The cost of an Uber trip in Seattle will jump about 24% starting Friday as the ride-hailing company is raising its prices in response to a new law requiring drivers to be paid the city’s minimum wage.
The Seattle City Council unanimously voted in September to adopt new regulations designed to ensure Uber and Lyft drivers earn the city’s $16.69 per hour minimum wage in 2021.
The transportation network companies are now required to pay drivers at least $0.56 per minute when there is a passenger in the vehicle as well as a per-mile rate to cover expenses. The city says that standard will ensure drivers earn at least Seattle’s minimum wage, assuming they spend about 50% of their time waiting for rides or driving to pick up passengers.
Uber’s fare increase is the first of three planned increases over the next three months, and by April the company expects fares may be 50% higher.
“We know that any price increase is frustrating for customers, and we continue to look for new ways to reduce prices while complying with the City Council’s laws,” Uber spokesperson Harry Hatfield said. “There were progressive ways to create earnings protections for drivers without harming Seattlites that rely on ridesharing, and we are disappointed that the City Council was not more open-minded in their deliberations.”
Uber said ride volumes have been down as much as 80% during the COVID-19 pandemic and on top of insurance, credit card processing fees, customer service, an in person driver center and maintenance and improvement to its technology it had no room to incur more costs without a fare hike.
Lyft hasn’t announced an immediate price increase but has said in the past it could do so in the future as a result of the new law.
The City of Seattle added a pay calculator for transportation network company and rideshare drivers designed to help them determine if they are being paid fairly for trips that begin within the city starting in the new year.
The minimum wage is part of Seattle Mayor Jenny Durkan’s “Fare Share” program introduced in September 2019, which increased a tax on each Uber and Lyft ride. It is the latest in a series of city ordinances targeting the gig economy.
In June 2019, the Seattle City Council unanimously approved legislation that required food delivery companies to pay drivers $2.50 per delivery on top of their regular rates to offset costs and risks that drivers are dealing with during the pandemic. A few months earlier, the U.S. Chamber of Commerce, Uber, and the City of Seattle agreed to walk away from a lengthy and complex legal battle over a law that would allow drivers to unionize.
Rachel Lauter, executive director of Working Washington, said in a statement that it makes no sense for a multi-billion-dollar company like Uber to “alienate thousands of customers in a key market” with a fare increase “in a fit of spite over having to raise pay for workers.”
“But this isn’t an economic decision: it’s a political campaign,” Lauter said. “Uber is simply using this political pricing stunt to try and see if they can generate any measure of public opposition to higher pay and basic benefits for workers.”
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