Mayor Jenny Durkan announced a plan today to dramatically change how the rideshare economy operates in Seattle, creating a new minimum wage for rideshare drivers and increasing the tax rate on rideshare trips by over 200 percent. Durkan framed her plan as a model for holding Lyft and Uber responsible for their impact on their drivers and the city.
“Clearly these [rideshares] are popular services but these popular services have to be delivered in a way that is fair to the people who are delivering those services,” Durkan told reporters Wednesday.
Durkan’s plan, which still needs city council approval, does not actually specify what the minimum wage for drivers would be. The exact minimum wage, which would be in addition to the costs of benefits and expenses which the ridesharing apps do not currently pay, would be determined by an independent study. Durkan wants both the increased tax rate and the minimum wage to take effect in July of next year.
The new ridesharing tax rate, which would increase from $0.24 per ride to $0.75 per ride, would generate $130 million over the course of five years, according to city estimates. That money would be spent on the new downtown streetcar, provide $52 million for 500 new affordable housing units, and pay for a new city-created non-profit to support drivers if they get wrongly terminated from the driving apps.
Durkan’s attempt to regulate the ridesharing market comes as governments across the country try to increase wages for rideshare drivers. Last year, New York City created a $26.51 an hour minimum wage, or $17.22 after expenses are included. It also created a limit for how many ridesharing cars could be in Lower Manhattan at any given time. Both Uber and Lyft have protested by limiting when and where drivers can log into their apps. The drivers responded Tuesday by bringing rush hour traffic near the Brooklyn Bridge to a standstill.
California enacted a law on Wednesday that forces Lyft and Uber to classify their drivers as employees, which forces the companies to pay them minimum wage, benefits, and workers compensation. The companies currently classify their drivers as independent contractors, freeing them from those pay requirements. Uber has said it will not comply with the law and both ridesharing giants are threatening to fund a statewide ballot referendum to repeal the law.
Representatives from Lyft and Uber declined to support Durkan’s proposal on Wednesday, saying that the proposed regulations would unfairly hurt low-income workers and riders by reducing the number of rides in the city.
“The Mayor’s decision to triple Seattle’s tax on ridesharing will raise prices for riders and decrease trips for drivers,” Nathan Hambly, a spokesperson for Uber said in an e-mailed statement. “We support the creation of a guaranteed minimum earnings standard for drivers, and have engaged in good faith with the Mayor’s office and labor leaders for several months on this issue in hopes of reaching a compromise.”
A spokesperson from Lyft said the increased tax would hurt low-income riders.
“While Lyft fully supports a minimum earnings guarantee for drivers, the mayor’s regressive tax proposal for riders will hurt the underserved communities that rely on affordable rideshare most,” Lauren Alexnader, a spokesperson for Lyft, said in an e-mailed statement. “Fifty-one percent of Seattle Lyft rides start or end in low-income areas, and the mayor’s regressive tax would increase the fees they already pay by 300 percent, making it the most taxed rideshare city in the country.”
Durkan said it was up to the city to regulate rideshare driver pay because of inaction by the state and federal government.
“Make no mistake about it, [ridesharing] provides a valuable service for a lot of people,” Durkan said. “We think this is one option that can provide a lot of benefit to this city but also places burdens on the city. And… no business should benefit by not treating its workers fairly."