(Reuters) – The Seattle City Council passed a minimum pay standard for drivers for companies like Uber Technologies Inc UBER.N and Lyft Inc LYFT.O on Tuesday.
Under the ordinance, effective January, the drivers will now earn at least $16.39 per hour – the minimum wage in Seattle for companies with more than 500 employees.
Seattle’s law, modeled after a similar regulation in New York City, aims to reduce the amount of time drivers spend “cruising” without a passenger by paying drivers more during those times.
City officials argue this should prevent Uber and Lyft from oversaturating the market at drivers’ expense, but the companies say it would effectively force them to block some drivers access to the app. Both Uber and Lyft have locked out drivers in response to the NYC law.
“The City’s plan is deeply flawed and will actually destroy jobs for thousands of people — as many as 4,000 drivers on Lyft alone — and drive rideshare companies out of Seattle,” Lyft said in a statement.
Uber did not immediately respond to request for comment.
Researchers at the University of California, Berkeley, and New York’s New School, who analyzed the Seattle ride-hailing market using city data and a driver survey, found drivers net only about $9.70 an hour, with a third of all drivers working more than 32 hours per week.
But a study of data provided by Uber and Lyft showed most ride-hail workers in Seattle are part-time drivers whose earnings are roughly in line with the city’s median, defying some perceptions of drivers working full-time for little pay.
Reporting by Tina Bellon in New York and Rama Venkat in Bengaluru; Editing by Simon Cameron-Moore