The New York City Council has voted to cap the number of vehicles Uber and other ride-hail services operate in the city in a major setback to the companies’ growth prospects. The City Council has approved a package of bills that will halt new licenses for Uber and other ride-hail vehicles for a year. The legislation also allows the city to set a minimum pay rate for drivers. The council passed the measures in a 39-6 vote.
Uber has long had a bad reputation as a company determined to grow at all costs, giving little regard for its impact on the cities it chooses to operate in. Now, the New York City Council may have provided other cities with a model for how to rein in the company. The new rules will make New York the first major American city to restrict the number of ride-hail vehicles and to establish pay rules for drivers.
New York City Mayor Bill de Blasio and City Council speaker Corey Johnson say the bills will help reduce worsening street congestion and improve low driver wages. According to a study by independent economists, roughly 40 percent of for-hire vehicle drivers have incomes so low that they qualify for Medicaid, while about 18 percent qualify for food stamps. A minimum wage of $17.22 an hour after expenses would increase driver earnings by an average of about 22.5 percent. The Taxi and Limousine Commission (TLC) could set and enforce the driver minimum wage as early as October.
The cap on new for-hire vehicles will last for twelve months as the city studies the booming industry. Since 2015, the number of for-hire vehicles in the city has surged from about 63,000 to more than 100,000 vehicles. App-based ride services account for about 80,000 vehicles in the city and provide roughly 17 million rides per month.
Uber has publicly criticized the Council’s decision to approve the cap. The company has warned its riders that the cap could produce higher prices and longer wait times for passengers. In a statement Josh Gold, a spokesman for Uber, said, “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.”