Uber Suggests NYC Driver Pay Cuts in Bid to Woo Riders

Ride-hailing giant Uber Technologies is suggesting a pay cut for its drivers in New York City, citing lower gas prices, as it tries to lower the price of rides in one of its biggest markets.

According to a Monday (Nov. 4) report from Bloomberg, Uber wants the city’s Taxi and Limousine Commission — which is responsible for establishing minimum driver pay — to reduce the per-mile rate in its driver pay formula $1.277, down by 6.1% from the current $1.360. Bloomberg cited a letter the company had sent to the commission, in which the company pointed to lower gas prices as the reason for its proposed rate cuts.

In addition, Uber suggested capping future inflation-related adjustments at 3% or pegging it to the average rate reflected by the Consumer Price Index, whichever is lower.

The company said in its letter that the reduction aims to ensure that “riders can continue to afford trips,” Uber Senior Counsel Nicholas Davoli wrote, arguing that the reduced costs would encourage rider demand and offset the impact of a reduced base pay on drivers’ incomes.

Meanwhile, Uber’s membership program has seen a surge in new memberships, reaching a tally of 25 million, according to its latest earnings report.

The new numbers reflect Uber’s growing presence outside of big cities, its core market, PYMNTS reported Thursday (Oct. 31).

During an earnings call, CEO Dara Khosrowshahi told analysts that the company was looking beyond major cities — places like New York and Sao Paulo — which continue to be its largest source of demand.

“But continuously, you know, we’ve seen that our growth outside of the core, in the boroughs of New York now extending into the suburbs or in secondary and tertiary cities, has been higher than, than the core itself almost accidentally,” he said.

“And this is true for mobility and delivery as well,” the CEO added. “And really for us, the start of our focus on lens dense areas started with delivery, you know, in the U.S., especially if you look at non-core cities, it’s 60, 70% of the market. So the majority of the market there, generally, it’s growing faster than city centers as well. So we’ve really started focusing on improving selection in those areas.”