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Uber, lyft and other taxis

New York City’s Minimum Wage Law for Rideshare Drivers Might Actually Be Reducing Drivers’ Pay

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New York City’s new minimum pay rules for rideshare drivers were intended to boost driver income, but they may be having the exact opposite effect.

On Tuesday, rideshare company Juno—which is currently suing city regulators over the new pay rules—filed court documents showing that their bookings are down some 30 percent for the month of February (when the new pay rules went into effect) and that average hourly compensation has fallen by 17 percent.

“Costs have increased for riders, demand for Juno’s services has decreased, and hourly earnings for Juno’s drivers have fallen,” reads a memorandum filed by Juno, which warns that these effects “will only get worse” so long as the rules remain in place.

The decline is particularly concerning, Juno CEO Ronen Ben David wrote in a separate court filing, because the company had been seeing business increase prior to the implementation of the new pay rules. Juno performs about 5 percent of rideshare rides in New York City, compared to about 20 percent for Lyft and 70 percent for Uber.

Lyft, which is also suing New York City regulators, reports that they, too, are seeing a decline in rides booked though their app, although it has not been as severe as the hit reported by Juno. Lyft estimates that the city’s rideshare industry could see a $50 million decline in bookings in 2019.

In August of last year, the New York City Council passed a bill requiring the city’s Taxi and Limousine Commission (TLC)—the regulator responsible for the rideshare industry and the target of Lyft and Juno’s lawsuits—to come up with pay standards that would raise drivers’ earnings to $17.22 an hour.

In December, the TLC did just that, issuing new driver pay rules built around a complicated formula that factors in an individual trip’s time and length as well as a company’s utilization rate (the amount of time drivers actually have a passenger in the car.)

In their lawsuits, Juno and Lyft object to the commission’s rule on two grounds.

The first objection made by both companies is the way the TLC’s driver pay formula employs the utilization rate. Without getting too in the weeds, the higher a company’s utilization rate, the less it has to pay per-trip to its drivers. That advantages companies like Uber and Via, which both have higher utilization rates, by allowing them to pay drivers less for the exact same trip.

The Juno suit argues that companies with lower utilization rates will have to raise fares to cope with these higher costs, which scares away riders, further lowering their utilization rate and raising their per-trip costs, which requires more fare increases. The company says this vicious cycle will ultimately kill off smaller services.

Lyft also objects to the TLC’s formula calculating pay on a per-trip basis, which the company argues both violates the city council law establishing pay standards, and creates distortions in the market.

A report from MIT Professor Catherine Tucker, filed as part of Lyft’s lawsuit, argues that a rigid per-trip formula prevents companies from adjusting fares and driver pay to respond to changes in demand throughout the day.

Tucker’s report also argues that the TLC’s current formula rewards drivers for completing short, slow trips, as opposed to longer or faster rides—essentially creating an incentive for drivers to service riders in dense Manhattan at the expense of commuters in the city’s outer boroughs. That incentive works against another of the city’s goals, which is to reduce congestion in Manhattan.

Starting in February, for-hire vehicles entering Manhattan have to pay a new fee designed to limit car trips on the island’s gridlocked streets. Traditional cabs pay $2.50 per trip, while trips performed by rideshare companies are slapped with a $2.75 fee. Shared rides performed on UberPool or Lyft Line pay only a $.75 fee.

Disentangling the effects of the congestion surcharge and the fare hikes that followed the new minimum pay rules is difficult. Their combined effect is that rideshare trips are costing more, and people are taking fewer of them.

Thanks to perverse incentives contained in the TLC’s pay rules, the decline in trips will likely not net out any improvements in congestion. As the market for rideshare rides shrinks, total driver compensation could start to fall as well. According to Juno’s court filings, it already has.

Juno and Lyft’s lawsuits are still ongoing. In February a judge issued a temporary restraining order against the TLC’s new pay formula, but Lyft at least has chosen to continue to comply with the rules as its case works its way through the courts.

For now, it appears that if these new regulations “help” anyone, it will be Uber and the incumbent taxi industry and taxi medallion owners; many of whom have refinanced their medallions so many times that they are essentially underwater on an investment that is devalued by rideshare competition. There are already clear losers: passengers and smaller rideshare companies trying to earn their business.

Source: https://reason.com/blog/2019/03/14/new-york-citys-minimum-wage-law-for-ride

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Uber, lyft and other taxis

Michael Cohen was $22M in debt because of his taxi medallions

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Michael Cohen owed $22 million in loans against the taxi medallions he owned — and allegedly lied in order to try to clear the massive debt, according to court documents unsealed Tuesday.

The extent of the financial woes racked up by President Trump’s former personal attorney and fixer emerged in just-unsealed filings related to search warrants in special counsel Robert Mueller’s investigation.

The documents show that federal prosecutors in Manhattan and the FBI were zeroing in on Cohen’s taxi businesses — including “misrepresentations” and omissions he made “in connection with a transaction intended to relieve Cohen” of the $22 million debt.

The investigation, which began in July 2017, found that Cohen lied about income from consulting work in 2017 in order to avoid paying back loans and failed to disclose “tens of thousands of dollars” he received in other monthly income.

“By making these misrepresentations and material omissions, Cohen avoided making monthly payments on his loans, and attempted to fraudulently induce the banks to relieve him of certain repayment obligations and personal guarantees that Cohen and his wife had signed,” the papers said.

It had been previously reported that Cohen was in the hole from borrowing cash from banks and credit unions against the medallions.

The once-rare taxi medallions — which at their peak were worth as much as $1.2 million apiece — tanked to just an average of $200,000 each after ride-share services like Uber and Lyft exploded in the city.

Cohen has pleaded guilty to tax fraud and campaign finance violations, as well as to lying to Congress.

He’ll begin serving a three-year sentence in May.

Source: https://nypost.com/2019/03/19/michael-cohen-was-22m-in-debt-because-of-his-taxi-medallions/

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Uber, lyft and other taxis

Lyft’s driver wage lawsuit in NYC continues

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As Lyft gears up to list its stock on the NASDAQ, the transportation company is facing ongoing litigation regarding driver wages in New York City. Today, a judge denied Lyft’s motion for an injunction blocking the recent ruling that sets a minimum wage for drivers. Still, the judge said she’ll think it over and file a written ruling in the next 30 days. This comes shortly after a number of drivers protested Lyft’s lawsuit against the city of New York earlier this morning.

“We are pleased the judge denied Lyft’s motion to block the wage protection rules for now and we hope she will uphold the city’s rules in her written decision,” Independent Drivers Guild member and Lyft driver Tina Raveneau said in a statement. “Eighty thousand New Yorkers serve as professional drivers for apps like Lyft and we deserve the protection and the dignity of a livable minimum wage. It is like a punch in the gut to us, the drivers who helped build this company, that Lyft stood in court suing to block higher wages at the same time as they moved toward an IPO at a $23 billion valuation. We are finally making more than we have in years thanks to the new pay rules, but Lyft wants to bring it back to the way it was before, poverty wages.”

Lyft filed the lawsuit earlier this year, arguing the new rules give an advantage to Uber, will reduce driver earnings and exacerbate congestion. At the time, Lyft said its suit was “not directed at the law passed by New York City Council, but rather at the TLC’s complex formula for implementation.” Lyft is a proponent of a weekly pay standard but argues the TLC’s approach does not take into account things like drivers who use multiple apps and fluctuating demand.

“We support the New York City Council’s minimum earnings goal, but oppose the TLC’s specific rules because they actually hurt earning opportunities for drivers, and provide advantages to certain companies over others,” Lyft spokesperson Campbell Matthews said in a statement. “We appreciated the opportunity to make our case in court today, and look forward to the judge’s forthcoming ruling.”

The suit came after the NYC Taxi and Limousine Commission in December approved new rules to offer a minimum hourly wage of $17.22 (after expenses) to drivers who work for ride-hailing companies like Uber, Lyft, Via and Juno. The two-year campaign for minimum wage was spearheaded by The Independent Drivers Guild, a labor organization that advocates for drivers. The rules require companies to pay drivers according to a formula based on mileage, time and utilization rate (average percentage of time drivers have passengers in their cars).

Lyft has recently said that it is committed to increasing the earnings of drivers and supports the NYC council’s minimum earnings goal. But it filed the lawsuit, Lyft said in a recent blog post, “to correct the flawed implementation of the law by NYC’s Taxi & Limousine Commission.”

These rules legally went into effect in February. Since then, Lyft says there has been a negative impact on driver earnings. That’s because, Lyft says, the cost for passengers increased 24 percent, which led to rides dropping 26 percent and driver earnings dropping 15 percent. Lyft had to then take “action to stabilize the market largely through the use of passenger discounts. We won’t do this forever, but knew it was important for both the driver community and Lyft while the lawsuit progressed.”

Source: https://techcrunch.com/2019/03/18/lyfts-driver-wage-lawsuit-in-nyc-continues/

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Gett Could Follow Lyft to IPO Market in 2019

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Israel-based taxi-hailing app Gett Inc. may follow Lyft to the market with an IPO in 2019, reports said.

Ride-hailing company Lyft confirmed Monday it plans to sell 30.8 million Class A shares on Nasdaq in an initial public offering with a price range of $62 to $68 a share. The IPO would value Lyft at between $21 billion and $23 billion, TheStreet reported.

“We will see how Lyft goes, we believe there’s a lot of public capital waiting for the [technology] darlings [Uber and Lyft], but we also believe that our business model makes sense,” Gett founder and CEO Dave Waiser told the Financial Times.

Unlike Uber and Lyft, Gett books rides through established taxi operators, such as New York’s yellow taxis and London’s black cabs. More than half of Gett’s revenue comes from about 20,000 business accounts.

Formerly known as GetTaxi, Gett acquired Juno, New York’s third-largest ride-hailing app by market share in April 2017, but may be trying to sell it off, reported Crain’s, which cited a person familiar with the matter. The source also said Gett was losing $1 million a day in its New York City operation.

Gett is aiming to become profitable in every market in the first quarter of 2019, said investor Vostok New Ventures Ltd, which held a 5.6% stake as of June 2018. Stockholm-listed Vostok reported in a 2018 report that Gett generated $1 billion in revenue and performs 100 million rides per year globally. The app is available in more than 120 cities, including London, Moscow, Israel and New York.

Gett could list its IPO either on the London Stock Exchange or in Israel, Waiser said.

Lyft will market the offering to mutual funds and hedge funds in meetings in New York and other cities. The shares could be priced as soon as March 28.

Source: https://www.thestreet.com/technology/gett-could-follow-lyft-to-ipo-market-in-2019-14899196

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