As problems surge, cities looking to regulate ride-sharing apps like Uber
Chicago is filled with Uber and Lyft drivers buzzing all over to take people to where they want to go. Ride-sharing customers love their apps where they can hail an Uber driver in minutes.
However, are Uber, Lyft and other app-based car companies good for the city as the billion-dollar company fights hard against regulations that would protect its drivers and the customers who hail these private cabs?
Is their presence here worth the damage they have done to CTA ridership and the struggling taxi cab industry?
Two years ago the Chicago City Council approved less restrictive regulations on Uber and Lyft when it dropped fingerprint background checks which are mandated for taxi drivers. The weakened measure that passed requires drivers to take a one-day course that can be completed to get a license. Uber which employs more lobbyists than Walmart – lobbied the city hard, threatening to leave if the fingerprint criminal background check passed.
Former part-time Uber drivers told this reporter that they eventually gave up the gig when they factored in the time spent looking for fares (estimates are that 50% of a driver’s time is spent looking for fares) and wear and tear on their own vehicles resulted in earning around the minimum wage. The Uber phenomenon has destroyed the heavily-regulated taxi industry where drivers can no longer earn a proper living. Eighty-five percent of app-based drivers earn below the minimum wage while 40% of the drivers qualify for Medicaid, according to Labor Notes.
Meanwhile CTA ridership has dropped three straight years and much of the blame goes to the car-sharing services siphoning off their ridership.
“Owners and drivers have no one to represent them and Uber and Lyft are taking advantage of that,” said Robert Reddy, an UberBLACK independent contractor. “Many drivers have filed bankruptcy and are still filing in Chicago. The situation in Chicago is grim. Full time drivers with 10 years and above are putting in more than 12 hours, those who have families are putting in 16 and more hours a day. This profession is not a family supporting profession anymore. Only newcomers who are single and have no clue of the industry economics of input and output in terms of time, money, and man hours are signing up only to realize it’s not feasible and they are leaving in six to 12 months.”
Then there is the problem that the glut of Uber and Lyft drivers in the city has resulted in a huge increase in the number of vehicles on the road, increasing traffic congestion and hurting public transportation.
But while Chicago remains under the thumb of Uber, New York City has turned the tables. The New York Unemployment Insurance ruled against Uber in July stating that its drivers are employees eligible for unemployment insurance. Like the majority of new jobs created today, Uber claims its drivers are not employees but independent contractors which has allowed Uber to evade payroll taxes for hundreds of thousands of drivers across the country and to cheat those drivers of overtime and minimum wage protections, as well as the right to form a union. New York is now getting ready to audit Uber to determine how much it owes in back unemployment taxes.
The number of Uber drivers in Chicago has skyrocketed, with the most recent figures showing over 70,000 drivers who provided four or more ride-hailing trips in a month, quadrupling over a three-year stretch, according to Uber.
NY responded to these concerns as well, when the Taxi Workers Alliance and their allies won legislation making NY the first city to mandate a cap on app-based, for-hire vehicles, and the first to mandate a minimum wage for Uber and Lyft drivers.
The one-year cap will ensure no more Uber drivers are added while the city’s Taxi and Limousine Commission studies the number of vehicles on the road and the glut’s impact on traffic, driver’s livelihoods and taxi availability in different parts of the city. The city council mandated that Uber and Lyft drivers should earn a minimum of $17.22 an hour – the independent contractor equivalent of $15 an hour, after taxes and expenses, Labor Notes reported. The city will also regulate minimum fares, which could level the playing field to stop app companies from manipulating prices to undercut taxis (Uber customers note price surges during peak times and lower prices during non-peak times).
“The City of Chicago too should come up with a cap on the number of cars,”
Reddy said in a written response to this reporter. “When the city of Austin banned UBER, all those drivers came to Chicago and started driving here. UBERX Drivers from all cities are driving in Chicago without check causing not just congestion and chaos, but accidents and traffic disruption. In some cases these UberX/Lyft Drivers violate rules driving the wrong way on a one way without checking, causing accidents.”
The taxi industry has been devastated by Uber, and their union in Chicago tried in vain to fight back against the ride-sharing industry. New York was hit with a number of taxi driver suicides by those who claimed they could no longer pay off their debts for taxi medallions they had purchased before the price dropped due to Uber entering the market. Those stories and a strong push-back from the taxi drivers put Uber on the defensive in NY.
Uber is one of the world’s most highly valued private firms at $72 billion and is planning an initial public offering in 2019. But the valuation will depend on how the company fares under increased regulatory scrutiny.
