said the 51-cent tax should be used to help drivers even beyond the grievance process.
“A lot of Uber drivers can’t afford Uber and Lyft and use transit to get around,” he said, saying he supports the use of funds for housing and transportation.
Wolfe, with Drive Forward, says any fee paid by rideshare companies should benefit drivers directly. In a Sept. 13 letter to the mayor, Drive Forward said it does not consider housing and transit a direct benefit.