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Let 100 Ubers Bloom

eye on the news

Let 100 Ubers Bloom

The rideshare company wins a temporary reprieve in New York City—but the battle is just beginning. July 23, 2015
Photo by Adam Berry/Getty Images

The feud between Uber and New York City’s elected officials has reached a temporary truce: the city abandoned its threat to place a cap on the number of Uber vehicles that could operate in New York while a four-month study of the ride-share company’s impact on traffic patterns is conducted. The study will proceed, but Uber will be free to grow in the meantime.

During the lead-up to the truce, Bill de Blasio, New York’s proudly progressive mayor, had made it his personal mission to attack Uber, a company with an estimated valuation of $50 billion. Striking his usual populist tone, de Blasio suggested that he was defending the rights of workers (and riders), and that Uber’s rapid growth, by increasing congestion, had slowed down average traffic speeds in Manhattan. But even if de Blasio’s concerns are sincerely held, his anti-Uber campaign will serve the interests of the city’s taxi cartel, not those of ordinary New Yorkers.

Uber and other ridesharing companies have been a boon to New York’s middle- and lower-income residents—expanding transit options and offering employment opportunities. Focusing his Uber attacks on Manhattan, de Blasio scants the needs of outer-borough residents, many of whom have limited transportation choices. The established taxi system does little to help; yellow cabs are so notorious for only cruising south of 96th Street that in 2013 the city instituted green taxis, which are allowed only to pick up rides north of Central Park and in the outer boroughs. This system is inefficient, though, because if a green taxi picks up a passenger who wants to go to midtown or downtown Manhattan, the cabbie has to drive an empty vehicle out of Manhattan. And yellow cab owners have fought to keep green cabs out of the busiest parts of the city. Uber has effectively expanded transportation access for all New Yorkers.

Ridesharing’s popularity also provides attractive employment options. In New York City, Uber drivers earn an average of $30 an hour (before expenses but after accounting for Uber’s fee). Though take-home pay is lower after adjusting for vehicle maintenance, depreciation, and fuel, earnings still wind up higher than what an average New York City cab driver makes after expenses and lease payments (about $20 an hour). And Uber’s driver-partners are independent contractors, not employees; drivers can earn their living this way or supplement their incomes by working part-time.

De Blasio’s attempt to pin the primary blame for traffic congestion on Uber also seems overstated. (Moreover, the option to use ridesharing services, especially uberPOOL, which lets riders split a fare with others heading in the same direction, has the potential to reduce traffic congestion and vehicle emissions over time.) While average Manhattan driving speeds did decrease to 8.5 mph last year, other factors (not just Uber drivers) could be responsible for the slowdown—including additional pedestrian walkways, bicycle lanes, and operational problems on the subways that have put more people in cars. And the slowdown isn’t necessarily a bad thing. After all, New York City’s Vision Zero initiative aims to “end traffic deaths and injuries on our streets,” which even slightly reduced speeds helps achieve.

Ridesharing has other potential safety benefits. A report issued by Uber and Mothers Against Drunk Driving showed that people often use ridesharing services instead of trying to drive themselves home after a night out. In a survey of 807 individuals conducted by Benenson Strategy Group, 88 percent agreed with the statement that “Uber has made it easier for me to avoid driving home when I’ve had too much to drink.” Data from cities where the uberX service is available confirm that low-cost, convenient transportation options, especially late at night when taxis are scarce, reduce incidents of drunk driving.

Studies show that ridesharing services are safer for drivers, too. Taxi drivers’ occupational fatality rates are four times higher than the U.S. civilian average. Over three-quarters of these fatalities are homicides. In ridesharing, however, the identities of passengers and drivers are verified beforehand, and the cars’ locations are electronically tracked. A feedback system enables riders and drivers to leave post-ride, public ratings for one another.

Threatened by this formidable new competitor, the city’s traditional taxi industry is fighting furiously to shut it down or at least slow its growth—and it expects help in this effort from de Blasio, to whom it donated more than $550,000 during the mayoral campaign. The taxi industry does have some grounds for concern. Drivers or fleet owners paid hundreds of thousands of dollars for the taxi medallions that permit them to accept street hails, and they’re seeing the return on this investment decline. Common-carrier regulation forces taxis to submit applications before they can increase their rates. Changing rates can take years, while Uber can adjust its rates to changes in demand.

The solution, though, is not to crack down on Uber but to reform traditional taxi services along the ridesharing model. Yellow cabs should also be able to charge pre-determined prices that depend on the time of day and amount of congestion. Anyone who has tried to hail a cab late at night or in the rain knows how hard they are to find. More cab drivers will work during these periods if they have a chance at higher pay. And in many cities, including New York, traditional taxis can already use the Uber platform to hail rides—so deregulation measures that allow drivers to share in ridesharing’s other benefits would be an effective compromise.

And ridesharing in New York could still be made easier. Right now, New York is one of the few markets where rideshare driver-partners need to obtain a commercial livery license. In most other cities, people can begin driving with Uber, Lyft, or Sidecar after passing background tests and vehicle safety inspections. Ridesharing’s safety record makes clear that requiring drivers to spend time obtaining expensive licenses is not necessary. Freeing rideshare driver-partners from these regulations would not only expand employment opportunities but also lower costs for riders.

In Paris, cab drivers resorted to violence to get their government to ban ridesharing. At least New York’s Uber battle is being waged through public debate—but innovation and competition still face a long struggle ahead against the entrenched power of the taxi industry and its political allies.

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