Seattle is preparing to target one of the most lucrative — and easily the most traffic-bloating — corners of the city’s “app” economy to raise more money for public transit, affordable housing, and, yes, further regulating and monitoring the industry.
Mayor Jenny Durkan has rolled out a 2020 “Fare Start” budget proposal calling for new legislation that would add 51 cents to the cost of every Uber and Lyft ride in the city and set new minimum wage requirements for the industry’s freelance drivers.
“Economic models really vary from app to app,” Mayor Durkan said Wednesday in a media briefing outlining the new proposal and explaining why the “transportation network company” industry tax and regulation ended up in Seattle’s fast lane.
An existing 24 cent fee currently funds wheelchair accessible taxis and “regulation of the industry.” Funds from the additional 51 cents per ride charge would generate $52 million for housing near transit, $56 million to fund the Center City Connector streetcar, and $17.75 million to create an independent Driver Resolution Center for Uber and Lyft drivers, the mayor’s office says. After 2025, new revenue will fund transit, bicycle, pedestrian, and safety projects, the mayor’s office said.
The 75 cents per ride fee would bring in $24 million starting in 2021 and grow to about $27 million by 2025, if the mayor’s office’s projections hold true and demand for the ride services doesn’t dip significantly.
The fee would only be charged on rides from the city’s largest providers. A threshold of 1 million rides per quarter means smaller providers won’t be subject to the added tax.
“As Seattle continues to grow, we need policies that support more transportation and housing options, and strong worker protections to make Seattle a place where everyone can thrive,” Alex Hudson, executive director of the Transportation Choices Coalition said in a statement. “By investing in streetcar, bus, light rail, biking, and walking improvements in Seattle, we can give everyone more choices to get where they need to go, spending less time in traffic and more time with loved ones.”
In addition to adding the 51 cent fee, the mayor is also proposing the city “mandate that Uber and Lyft drivers be paid a minimum wage in addition to compensation for benefits and expenses,” and create a new Driver Resolution Center “to provide Uber and Lyft drivers representation services and an impartial process for settling unwarranted deactivation by the companies.”
The center would be a first of its kind in the nation and operated by an independent provider that is likely experienced in “grievance resolution,” Shefali Ranganathan, Durkan’s deputy mayor said Wednesday.
Saying her proposal was really about “fairness” to the industry’s drivers, Durkan pointed out the “significant impact” on city and transit infrastructure the services wreak.
Last year, Uber and Lyft accounted for 24 million rides in Seattle, half of which either started or ended downtown, her office says. “We know that Uber and Lyft contribute to congestion downtown, and slow down buses and clog streets and curbs,” a presentation on the mayor’s proposal reads. “A recent UW analysis found vehicles picking-up/dropping-off passengers constitute on average between 29% to 39% of total traffic volume in South Lake Union during peak hours.”
An independent study released last year fingered ride share companies like Lyft and Uber for actually increasing traffic in densely populated cities like Los Angeles, San Francisco, and Seattle.
With ride sharing a critical component of the rapidly growing Seattle area’s transportation infrastructure, City Hall has been doing what it can to shape the industry’s labor practices as it has opened its streets to the services. In 2015, the council voted to give drivers collective bargaining rights, a move that immediately ended up in the courts. Last year, the City Council passed a resolution calling for study of a “minimum rate” for TNCs.
Though reports suggest that many drivers in the industry are unable to make a living through driving alone, in recent years, professional drivers have been the top-ranked new business created in District 3 neighborhoods including Capitol Hill and the Central District.
Research from MIT showed many drivers if not the majority face an uphill climb earning an adequate living driving for the largest services. A driver’s median profit was $3.37 an hour after expenses, MIT’s Center for Energy and Environmental Policy Research said.
The nation’s largest cities have also targeted the industry. In New York, reports show demand has dropped as fares have risen following the city’s passage of minimum wage rules for drivers. And in San Francisco, voters will decide whether to implement a proposed new tax on the services.
The mayor’s proposals will be part of her 2020 budget proposal that will then be shaped by the Seattle City Council. In a statement on the plan, current council president Bruce Harrell who decided not to run for reelection and is serving his final weeks at City Hall said he has no interest in “stymieing the industry.”
“All TNC drivers should be receiving fair compensation for their work,” Harrell said. “Council will work closely to examine the Mayor’s proposal in a transparent manner and will provide an opportunity for the public to weigh in over the next few months”
Durkan, Wednesday, said she also had concerns of “unintended consequences for the industry’s drivers. “They like having these jobs,” she said. “They just want to be paid fairly.”
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