New York Approves First U.S. Cap on Uber, App-Based Cab Drivers

New York’s city council dealt a political blow to Uber Technologies Inc. and other app-based car-for-hire companies by approving a one-year industrywide cap on new licenses and giving the city Taxi & Limousine Commission authority to set minimum pay standards for drivers.

The passage of sweeping industry regulations signaled politicians’ changed attitudes toward the so-called gig economy and electronic car-hailing services such as Uber, Lyft Inc. and Via Transportation Inc.

The council voted against a similar cap proposed by Mayor Bill de Blasio three years ago after Uber mounted a television ad campaign and mobilized drivers and customers to oppose it. App-based licenses have since increased to more than 80,000 from 12,600, according to the city Taxi & Limousine Commission.

“We are not taking away any service that is currently being offered to customers,” Council Speaker Corey Johnson said at a City Hall news conference. “This is about supporting and uplifting drivers.” 

Unrestrained growth has increased congestion in central Manhattan and heightened competition has suppressed pay for drivers of Yellow Cabs, black car liveries and luxury limousines. Hundreds of cab owners couldn’t earn enough to pay their car leases and taxi-license medallions, and economic desperation became a factor in at least six driver suicides since November. About 85 percent of drivers for app-based companies earn less than $17.22 an hour, according to an industry study by New School’s Center for New York City Affairs.

The electronic-app ride hail companies argued against the cap, saying it would shrink the number of available drivers and encourage them to seek passengers in midtown Manhattan. Uber supported the minimum-pay standard that will obligate the company to make up the difference when drivers’ earnings fell short, seeing it as a way to give the company an incentive to limit its size instead of ceding that role to the government, said Jason Post, a company spokesman. The level of the pay floor is still-to-be determined.

The law calls for the cap to remain in effect for a year during which city regulators study the economic and environmental impact of the electronic-hail industry, without restricting licenses for wheelchair-accessible cars. Post said the moratorium on new licenses and the minimum pay floor were the first in the U.S. to be imposed on his company.

Scott Solombrino, CEO of Dav El, a New York City chauffeured limousine service, objected to including businesses like his under the cap, saying it would inhibit their growth even though they don’t contribute to the problems of congestion and underpaid drivers.

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