Commonwealth Magazine has had some good articles over the last many months about Uber & other “ride-sharing” applications. I’ve recently run through Uber is as Transportation Outlaw and Ridesharing Choices Must Be Protected but both are missing the point as most of the noise we hear on this topic comes from one industry group (ride-sharing apps) or the other (the established taxi industry).
I’ve found the coverage on ride-sharing apps (Uber included) to be very binary. Arguments typically fall into an “Uber is bad/Uber is destroying jobs for hardworking taxi drivers/Uber is flaunting local regulations” or “Uber is amazing/Politicians Don’t Understand The Sharing Economy”.
What I think these apps really show us is that local regulation, including those that have entrenched the taxi monopolies around the country for decades, don’t work in the new, border-less, hyper-connected world we’re now finding ourselves in.
I’ve been a casual Uber user for a few years now, and what Uber has provided to me over taxis is:
- Consistently better service than I typically get from a taxi
- The same quality of service everywhere
The first point is very easy to understand – Uber has high standards for their drivers and their cars. Poor reviews quickly take bad drivers off the road. And because drivers are self-employed, they’re motivated to offer a quality product that meets Uber’s standards. This is an area where medallion owners could compete, but without an easy outlet for passengers to summon a “good” taxi (Besides Uber), it’s hard for medallion owners to differentiate themselves (Do you ever pay attention to the cab company operating your taxi? I don’t).
The second point is what I think is really the most prescient. No matter where I am in the world (Boston, Cambridge, Brookline or New York, San Francisco, London or suburban Northern Virginia) I can always get an Uber that will take me where I need to go. When dealing with taxis, because they’re regulated locally, they’re often remiss for driving over town lines because they’ll have to drive back before they can get another fare. And because each town licenses taxis separately, you could have the best service with clean cars and courteous drivers picking you up in one town, and then receive abysmal service on the return leg from another town. The worst example I’ve seen of this is arriving in Washington D.C. at Reagan National – taxis from all over come there to pick-up passengers (Not like Logan where only Boston taxis can pick you up). You may have to have 4 or 5 taxis pass you up until you find one that can take you where you want to go (“Going to Alexandria? Sorry, I’m DC only. Going to DC? Sorry, I only do Fairfax.”).
Why in this modern day & age, when I go to Brookline for dinner with friends, and then Cambridge to see a show before returning home to Boston, are the taxis all licensed and regulated differently in each town? Uber makes it simple and I always get exemplary service.
So should Uber and other ride-sharing apps be regulated like our taxis currently are? In part. But maybe our taxis should also be regulated like Uber.
We should reconsider many aspects of our taxi licensing. Does it make sense for each town & city to license & regulate its taxis separately? Not really – taxis in our metro-region should all follow the same rules. Should Uber drivers face more stringent background checks? Possibly – so let’s have the State Police do all background checks for all taxi, livery & ride-share drivers. Does it make sense to have medallion owners collude with local politicians to keep an artificial cap on how many taxis serve each town? Probably not – let’s scrap the medallions and allow owner-operators to pay a flat annual fee each year for the privilege of being licensed by the state. What about fares? Set them at the regional level – a taxi around Boston shouldn’t be priced the same as a taxi around Amherst (But a taxi in Boston, Brookline, Cambridge or Somerville probably should be).
This shouldn’t be a binary choice – Uber or Taxi. We should allow the disruptive aspects of Uber to let us see how local regulation of what’s now a regional business doesn’t make any sense and setup a process where the taxi industry & Uber can compete on a level playing field. Each may lose out a bit, but it gives consumers the choice they demand with the protections they deserve.
Taxi’s gotta give up or significantly reform the medallion system, let cabs pick up in one city and drop off in another, all should accept cards, and all should have apps that enable customers to call them.
Uber has to legally consider itself a transportation company and it’s drivers it’s employees. They should be subject to the same insurance and driving experience standards as cab drivers.
Taxi’s give up the advantage they have now as a legal cartel and make sensible reforms that keep them competitive in a free market. Uber recognizes it lives in society, Margaret Thatcher and Ayn Rand are wrong, and embrace some common sense government regulation.
I think drivers in either company can then confidently survive this transition, I think Uber will continue to do well because it’s service is more reliable and point to point, while taxi’s can stand to take business away during bad surcharging times, enjoy dispatcher and stands, can continue to serve elderly and non-wired citizens, and are still the first choice for folks hailing a service.
That taxi drivers are employees. More often they are ICs renting the medallion from the owner.
I think your last phrase is the crux of the discussion.
I think that with regulations that allow the Uber model (which we all agree we should do), Uber-style rides are quickly replacing taxis as “the first choice for folks hailing a service”.
Disruptors like Uber work by building their business by taking low-margin unattractive business away from the established competitors. In the ride-sharing space, these are the short non-peak trips that Uber does so well. By the time the established companies realize they have a problem it’s too late.
There are not enough elderly and non-wired citizens to sustain a taxi business.
BTW, neither taxi drivers nor Uber drivers are employees, no matter what gets claimed in court. The precedents for making such claims were established decades ago when unscrupulous companies and programmers attempted to evade payroll taxes by calling programmers “contractors”. Clear guidelines were established, and software contracting is alive and well (although not nearly so lucrative for contributors as it once was). Demanding that Uber call its drivers employees is an overreach.
Perhaps new entities will emerge, analogous to today’s “approved” software contracting companies. In the software world, companies typically allow a big contract firm to jump through hoops and become an “approved vendor”. The company then does business-to-business contracts with the approved vendor, and individual programmers work as hourly employees of the contract firm.
The net effect of that is to once again make it impossible for entrepreneurial individuals to reap the benefits of working as an independent. Big business closed ranks and squeezed out people like me who did obey the rules, shedding “overhead” like vacations, pension plans, sick time, and the rest along the way. People with money relentlessly erect barriers to prevent others from joining their ranks.
In my view, every person who is willing to jump through the hoops needed to actually BE an independent contractor — payroll tax withholding, paying the employer’s share of FICA, maintaining workers compensation insurance, and so on — should be allowed and even encourage to do so.
…if the state doesn’t take over licensing entirely, it should at least mandate full faith and credit among the communities doing the licensing. I license given by one community should be valid in at least every immediately adjacent community.
I’ve never understood medallions, which strikes me as rationing and artificially limiting the market.
That is exactly what they are.
> it should at least mandate full faith and credit among the communities doing the licensing
You’ve overcome the problem of the license, but not the problem of rates. Each community sets the rates of the taxis it licenses. It’s fine under the current situation, because the vast majority of riders are picked up by a taxi in that community (fn 1).
If taxis can troll for fares in multiple jurisdictions, what fare do they charge?
Footnote 1: strictly speaking, you can be in Cambridge, heading to Brookline, and call a Boston taxi to come pick you up. Boston taxis can’t troll Cambridge streets for fare, but they can respond to a dispatch request out of town.
…such as mileage or time? If communities insist on setting rates (not sure why, seems like the market should do that), then agree or mandate a consistent rule such as rates set by town of origin, town of destination, or town that issued the license.
I still don’t get why government regulation is needed at all. The Uber model solves this just fine, and we’ve demonstrated that the current model doesn’t work.
I can see where government regulation is needed to ensure that consumers are actually changed what the provider says they should expect when requesting the ride. That strikes me as entirely consistent with our other truth-in-advertising laws.
I don’t see a need for regulation beyond that.
If you were to repeal dumb laws like not being able to cross town lines, taxi drivers would be clicking their heels. If you could have a single flat rate based on mileage regardless of community, everybody’s lives would be easier.
But cities and towns make a lot of money on the existing situation. Just like liquor licences, they get to administer the medallions, which are limited per town, which keeps the value high and provides annual revenue for renewal. They get to set their own rates, and some take a cut.
THAT is the basis of the resentment – that taxis must conform to this regulatory system, built up for decades strata by strata, and Uber drivers do not (btw – how many Uber drivers do you think are reporting their income? Does Uber issue 1099’s or is it an honor system, unlike taxi drivers who are taxed on their income?).
Either repeal taxi regulations, or enforce them on Uber. They are providing the same service and should be treated equally.
For the medallion owners, who have had to pay literally millions to government agencies for the privilege of operating, this could constitute a taking for which they should be reimbursed but that is a longer-term issue.
According to published reports like this, ride-sharing companies like Uber and Lyft do send 1099-Ks to their drivers. There is apparently some confusion over whether every driver gets one, or just those who earn more than $20,000 in a given year — and the IRS apparently says that either approach is ok.
It appears to me that you’re shooting from the hip about Uber, rather than looking at what it actually does. I’m also not sure that the taxi companies are any different.
I agree with you that the current laws exist mostly to generate spurious revenue for cities and towns. THOSE laws ought to be repealed.
I agree with you that drivers for Uber, Lyft, and taxi companies should all be subject to the same incredibly confusing tax regulations — it appears to me that they are.
I think it’s pretty hard to make the “taking” argument given that the medallion laws are in place, but I’ll leave that to our several BMG participants who are attorneys.
…safety and labor regulations, but prices don’t need to be. Airlines do just fine setting their own rates.