New York City just voted to cap the number of Uber and Lyft drivers and will enforce a minimum wage for drivers

shutterstock/MikeDottaUber car service on the streets of New York
  • The New York City Council just voted 36-6 to require ride-hailing apps like Uber and Lyft to pay their drivers minimum wage, and will prohibit them from hiring new employees for a year.
  • The year-long halt on new driver hires will go into effect 120 days after the bill becomes a law.
  • Uber was also recently required to classify NYC drivers as employees, rather than independent contractors, after the New York Unemployment Insurance Board ruled that Uber must provide unemployment benefits.
  • Councilmember Adrienne Adams said that 85% of ride-hailing drivers currently earn less than minimum wage.

In a blow against Uber, Lyft, and other popular and fast-growing ride-hailing apps, the New York City Council just voted 36-6 to require ride-hailing services to pay their drivers minimum wage, and to halt all new driver hires for a year, Outline reports.

The council met Wednesday to vote on the legislation, which Uber rallied against in a social media ad campaign, titled #Don’tStrandNYC.

The halt on new driver hires will begin 120 days after the bill goes into effect. The estimated 80,000 ride-hailing drivers in NYC had not previously been covered under the city’s minimum wage of $US13 per hour, and councilmember Adrienne Adams said that 85% of ride-hailing drivers currently earn less than minimum wage.

Council members were also concerned with the alarming rate at which drivers are signing up for these services -especially since a recent report indicates that ride-hailing apps are actually making traffic worse, not better. Transportation analyst Bruce Schaller estimated that ride hailing services have resulted in a 160% increase in driving on city streets. The council’s cap on driver hiring is meant to curb this growth.

“These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of colour and in the outer boroughs,” Joseph Okpaku, Lyfts vice president of public policy, said in a statement. “We will never stop working to ensure New Yorkers have access to reliable and affordable transportation in every borough.”

Uber was also recently in the spotlight in NYC, when the New York Unemployment Insurance Board ruled that Uber must provide unemployment benefits to its drivers, effectively classifying them as employees instead of Uber’s preferred classification of ‘independent contractors.”

In a statement, the Uber-linked local advocacy group Tech:NYC called the measure “a step backwards,” saying that diminishing the supply of ride-hailing vehicles won’t diminish the demand, resulting in higher prices and longer waits for citizens.

“While there’s no doubt City Council means well with this legislation, the truth is it’s a misguided solution that will create more problems than benefits,” reads the statement, in part.

“The City’s 12-month pause on new vehicle licenses will threaten one of the few reliable transportation options while doing nothing to fix the subways or ease congestion,” an Uber representative said. “We take the Speaker at his word that the pause is not intended to reduce service for New Yorkers and we trust that he will hold the TLC accountable, ensuring that no New Yorker is left stranded. In the meantime, Uber will do whatever it takes to keep up with growing demand and we will not stop working with city and state leaders, including Speaker Johnson, to pass real solutions like comprehensive congestion pricing.”

NOW WATCH: Tech Insider videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.