Dive Brief:

• New York City will be the first city in the United States to have a minimum wage for drivers of ride-hailing apps like Uber and Lyft after its Taxi and Limousine Commission (TLC) approved new rules Tuesday.
• Under the regulations, the minimum wage is set at $17.22 an hour after expenses, which is the contractor equivalent of the city’s $15 an hour minimum wage for salaried employees, which goes into effect on Dec. 31. Drivers that drive wheelchair-accessible vehicles will receive higher pay.
• “Today we brought desperately needed relief to 80,000 working families. All workers deserve the protection of a fair, livable wage and we are proud to be setting the new bar for contractor workers’ rights in America,” Jim Conigliaro, Jr., founder of the Independent Drivers Guild that represents 70,000 ride-hailing drivers in the city, said in a statement.

Dive Insight:

New York City has been something of a national leader on regulating the ride-hailing industry, having earlier this year become the first city to pass legislation to freeze the issuance of new licenses, add a new license category for the companies, and empower the TLC to study the growth of the industry. This TLC vote, which formalized the minimum wage it was instructed to set by the city council’s August vote, means drivers will receive an estimated $9,000 bump in annual pay.

Overall, reaction has been mixed. In a statement, the New York Taxi Workers Alliance called it the “first real attempt anywhere to stop app driver pay cuts, which is an Uber and Lyft business practice at the heart of poverty wages.” And Hector Figueroa, president of the 32BJ chapter of the Service Employees International Union (SEIU), released a statement calling the move “a step in the right direction for app drivers who are struggling in our city.”

By contrast, Uber and Lyft both released statements to The Verge criticizing the minimum wage moves, and noting the new rules would most likely lead to fare increases for passengers in the city. "These rules would be a step backward for New Yorkers, and we urge the TLC to reconsider them," Lyft said. The ride-hailing companies raised similar concerns earlier this year when the raft of laws governing them were under discussion, with Lyft data provided to Smart Cities Dive arguing that its drivers already make $24.14 an hour in gross pay, which is still slightly under the new minimum of $26.51 per hour gross approved by TLC.

Also of note is Via, which operates in New York City but already ensures its drivers are paid above minimum wage. Via supports this new rule wholeheartedly. "As the industry leader in driver earnings in New York City, we are looking forward to working with the TLC on implementing this rule," the company told The Verge.

Regulating the gig economy remains a challenge for cities, especially when it comes to disruptive industries such as ride-hailing, which have revolutionized the way people get around. Having had attempted once to rein in ride-hailing in 2015, New York City's elected leaders' success in passing new regulations could serve as a model for other cities looking to do the same. But if Uber and Lyft’s warnings of fare hikes will come true, it will present a challenging balancing-act for cities and the private sector as they try and stay competitive but help keep drivers out of poverty.