Uber will stop blocking drivers in New York City from logging in to its app, which it has been doing since fall 2019. The company says it wants to give drivers one less thing to worry about in the middle. of the new coronavirus pandemic.
Uber began restricting driver access to the app after the city passed a law in late 2018 that requires trucking companies to pay drivers at least $ 17.22 an hour after expenses. The payment formula uses the so-called “utilization rate,” which represents the portion of time a driver spends with passengers in their vehicles compared to the time they spend idle and waiting for a fare.
The rules penalize companies for allowing too much car traffic. The higher a company’s utilization rate, the less it will have to pay drivers to meet the new minimum wage requirement. The rules were intended to increase pay for drivers while also addressing what many saw as an oversaturated market in New York City.
In response to the law, Lyft began limiting driver access to its application. But that had a ripple effect: Drivers who were kicked out of the Lyft app started logging into Uber, significantly increasing the volume of vehicles on their platform. To maintain a good utilization rate, Uber says it was forced to follow Lyft’s lead and restrict access to the app.
But with the uncertainty surrounding the pandemic, Uber says it wants to help drivers in any way it can, and that includes not removing them from the app. “The last thing drivers should be concerned about right now is whether they can use the app, which is why we have decided to lift the current restrictions,” a spokesperson said in a statement. “In these difficult times, the well-being of drivers is on our minds, and we will continue to look for ways to support them whenever possible.”
The question is whether there is enough demand to meet the inevitable increase in driver supply that Uber is allowing. In a call to investors on March 19, Uber CEO Dara Khosrowshahi said gross bookings in Seattle decreased by 60 to 70 percent, a figure he said could be extrapolated to other cities affected by the viruses, including New York City.
Uber says it wants to help drivers by removing barriers to accessing its app. But at the same time, there are far fewer customers who need transportation these days. Based on New York City’s utilization rate, the less work each of these drivers has, the more Uber will have to pay. How much more remains to be seen.