Uber and Lyft rides are down in New York City thanks to a minimum wage rule that drove up prices. Analysts say it could have been even worse.

AP Photo/Mark Lennihan

Uber and Lyft drivers process across New York City's Brooklyn Bridge during a protest earlier this year.

• Uber and Lyft were forced to raise prices in New York this year after the city imposed a minimum wage rule for ride-hailing drivers.
• Total rides fell in the five boroughs, new data show, but analyst say the drop isn't as bad as some had feared.
• Visit Business Insider's homepage for more stories.

People are taking fewer Uber and Lyft rides in New York City, the United States' most lucrative and important market for ride-hailing, but the drop isn't as bad as some had feared.

According to data from the city's Taxi and Limousine Commission, analyzed by Bloomberg News, the total number of Uber rides fell about 8% from March to May, while Lyft rides fell slightly, about 0.4%

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The slowdown comes after New York City imposed a new minimum wage law for ride-hailing drivers, one that was met with stiff opposition from Lyft over how the wage was calculated and also pushed up passenger fares throughout the five boroughs.

Still, the drop in demand wasn't as much as some had feared.

Eric Sheridan, an analyst at UBS, said the regulatory changes had far less impact than some had previously forecasted

"Data from the NYC TLC indicates that higher prices have had minimal impact on demand (measured as growth in number of trips in high-volume FHV services), indicating Uber & Lyft may have more pricing power than investors think," he said in a note to clients Tuesday.

"We would argue that observing fairly stable volume growth rates following increasing prices ~10-20% and layering in the $2.75 congestion tax is a positive sign, even if you assume Lyft & Uber gave back some of the base fare price increases in the form of incentives/promotions."

An Uber spokesperson declined to comment on the record for this story, but noted that the biggest decline due to price hikes were in the company's shared rides. Riders who tend to take Uber Pool generally have more price sensitivity, the spokesperson added.

Lyft did not respond to a request for comment.

The minimum wage rules have "translated into pretty substantial price increases to the consumer," CEO Dara Khosrowshahi said on the company's first quarter earnings call in May. "But overall, if you look at the dollar growth rate in New York. It's still a healthy city for us."

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