NYC raises minimum wage for drivers, but will it help?

By Jon Vitale

Elm Staff Writer

Lyft was recently entangled in a battle with its workers over the new minimum wage in New York City. Last month, NYC’s municipal government reached an agreement with the New York Taxi and Limousine Commission to raise the minimum wage for all drivers to $17.22 an hour. Estimates say that the wage would guarantee an income of $9,600 per year for full-time drivers, some 70,000 of whom work for app-based services such as Lyft and Uber.

Lyft fought back against the new minimum wage, filing a lawsuit against the city under the claim that the law favored other services, such as Uber and cabs, over their own.

Lyft’s argument, more or less, was that while Uber and cabs could afford to raise prices on consumers to account for the new minimum wage, their service was more dependent on giving consumers a cheaper option, and thus the law hurt them disproportionately. Lyft’s highly publicized fight came to an end this week, as they finally agreed to pay their workers $17.22 per hour.

While this might seem like news to celebrate, we should consider for a few moments the ramifications of this new wage, and how helping those in poverty is a long and complicated process with many variables.The new minimum wage for drivers in New York will not help people in poverty. In fact, it will do quite the opposite.

To begin with, a higher minimum wage means that companies like Lyft will be less willing to hire new workers. A higher minimum wage might benefit those already working, but it is a sizable blow to those who are unemployed. Making it more difficult for unemployed people to find work does not help poverty, it makes it worse.

Whatever boost in profits that the driving companies do not accumulate from cutting their workforce, they will make by passing that cost onto consumers. To account for the higher wage, Uber has already raised prices, and Lyft is now all but certain to follow. Increased prices are a serious problem, and they, particularly in this case, disproportionately hurt the poor.

While many people in the middle and upper classes can handle increasing prices without too much difficulty, for the poorest, rapid increases in prices is a serious problem that determines whether they can afford the service or not. This trend is particularly harmful in driving services. Many people who are unable to afford their own cars, and whose schedules make public transportation difficult, rely on these driving services to get around, and it is those people who will be hurt most by this new minimum wage.

Minimum wage is a dated, regressive economic policy that reduces competition, hurts small businesses, and burdens the poor. There’s a reason that some countries, including Denmark and Sweden, have gotten rid of it altogether. Helping the least fortunate is a cause we should all be committed to, however, we should not choose policies based on their effects, not their intentions. The effects of policies like minimum wage, as with this case in New York, will speak for themselves.

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