New York City Ready to Clamp Down on Uber & Lyft

A year ago the Taxi & Limousine Commission (TLC) of New York City, which regulates and licenses all of New York City’s ridehail drivers, held hearings to listen to complaints from drivers.  One of the major complaints made by drivers was that there were far too many drivers on the road for any of them...

A year ago the Taxi & Limousine Commission (TLC) of New York City, which regulates and licenses all of New York City’s ridehail drivers, held hearings to listen to complaints from drivers.  One of the major complaints made by drivers was that there were far too many drivers on the road for any of them to make a decent living.

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Indeed, there are now nearly 70,000 licensed FHV (For-Hire Vehicle) drivers licensed in New York who drive for Uber, Lyft, Juno and Via – the city’s major ridehail services.  That’s in comparison to the approximately 13,000 taxi drivers – a number which has remained stable for decades.

For at least 50 years, New York has had roughly 13,000 taxis in operation.  That was the number at which it was deemed each taxi driver could earn a living wage.  More drivers than that, the city assumed, would cut into the incomes of existing drivers.

New York’s rideshare services now have more than five times that number of drivers and that has led to deep price reductions and more idle time for each driver.  Rideshare drivers in the city now make a fraction of what taxi drivers used to make in the pre-Uber days.

The TLC produced a massive study showing that New York drivers are barely making minimum wage after all is said and done.

New York TLC Listens to Drivers

At the TLC hearing, ridehail drivers correctly noted that with so many drivers on the road, it was nearly impossible for any one driver to make ends meet.  So, they requested that the TLC begin limiting the number of new FHV licenses they handed out until the number of drivers reached a level at which all drivers could stay relatively busy.

The TLC commissioners seemed sympathetic but they informed drivers, at that time, that they had no authority to limit the number of licenses given out yearly.  Only the City Council had that authority, drivers were told.

Well, now the New York City Council has just proposed a new law that would halt the issuance of new for-hire vehicle licenses for one year.  This is on top of another possible ruling that may come soon from the TLC to mandate a minimum wage floor for drivers.  These two new regulations, if both are passed, would radically change the entire rideshare industry in New York.

It’s not the first time the city has tried to limit the number of FHV licenses, however.

In 2015, newly-elected mayor Bill de Blasio tried to put a 1% increase cap on the number of new drivers the ridehail services could take on in a year.  But he was defeated by a well-orchestrated public relations campaign put on by Uber, claiming that the cap would cost New York 10,000 jobs.  Ten thousand was roughly the number of new drivers they hoped to add that year.

Uber even put a “de Blasio” option on its passenger app, that tried to tell passengers what would happen if the cap was put in place.  They basically said there would be no more Uber.  Of course the city wasn’t outlawing Uber, they were simply proposing a cap on the number of new drivers allowed each year be put at 1% growth.

Choosing the “de Blasio” option would cause a message to pop up, warning riders that ‘this is what Uber will look like if the mayor’s “cap bill” passes’.

If you were in Manhattan, you would see this screen:

If you chose the “de Blasio” option in Manhattan, it would show you a wait time of 25 minutes.  New Yorkers were used to wait times of 2-3 minutes, so this was scary!

If you were in any other borough of the city, where the vast majority of New York’s minorities live, Uber would show you this screen:

This was Uber’s way of saying, ‘if you cap the number of new drivers we can add to 1% a year, minorities will get no service.’  Their not-so-subtle suggestion of course was that the bill was an attack on New York’s minorities.

To suggest that riders would see “NO CARS AVAILABLE” in the outer boroughs or that Manhattanites would have to suffer 25-minute waits, was not based on the mayor’s proposal.  Uber presented the argument as if the city was about to outlaw rideshare completely.

The mayor’s claim was that with so many new cars on the roads of the city, that traffic was becoming unbearably congested.  It stands to reason if you add 70,000 new cars trolling around the city for rides to an already super contested city, it could cause an increase in congestion.

But, enough New Yorkers were frightened by Uber’s claims that they inundated the mayor’s office with emails, sent by a one-button click on the Uber app, registering their strong disapproval.  The new mayor, not quite confident in his political strength that early into his first term, backed down.

Now the Tables Have Turned on Uber

But now, the tables have turned.  The mayor is fairly popular today and due to a plague of scandals over the last few years, Uber is one of the most disliked companies in America.  That’s a 180-degree turnaround from three years ago.  Uber is now fighting hard to prevent this proposal from becoming law.

The mayor’s and now the City Council’s contention is that the ridehailing companies are adding tremendously to traffic congestion.  They want a year with no increase in the number of drivers to study the issue.

Public opinion seems to now be on their side as passengers have grown tired of the endless traffic jams.  In midtown New York during the week, the average car speed is now just 4.7 miles per hour!  And people have noticed.

New York is the third most congested city in the world, following Los Angeles and Moscow.

New studies show that along with road space that has been taken off limits for cars to make room for bike lanes and pedestrian plazas, the existence of Uber, Lyft and the others has also had a negative effect on traffic.

A major promise of Uber and Lyft is that they would reduce traffic by encouraging people to leave their cars at home.  But in a major study of traffic congestion in nine major cities across America, including New York, Bruce Schaller, a former New York deputy commissioner of transportation, found that just the ridehailing services are contributing to congestion.

Instead of leaving their cars at home, people are driving just as much as they ever did, the report found.  It is in fact, not people who own cars who are using Uber and Lyft, it is people who normally would have used public transportation, including subways and buses.

It is those people who are now hopping into the backs of Ubers and Lyfts because they now see public transport as an unbearable alternative.  To sit in a comfortable climate-controlled car, even at 4.7 miles per hour, is a more attractive option to them than taking a bus or subway.  And with Uber and Lyft’s rates being so cheap now, it’s not so much more expensive that they can’t afford it.

The way a lot of New Yorkers see it is they can spend nearly $3.00 to take a subway, and get pushed around by the massive crowds, have to look at dirty stations and trains and have a good chance of the train not showing up anytime soon.  Or, they can spend $8.00 a take a comfortable private car… away from the hassle of the crowds.  And a lot of people are choosing the more comfortable $8.00 alternative.

If the price differential were greater, say an $18 fare rather than an $8 one, a lot of these people would jump right back onto the train.

In a study by UC Davis, researcher Regina R. Clewlow, Ph.D. concluded that “a large portion of travelers are substituting ride-hailing in place of public transit, biking and walking trips, or would not have made the trips at all.”  So ridehailing, she concludes, is luring people in to make more car trips than they would have in the past.

Uber Claims Discrimination

With all that evidence though, Uber is again claiming any regulations at all, are discriminatory against New York’s minorities.

This is their latest ad, released just a few days ago:

Changing the subject seems to be their only hope this time.  Unfortunately, they don’t have the popularity or strong public backing they had last time.  And this time, as traffic has worsened noticeably over the last three years, people are willing to try just about anything to help alleviate it.

Effect on Drivers

If this law passes, and make no mistake, most New York drivers are hoping it does, it could eventually greatly improve earnings and working conditions for drivers.  If the ridehail companies aren’t allowed to add any new drivers for a year, it will mean a lot less competition for drivers, which in turn will mean higher hourly earnings as drivers will stay busier.

It could also mean more surges and the companies may have to increase pay to drivers to make it more attractive for the ones they have left to stay on.  If the law passes, they’ll be desperate to keep every last one of them.

The bottom line for drivers is, when there are fewer drivers, earnings will go up for everyone who is left.

Since this is happening in New York, a city the rest of the country looks to for guidance, it could well spread to other cities as well.  And that would be a good thing for drivers everywhere.