By Don McCurdy
The on again off again, well, never really off, Uber service to Philadelphia is officially back on. Taxicab drivers alleged that the infamous Philadelphia Parking Authority was regulating Uber and Lyft more lightly than it was regulating taxicabs which they deemed unfair. A judge issued a restraining order but Uber went elsewhere and had the ruling overturned. Uber's authority to operate in Philadelphia was set to expire on September 30th, but nothing happened. It's reported that things just keep cruising along with no end in sight. It's not surprising that taxicab drivers are suing, it's one set of rules for them and apparently no set for Uber and Lyft.
How about Social Security?
In what can only be described as a major blow it is being reported that New York State has ruled that two former Uber drivers are employees. The New York State Department of Labor is reported to have made the decision. There is little doubt in my mind that Uber will take this decision to court and I'd be hard pressed to see them losing. It would seem that they have little choice in whether to take the ruling to court because it could cost them a fortune not to.
Labor "leaders" are reported to be calling it a major victory for Uber drivers, but if Uber is forced to stop doing business in the state I don't see how it would be a big win for drivers. Were I a taxicab company owner I wouldn't be celebrating too much because your ruling could be on the way. While it's reported that the cases are individually ruled, unless Uber has significantly changed its method of operation, they can expect every driver they've booted off the system to apply. Let's see, unemployment tax, Social Security, federal withholding, workers compensation and minimum wage laws all apply to the same ruling. I doubt we have heard the last of this one.
So, what'd I miss?
For several decades, the City of New York has tightly controlled the medallion market. With that control they raised the value of those medallions and sold them at a premium with the express promise that they would have exclusive rights to pick up flag trips (Hails), especially since the city disallowed them to use any kind of dispatch.
Controlling the number of taxicabs is important to the health of the industry. This was the impetus for disallowing taxi dispatch and controlling the number of providers (taxis) This begs the question, how is it that Uber, Lyft can put as many cars on the road as they want? Either capping the providers is good for the industry or it's not, which is it?
Banks, investors (small and large) taxicab companies, limousine companies and drivers have dealt with the city's over regulation since the inception of the medallion, but now it's okay for nonmedallion vehicles to flood the streets of New York City unchecked or even uncounted?
Do we even have a clue as to how many vehicles there are? The question seems pretty simple to me, either regulate the industry or don't. Taxicabs have been denied the right to dispatch, even though the technology has been there for years. They were all required to be yellow, denying individual companies the ability to provide a better product. Now comes unlimited vehicles with a simple sticker for identification, dispatching via GPS, with little regulation. Not only is the playing field not level, it's not even the same field.
My contention that the taxicabs charge more because of regulation is not only borne out but has become the albatross around the necks of yellow cabs. I'd say the city needs to look real hard at how they can restore some kind of balance to their ground transportation system before there are no yellow cabs.
Same old song.
Reports from Jackson, Mississippi are that new companies are being denied entry into the market based on the worn out "public necessity and convenience" clause in the city's fifteen year old taxicab ordinance. Not only that, but the taxicab company servicing the outlying areas is reportedly charging less than the city's mandated $3.00 a mile.
What really made the story a laugher for me were the comments attributed to one of the current city taxicab company owners, "there's a reason we're set up the way we're set up (city's mandated $3.00 a mile minimum) and that's to protect the public." Yeah bro, I get that. I'm rock solid sure that the public doesn't want to pay 30% less and have more options available to them. Uh huh.
Meanwhile, the same owner reports that his business has been cut in half since Uber came to town. Yeah, I can understand the dilemma. You've been protected by the city for all this time and now your license to print money is getting revoked. I think that might have brought a tear to my eye as well. Well, okay, maybe it was the tree pollen.
Histories of ages past . . .
A recent blog report covered an interesting report from a well known transportation consultant. It discussed what the author deemed "valuable advice" for various regulatory agencies attempting to achieve a balance between taxicabs and "Transportation Network Companies." The consultant, Bruce Schaller, has obviously spent considerably more time studying the industry than I have, but it kind of reminded me of the quote attributed to the late Spiro T Agnew, "you learn about poverty from people who have studied poverty, not people in poverty."
The differentiation between flag and dispatched taxicabs did give the report a New York flavor since that's the only place I know of that you have flag only cabs unless you count single company airports. That aside, the article had some interesting points.
First up was leveling the playing field, something I have most certainly espoused. I do not make any distinction between flag only and dispatched because I simply believe that companies should be allowed to approach the business in a manner that they believe will be successful. I've heard the "reasons" for flag only taxicabs and find them somewhat wanting. If you were going to "level the playing field" it would seem to me that lifting that restriction would be a good start.
Next was fingerprinting drivers. I drove a taxicab in Austin Texas and when I started the requirement was that you provided the taxicab company with a City of Austin criminal history. If you shot six people outside of the city they weren't worried about that, just inside the city. Later they expanded that and came up with a list of crimes you could not have ever committed and get a city license.
Initially the city would license you regardless of your record and it was up to the company to decide if it was going to take a chance on you. Companies were reluctant to sign up violent or sexually oriented offenders, but other issues were not so stringent if you could demonstrate that you had turned over a new leaf.
The lady who ran the company I drove for was called Tuffy and if you got crossways of her you would find out why. I never did. It was like joining the Foreign Legion, nobody asked you why you were there. The companies promoted regulation that took the decision out of their hands and put it on the government which gave the companies less exposure to lawsuits. You may find out someone's past mistakes with a fingerprint criminal background check, but that doesn't tell you who that person is today.
The article discussed what is a never ending problem for cities and companies, wheelchair accessible service. Again, the "solution" has a New York flavor by adding fees to all rides. So, this selective tax will not only tax those who utilize this form of public transportation.
Is the benefit to wheelchair users only to certain riders of public transportation or is the benefit to society as a whole? I most certainly agree that wheelchair service is necessary, but to limit the tax to only a select group of citizens is somewhat out of balance. Companies and/or cities should provide an incentive for genuine wheelchair accessible service, but that responsibility should be equally shared by the society seeking to encourage it.
Next, the article addresses independent contractor versus employee status for drivers. Many argue that full time drivers should be employees. That issue is driven by what the public is willing to pay for transportation. It's a wonderful concept, all drivers have workers compensation, Social Security, federal withholding, in some cases state withholding, Medicare, Medicaid, company provided health insurance and unemployment compensation. However, if you price the service out of reach of the riding public what good is it?
Compel companies to pay these benefits for full time drivers and what do you get? Part time drivers. That was one of the unintended consequences of the Affordable Care Act, some full time jobs simply went away. In this scenario the company, mandated by the state, simply refuses to allow drivers to work longer than the part time threshold. There are certainly other consequences, but I do have an editor.
Next, the issue of regulation, state, local or federal. The article discusses how regulations should be handled by different regulatory bodies differentiating between flag and dispatch. My thoughts on regulation are to stick to what your mandate really requires for protection of the public.
There are unintended consequences for every regulation. The more regulation the more unintended consequences. While some industries can and will ship the jobs to China if regulations get too onerous, the taxicab industry cannot. Regulation because you can regulate raises costs and invites cheating.
Allow companies to establish their reputation and price based on the quality of the service it provides. If cost is the only thing of importance then the cheaper alternative will prevail. Uber has been a dose of salts for the ground transportation industry. Those most adversely affected are those most heavily regulated. Learn a lesson!
If you have any comments regarding this or any of my articles please feel free to contact me at don@mcacres.com. - dmc
