Portland proposal to raise pay for Uber and Lyft drivers draws opposition

Portland city councilors are discussing a proposal that would raise take-home pay for Uber and Lyft drivers by limiting how much money the companies can take from each trip. Councilors are considering a limit of 20% for the portion that Uber and Lyft can take from a driver. Currently, the amount isn’t fixed, and can sometimes be over 40%.

Uber and Lyft have threatened to leave Portland over the proposal. Uber claims it would force the company to raise its rates or operate at a loss for most rides.

The Portland Metro Chamber and the “We Play for Portland” Coalition, which includes the Portland Trail Blazers, the Oregon Symphony, Portland Art Museum and other Portland sports and arts organizations are opposed to the City Council’s draft proposal. The groups warned City Council in a letter they released that if ride-share companies decrease their services or leave Portland, it could greatly affect audience turnout at Portland events.

We hear from Councilor Elana Pirtle-Guiney and Jon Isaacs, the executive vice president of public affairs for the Portland Metro Chamber of Commerce, about the draft proposal and what it could mean for the future of ride-share services in Portland.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Portland city councilors are discussing a proposal to raise take-home pay for Uber and Lyft drivers. The details are in flux, but one possibility would limit how much money the companies can take from each trip. The companies are pushing back. Uber says it might have to stop operating in the Portland area. That’s led a group of prominent business, sports and arts organizations to urge the city council to not move forward with this plan. They say a decrease in rideshare services could greatly affect audience turnout at Portland events. Elana Pirtle-Guiney is a member of the Portland City Council from District 2, that’s North and Northeast Portland. She’s co-sponsoring this policy. Jon Isaacs is the Executive Vice President of Public Affairs for the Portland Metro Chamber of Commerce. They both join us now and we would love to hear from you as well. Jon Isaacs and Elana Pirtle-Guiney, great to have both of you back on the show.

Elana Pirtle-Guiney: Thank you so much for having us today.

Jon Isaacs: Yeah, thanks for having me here.

Miller: Elana Pirtle-Guiney, first, why are you and Councilor Steve Novik pushing for a change in the way that Uber and Lyft drivers are compensated?

Pirtle-Guiney: You know, when Uber and Lyft entered the market, there was this promise to consumers. It’s going to be easier to get a rideshare ride, there will be drivers on demand, we’ll price things so that when there’s more demand, more drivers come onto the market. And that promise has really been broken over time as we have seen costs go up, but pay for drivers not keep up, which means those incentives aren’t there in the same way to get drivers on the market.

What we are proposing is a system where we ensure that drivers and rideshare companies can both cover their costs. We take the amount that Portlanders pay, and after some fees, split that so that both drivers and riders take home enough to cover their costs of doing business. That’s the basics here.

Miller: Jon Isaacs, what’s wrong with what you just heard?

Isaacs: Well, there’s nothing wrong. First of all, Councilor Pirtle-Guiney, it’s just an honor to be here with you, and I did want to take a moment to say thank you for your service last year as our first council president under the new council. That was a real responsibility you took on, and you did it as well as anyone could be expected and we really owe you gratitude for taking that on.

I think we agree on the goals here. I mean, we want all work opportunities in Portland to pay living wages and for workers to thrive in the work that they’re doing. I think the message I’d like to deliver today here is more an approach than it is on the specifics of the proposal. You know, we don’t talk enough about the positives that innovative businesses like Uber and Lyft have brought to our community. They provide safe rides for people who need them on demand.

I just took Uber to the Timbers match and home from the Timbers match this weekend. I got a safe ride home in four minutes. I could fully enjoy the game as I wanted to and be safe. They provide thousands of work opportunities on demand for drivers today in Portland. They’re still recovering from the pandemic, in which this industry obviously took a huge hit, but they provide those opportunities.

They partner with PBOT. I had brought today PBOT’s advertisement they put out on St. Patrick’s Day about their Safe Ride Home program, and Uber and Lyft are one of the core sponsors and partners in ensuring that drivers can get to their celebrations and get home safely without driving impaired.

I would also add that last year when the city council chose to increase the fee that riders pay to $2 – which is the largest fee on the West Coast and it’s one of the largest in the country. We also already have one of the largest fees at Portland International Airport, they chose to turn that into a general fund source for PBOT. So we have about eight million rides a year on rideshare. Obviously there’s demand for it, just do some simple math, times that by two, and now PBOT, our transportation bureau, is counting on $16 million a year in revenue from ride hailing. It’s a partnership that the city has. The message I want to deliver today is to ask Councilor Pirtle-Guiney and other leaders at the city to recognize that partnership and collaborate with the companies that provide these services so that we can ensure that drivers and riders benefit.

Miller: I do want to hear more about the conversations that are happening between city leaders like you, Councilor Pirtle-Guiney, and the companies, but I want to just first dig in a little bit into some of the numbers, some of the realities for drivers. And again, let me invite folks, if you are a driver, we would love to hear from you to get your perspective in this conversation, or if you rely on drivers.

City staff point to a study from researchers at UC Berkeley which says that on average, Uber and Lyft drivers in Portland make about $12 an hour. That’s the number that’s been distributed. The companies point to a very, very different statistic. They say drivers earn over $30 an hour, I think $38 was what I saw, as well, in one recent article. But that’s for the time in which drivers actually have a paying passenger in their cars. What do you think about these two different ways to think about or to calculate pay?

Pirtle-Guiney: For drivers, not only is there the time, when you’re deciding if you’re getting a ride or not, but there’s the time getting to your passenger and then getting back to where you can get your next ride. But I want to touch on the first thing you talked about there, which is the cost for drivers, because it’s a very important piece of this conversation to remember that drivers are independent contractors. They are covering all of their own costs.

So out of the money that they take home from that ride, they are paying for their car payments, their insurance payments, keeping that car clean so they can give you a nice ride. They’re also covering all of the things that, as an employee, someone’s employer might cover. The portion of your taxes an employer would cover, their own benefits, their healthcare, savings for retirement, any money they need to set aside to make sure that they are covered when they’re sick. That’s the normal agreement for an independent contractor. But when we think about how much drivers are taking home, remember that they are covering all of those costs also. So whether we’re talking about $12 an hour or $20 an hour, that doesn’t go nearly as far as it does for an hourly employee who might be thinking about what the reality of that amount is.

Miller: I want to play a voicemail that came in. Let’s have a listen.

Rob Nesbitt: This is Rob Nesbitt. I’ve been an Uber driver for 12 years. I’ve done 13,000 trips. Right now, the pay scale is 79 cents a mile, and I think the national average that the government allows for your car is 75 cents a mile. So the drivers in Oregon are very underpaid, and what we’re getting paid is maybe four cents above what it costs to maintain your car. The pay scale in Washington is $1.49 a mile, and I believe it’s $1.79 in Seattle. With the cost of gasoline going up, it’s also increasing the expenses that the drivers have to pay. I consider myself an ambassador to the city of Portland and the people that I give rides to. I would just like to see that we get a fair share in Oregon.”

Miller: Jon Isaacs, what do you make of the numbers we just heard there? There’s two bits that most stand out to me. One is, he’s saying that we only get four cents per mile more than it costs to operate our vehicle, and that we’re half the rate that drivers in Seattle are getting.

Isaacs: Yeah, there’s two things there. First, I’d just like to re-emphasize my first point. When we have a situation like this, where we have wildly divergent facts that are being presented or presentations of facts, and we have for a service that is a global amenity that visitors, residents, expect to have these days for a sophisticated modern city that’s gonna compete in the global marketplace, we need to offer rideshare services. So we need to have a collaborative approach to this to decide on what the actual facts are. Look at all the factors involved.

One of the most interesting things the driver that just called said is he pointed out the difference in his take-home between Washington State and Oregon. So that says to me, how is the same work paying him more there than here? And to me, we should start looking at things like the fact that Portland has the most expensive regulations for the rideshare industry in the nation. And they’re only regulations that apply to the city of Portland, whereas in most other states, the state is the regulator of rideshare to ensure that the same rules for operating in its cities and its state are all the same. That helps reduce costs for the business, where you might be able to free up costs for the driver.

But my understanding right now is Portland’s regulations cost more than 20% per trip for the company. So if you’re going to mandate 80% of the pay is gonna go to drivers, which, I don’t know if that’s right or wrong, OK, I’m not here to argue whether that’s right or wrong. But in this current scenario, if the cost of each ride, just the regulations, the cost to operate for Uber and Lyft, is over 20%, and then we’re gonna say, well, 80% has to go to drivers, you’re essentially regulating them into a deficit. And there isn’t any company that’s going to continue to operate in a market if the regulations force them into the red.

Miller: What are the specific fees or prices of operating in Portland that you’re saying you want people like Councilor Pirtle-Guiney to consider or reduce? What are the specific parts?

Isaacs: Let me give you one example. There’s many factors here. I could take up all our time talking about specifics, but let’s just look at insurance requirements. The insurance requirements that Uber and Lyft – which they do cover for drivers when they’re on the app, let’s be clear – drivers are insured by Uber and Lyft when they’re on the app. When they’re off the app, it’s their insurance, cause it’s their car.

We require the highest level of coverage in the nation. I would encourage our city to look at the marketplace and look at what our peer markets require for insurance coverage and bring those costs into the market. We made this point when the council last year increased the fee to $2. It’s 300% of our peer markets. It’s by far the highest fee in the country so we shouldn’t be surprised when rides here have gone down. They’re not tracking with the national trends.

Miller: To be clear though, that’s not money that Uber or Lyft have to pay. That’s money that the rider pays. It goes to the city. But you’re saying that’s playing into the fact that we have relatively low rates of ridership in Portland right now. Is that that’s your point?

Isaacs: Correct. And that is a factor. Again, I don’t know the details. I’d want to sit with the companies. I’d want to sit with the experts within PBOT who work with the industry every day and understand how these affect things. But my general point is that when you have the highest regulations that are the most expensive to operate, and then your approach to the goal that we all share – I want to be clear, we want rideshare drivers in Portland to make a living wage, we want them to thrive when they’re on the app – the approach could be, maybe we can bring the cost of these regulations down. Maybe a share of the fee can go to cover this.There’s all kinds of ways we could do it rather than doing mandates that forces the companies into a net loss operating position.

Miller: Elana Pirtle-Guiney?

Pirtle-Guiney: A couple of things there, and I just want to note that the argument I just heard is that we should have less insurance coverage, which is a benefit to Portlanders, in order to make this math math. The reason that Washington drivers have higher pay is because Washington has regulations that mandate a minimum amount of pay. That is why drivers make more in Washington.

It has nothing to do with outside market forces. It has nothing to do with the number of riders. In Washington, there is a minimum pay requirement per minute and per mile for drivers, which we do not have here. So they are able to make closer to a living wage in Washington. But a couple of times now, Mr. Isaacs, you have said we need to sit down with the companies and make sure we understand all of these pieces, and that’s exactly what we’re doing because those fees that we charge in Portland should absolutely come off the top before we talk about a split in cost.

What we’re trying to do right now is talk to both the companies and the drivers to understand what the costs of doing business are so that we can model something where we say,

OK, there are certain costs that need to come off the top. Those are things that are mandated by the city or by the airport or by other entities here in Portland. That’s not part of our calculation.

But after those are taken off the top, how do we ensure that both rideshare companies and the drivers who are providing rides to people in our community can cover their costs of doing business? And how do we split that amount that’s left in a fair way so that both parties can cover their costs of doing business? That’s what’s not happening right now.

Miller: But the point that Jon Isaacs was making right there in combining things like an insurance mandate with the rider fee of $2, which you voted to more than triple that last year. It was about, I think it was at 65 cents. Now it’s $2. The point he was making is that you should think about this holistically.

When you’re having conversations now with Uber and Lyft, are there live conversations about, for example, lowering that fee or changing other aspects of what the companies have to do to operate in Portland? Or are you only talking about, once you figure out what the overall expenses are for the different sides, are you only talking about increasing the percentage that drivers will get?

Pirtle-Guiney: We’re certainly open to a holistic conversation. So far neither Uber nor Lyft have brought that up at the table as a topic that they want to be part of the conversations. So what we’ve really been focused on is, should things like that be part of the calculation before or after the split? And it’s pretty clear to me that that needs to be before the split, that that shouldn’t be part of what either party is covering. It’s not their cost of operations. That’s an outside mandated cost.

Miller: In other words, when you are figuring out the percentage of take-home pay for drivers, you don’t want the $2 that the riders have to pay, you don’t want that to be factored in.

Pirtle-Guiney: Exactly that either we need to not factor that in or we need to think about that split differently.

Miller: Let’s take a call from James, who has called in from Portland. James, go ahead.

James: Well, I’m just saying that, you know, I’ve watched them, you know, when they first came to town, I thought it was a great opportunity, and they paid quite well, Uber did. And also, then, I started doing both Uber and Lyft. They were paying really well, you know, kind of attracting drivers like me.

But then over the years I’ve watched them go public and they were incrementally reducing pay to drivers over the years until they settled on maybe this spot where it was comfortable for the shareholders. So I understand they have to make money for their shareholders, but they should increase it more than what they have, because, as everyone has noted, the cost for cars, costs for maintenance, costs for repairs, it’s going up, and it just reduces the amount in respect to what the drivers are making, what I’m making.

I think, lastly, I want to say that, you know, I just drive for Lyft now. And they have a program where they won’t take more than 30%, and I think that’s admirable and they even adjust the payment structure like that. If they go over it, they make up for it and take care of you. So all in all, I think they could increase it a little and make it more cost effective for drivers to make some money.

Miller: James, thanks very much for that call. That was James calling from Portland. So we’ve been talking so far only about Uber and Lyft, but what about Uber Eats drivers or Amazon Flex drivers, who are also independent contractors who use their vehicles for these huge corporations, or DoorDash, Postmates, Instacart. What about everybody else?

Pirtle-Guiney: The city of Portland has a long history of regulating what we call TNCs, the Transportation Network Companies, which are the companies that move people around. And that’s also a portion of the contractor driver market that is heavily regulated in most states and localities. We’re focused on that part of the market because that is a place where we already do have regulations at the city level. We’re not entering a new part of the market. We’re not doing something different here.

Miller: Are the issues the same though? People who are independent contractors, who have to pay more for fuel, and who are working for these corporations, and who, I think, may have some of the seemingly very, very similar concerns, even if they’re taking food from point A to point B, as opposed to a person?

Pirtle-Guiney: You know, they may, but I haven’t heard from drivers in those parts of the market. If there are drivers in those spaces who have concerns like this, I’d be happy to have those conversations. What I’m doing is responding to what I think is a very reasonable concern from drivers in this part of the market who have seen pay go up in other cities and states as minimum wages have been regulated, and who are wondering why they still aren’t making enough to afford to live in our community here.

Miller: How seriously do you take the statement from Uber that they might cease operating in Portland if something like what you’re talking about is enacted?

Pirtle-Guiney: You know, under a take rate model, which is what we’re considering, the total fare remains flexible and responsive to market conditions. There’s no reason why this couldn’t pencil out for the TNCs who we are still at the table with, having conversations. So the fact that they’re putting Portlanders and their own contractors on the hook while we are trying to have good faith discussions is somewhat ridiculous and frankly disappointing.

Miller: Jon, I wonder, do you have any concerns that it’s gonna make it harder for you to navigate your position right now in the context of the public money for a refurbished Moda Center push? The circumstances are different, but in both cases, we had some kind of a very wealthy entity, either a very rich ownership group or these big companies saying,

“Give us what we want or we’re gonna take our marbles somewhere else.”

I’m paraphrasing, and obviously we heard Tom Dundon say, “No, no, I never said that,” but there was a very public, and at this point pretty documented, push to exert pressure on politicians at the local and state levels to get that public money. And now we have this case where these companies are saying… You’re saying you can’t compete globally as a major city if you don’t have these companies, and one of them says, “Don’t do this or we’ll leave.” Is it harder for you to get Portlanders on board if some of them are frustrated with what they saw with the Moda Center?

Isaacs: It’s interesting you brought up that comparison, because you’re getting to what our greatest fear here is, and I would just encourage us to take the rideshare companies very seriously, that their perspective is that they’re being regulated into a permanent losing position here, and there isn’t a company in any industry, if the cost of doing business guarantees you’re going to lose money, that’s going to do business here.

And yeah, we would be the only major city in America without rideshare. And in this scenario in which we’re entering the fourth year of a recession, the state just released its year-over-year job numbers, down 21,000 jobs year-over-year, we need to look at our competitive position with our other markets.

And in your reference to the Moda Center, our perspective is there’s a marketplace for this. We’re the last city in the nation to modernize our arena. And this is the way these things get done now. This is part of the business. The Blazers provide tremendous economic value, have provided billions of dollars in revenue to the state over decades, and they provide cultural value to our community, vibrancy. The city is thriving more when the Blazers are good. And so there’s a value to that public investment. We should also point out that the city now owns the building, so they’ll gain revenue off of not just the Blazers, concerts, you know, my kids…

Miller: I’m gonna, let me interrupt, only because I didn’t mean to invite… I see how it happened. I wasn’t inviting a re-intro to that whole conversation. I was more trying to figure out, take your temperature on the similarity in others…

Isaacs: We’re related…If we’re an outlier, and we’re the only city in the nation that won’t renovate its arena, it’s not hard to understand why an owner would say, hey, I’m gonna go to another city that wants us, in which they’ll do it. We have to recognize that we’re in competition with other markets. We’re not gonna grow our booming population like we have the last 50 years. We have to compete. We have to draw families here again. We have to draw employers here.

So if we find ourselves in a position where we’re the only city that won’t renovate our arena to keep our beloved basketball franchise, if we’re the only city that doesn’t have ride-hailing services, which is a global amenity that’s expected, that puts us in a further and further isolated, non-competitive economic position and just continues the cycle that we’re in.

Miller: Elana Pirtle-Guiney, briefly, then we’re going to take another call.

Pirtle-Guiney: We’re not moving toward a space where we won’t have rideshare companies. We are talking to the rideshare companies because we want to find a solution where both the rideshare companies and the drivers who take Portlanders and visitors around our fine city can cover their costs of doing business. That’s the ultimate goal here.

Miller: Let’s take one more call. Tina has called in from Portland. Go ahead.

Tina: Hi, there, thanks for taking my call. I’m calling because I am a frequent user of the rideshare service, and I will say that in Portland we are much more expensive compared to other cities, including cities like San Diego, even around the most high tourist visitation areas like Old Town. I also do want to mention that, as a listener, I didn’t hear the comment on insurance as trying to say that we need less insurance, but that actually we as a city need to look at the threshold requirements in all industries working with the city of Portland because it’s incredibly high.

I come from the construction industry, and I will tell you the requirement umbrella for the city of Portland is incredibly high and incredibly difficult for small independent contractors, so we do need to look at that. Nobody is asking for less because it is a safety issue, but we do need to look at the cost of why the city is requiring such high insurance requirements compared to other cities. Also with all of our taxes, we are driving businesses out of the city. People are leaving, like a max exodus of people are just leaving Portland, right, because businesses don’t want to be here. There is no work.

If you look across the city, why is Washington a higher rate? Well, they’re growing. Clark County is growing. It is better for people to stay in Washington or go there to work than come to Portland like they used to.

And one last comment, it is also a safety issue. If we have less share rides because they’re expensive, people are going to say, you know what, I will probably drive my car to the bar. I will probably go out with my friends and have a drink, and maybe it’s going to save me that amount of money because it cost me $50 to get across town when I could maybe drive my own car, right? These are safety things that we also need to look at. Besides, yes, I do agree we need to ensure folks have good living standards, but how do we get there without mandating more and losing businesses out of the city of Portland? Because I, as a long-term resident born and raised here, am ready to leave.

Miller: Tina, thanks for all of that. Elana Pirtle-Guiney, your response?

Pirtle-Guiney: Again, we need to figure out how to make sure that drivers can afford to live in our community, too. And I think Tina raised a lot of really important issues about our economy more broadly. We need to turn Portland back into a city where families see their future. We need to turn Portland back into a city where businesses see their future. And that requires us to have a good climate for businesses but also high standards for the folks who live here so that they can work here.

Miller: Elana Pirtle-Guiney and Jon Isaacs, thanks very much.

Isaacs: Thank you.

Pirtle-Guiney: Thank you so much for having us.

Miller: Elana Pirtle-Guiney is a Portland city council member from District 2, that’s all of North and much of Northeast Portland. Jon Isaacs is the executive vice president of public affairs for the Portland Metro Chamber of Commerce.

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