A New York State judge on Friday blocked regulators from raising the pay of ride-hail drivers, saying that the Taxi and Limousine Commission had not sufficiently justified the increase.
Uber sued the commission, a New York City agency, last month and argued that the increase, approved in November, was too high and could require the company to spend an additional $21 million to $23 million per month to pay its drivers. Uber argued that to avoid taking on the extra costs, it would have to raise fares by 10 percent, which could drive business away.
Justice Arthur F. Engoron of State Supreme Court in Manhattan agreed with the company’s argument on Friday that the commission had used a faulty methodology to calculate the pay increase, including factors such as last summer’s sharp increase in gas prices, which has since abated. Uber had called the commission’s move a “drastic departure” from past practices.
Justice Engoron is expected to issue a written ruling next week. A spokesman for the commission said that it would decide whether to appeal after studying the decision.
“I am disappointed for the city’s drivers, who deserve better,” David Do, the commission’s chairman, said in a prepared statement. “Once the written ruling is issued, we are going to review it carefully and continue to do what’s needed to protect this important pay standard.”
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
How does inflation affect the poor? Inflation can be especially hard to shoulder for poor households because they spend a bigger chunk of their budgets on necessities like food, housing and gas.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
Oltimidje Ouattara, 43, an Uber driver since 2015, estimated that he would have earned between $200 and $300 more a week with the raise, for a total of about $1,800 to $1,900 a week.
In the past year, his expenses have increased to about $750 a week from $550, he said. “We really deserve our raise,” said Mr. Ouattara, an immigrant from Burkina Faso who sends money to support his wife and three children there. “All our expenses are on our back. Everything is hard right now.”
The judge had temporarily blocked the raise on Dec. 14, five days before the taxi commission had scheduled it to take effect. Uber drivers have since protested by staging one-day strikes on Dec. 19 and again this week.
“It’s the wrong decision,” said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, which represents about 27,000 for-hire drivers in the city, more than half of whom work for Uber or Lyft.
Ms. Desai said that drivers’ work and living expenses had increased with inflation and that the judge’s ruling would delay any future raise by months. Still, Ms. Desai vowed to continue fighting, including calls for more strikes in the future.
A representative for Uber praised the judge’s decision and said the commission’s proposed pay hike had been arbitrary and based on temporary market shocks.
“Rates should be calculated in a way that is transparent, consistent and predictable,” said the representative, Josh Gold. “Existing T.L.C. rules continue to provide for an annual review tied to the rate of inflation.”
Drivers received a 5 percent raise in March to adjust to inflation, which is about half of what the TLC had approved in November.
Under the increases, driver pay rates for for-hire vehicles would have risen by 7 percent on per-minute changes and 16 percent on per-mile charges. For a sample trip of 30 minutes and 7.5 miles, the new rates would have required a minimum payment for drivers of $27.15, up more than $2.50 from current rates. The commission also approved an increase in yellow cab fares for the first time in 10 years. That increase is expected to bolster the earnings of taxi drivers by a third, according to the commission.
Mohammad Azizul Haque, 33, a Lyft driver from Jackson Heights, Queens, who attended the court hearing, said that he had been hoping to get a raise on Friday and had instead found out that “my suffering is getting longer.”
Mr. Haque, who immigrated from Bangladesh in 2010, said he earned about $1,300 a week driving an average of 40 hours for Lyft. But after deducting his work expenses — including a car payment, gas and insurance — he was left with only about $700 a week. He had planned to use the raise to help pay his bills, bring his relatives from Bangladesh to visit and save up to get married.
“I’m very upset,” he said.
Since arriving in New York City in 2011, Uber’s popularity has soared, eclipsing that of the yellow cabs that once filled the streets. The latest data available from the Taxi and Limousine Commission logged a daily average of 52,000 for-hire vehicles on the road citywide in October, compared with only 6,000 yellow taxis.