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New York City Votes To Cap Uber and Lyft, Regulate Drivers' Pay

The days of a free market in ride sharing are over in America's largest city.

MIKE SEGAR/REUTERS/NewscomMIKE SEGAR/REUTERS/NewscomNew York City has decided to pump the brakes on ridesharing services like Uber and Lyft by passing tight, first-in-the-nation regulations that both limit the number of drivers allowed in the city and empower regulators to pass more restrictions in the coming months and years.

Chief among these new regulations is a year-long freeze on the issuance of new licenses for rideshare drivers, during which time regulators at the city's Taxi and Limousine Commission will study every dimension of the industry, including how much drivers make, vehicle utilization rates (the percentage of time Ubers spend with a passenger in the back), and the impact of these services on traffic congestion.

Once this study is completed, the commission will be allowed to set caps on the number of rideshare vehicles allowed on city streets, set utilization targets for rideshare fleets, regulate where these cars can pick up and drop off passengers, and establish minimum hourly pay for drivers.

In short, the regulatory breathing room that has allowed Uber and Lyft to grow into the transportation dynamos they are today is coming to an end in New York City. According to rideshare companies themselves, this means dire consequences for riders, drivers, and overall mobility in the city.

"These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of color and in the outer boroughs," Lyft Vice President of Public Policy Joseph Okpaku said in response to Wednesday's vote.

"The city's 12-month pause on new vehicle licenses will threaten one of the few reliable transportation options while doing nothing to fix the subways or ease congestion," said a spokeswoman for Uber, Danielle Filson.

New York City politicians are much more optimistic, insisting that the new rules are both necessary, and will come with almost no trade-offs for the travelers who depend on ridesharing to get around the city.

"Our city is directly confronting a crisis that is driving working New Yorkers into poverty and our streets into gridlock," Mayor Bill de Blasio told the Wall Street Journal Wednesday. "I'm confident we are getting the balance right to address plummeting driver pay and rising congestion, without harming service," New York City Council Member Brad Lander told constituents in an email after the vote.

De Blasio and Lander claim that the rapid increase in the number of Uber and Lyft drivers on New York City streets has resulted in a big spike in traffic congestion while diminishing fares for drivers of traditional yellow cabs and rideshare cars alike, as they both compete for the same pool of riders.

Estimates vary on how much rideshare drivers actually get paid per hour, given that both hours and fares are going to vary widely between different drivers. According to a report prepared for the taxi commission, the median rideshare driver makes $14.25 an hour after expenses. Industry figures put it a little above $16 an hour.

Neither figure is enough for city politicians and regulators. Lander says that most drivers "suffer from low pay and high company mark-ups that generate huge returns for investors, but leave drivers in poverty." The Taxi and Limousine Commission says drivers need to earn $17.22 an hour in order to make "a living wage."

Lander and others, of course, skip over the fact that by freezing the number of new rideshare licenses—and allowing for future reductions—they're ensuring that people who would otherwise have signed up to drive for Uber and Lyft will be excluded from the marketplace, making their driving wage $0 an hour after expenses. Should the Taxi Commission use its new powers to reduce the number of rideshare vehicles on city streets under what it is now, we would see current drivers actually lose their jobs and their livelihoods.

It's hardly a secret that the new pay rules and cap on drivers are meant to protect incumbent drivers. The City Council's report on the legislation it passed yesterday included multiple pages on the negative affect ridesharing has on the wages of traditional taxi drivers. Taxi drivers themselves have pushed hard for the new rules on the explicit grounds that the rules will protect their wages.

Lander waves away concerns that hiking labor costs for rideshare companies while capping the number of operators they can put on the road will result in higher prices or reduced service for riders, saying that "there are more than enough [rideshare vehicles] on the road right now to provide good service, but we need to make them more efficient."

That putting in caps on the number of vehicles and setting "utilization rate" targets will not cause a reduction in service—particularly in New York City's boroughs where over half of rideshare rides begin and end—strains credulity.

Fewer cars and a growing number of people demanding them would could only result in longer wait times or higher prices for riders. Demanding that drivers have a passenger in the back over and above a certain percentage of the time will discourage them from servicing peripheral areas of the city where the time spend between dropping off one passenger and picking up another one is bound to be greater.

The one potential positive from this tradeoff—a reduction in traffic congestion—is far from guaranteed.

Traffic speeds have indeed gotten worse in New York City, falling some 15 percent since 2010. How much of this has to do with Uber and Lyft is a mystery. A 2016 report conducted by de Blasio's office found that congestion was getting worse prior to the introduction of rideshare services, and that the primary drivers of this congestion were "increased freight movement, construction activity, and population growth."

Nevertheless, ridesharing has gotten more popular since the release of that report, meaning its impact on congestion is probably real. A cap on these services would probably produce some reduction in congestion, though how much remains to be seen.

If the city really wanted to increase traffic speeds, it could implement any one of the various congestion pricing proposals floating around. (Both Uber and Lyft have endorsed such policies.)

Still, it cannot be stressed enough that New Yorkers have increasingly taken to ridesharing as a result of the city's deteriorating mass transit system. Ridership on the New York subway has fallen every year since 2015, even as the number of jobs and people in the city has grown. On-time rates have plummeted, maintenance problems have proliferated, and subway cars have become more crowded.

Given an ailing rail system that is increasingly failing to meet their needs, commuters have instead opted for a transportation alternative that can, with minimal wait and acceptable expense, get them directly from point A to point B in relative comfort. That may mean spending more time in traffic, but consumers appear willing to make that tradeoff. The regulations passed Wednesday seek to replace a successful and dynamic business model with a centrally controlled rideshare service. The government will not get to determine how much drivers make, how many of them can be on the road, how often they have to pick up passengers, and even where they can pick them up.

This is a loss for mobility, and for the promise of a freer market in transportation.

Photo Credit: MIKE SEGAR/REUTERS/Newscom

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  • sarcasmic||

    hey're ensuring that people who would otherwise have signed up to drive for Uber and Lyft will be excluded from the marketplace, making their driving wage $0 an hour after expenses

    That's the unseen. It doesn't matter. Only the seen matters. Like the people who get a raise when minimum wage goes up. They matter. The unseen who never get hired don't matter.

  • Fist of Etiquette||

    These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of color and in the outer boroughs...

    If these communities are so benefited by ride sharing services, why do they continue to elected regulators to outlaw them?

  • albo||

    I hear that if you vote anything other than Democrat in NYC you get kicked out and are forced to live in Buffalo.

  • Hank Phillips||

    Nixon's 1971 tax subsidies bribing teevee to ignore libertarians?

  • ||

    Exactly.

    You get what you deserve.

    Shitheads like DeBlasio.

  • SusanM||

    Okay, who really didn't see this coming?

  • Antilles||

    Drunk driving arrests have been dropping. They have to put a stop to that.

  • Marcus Aurelius||

    Talk about revenue loss...

  • Ken Hagler||

    Those taxi cartels really get their moneys worth from their "campaign contributions."

  • Shirley Knott||

    DeBlasio thinks they've got the right rules and policies.
    Funny how slavers always believe they're doing it right. I guess it comes from being on the right end of the whip.

  • Marcus Aurelius||

    I'm sure he's situationally aware.

  • albo||

    Blue city oligarchies will never go quietly even as they decay into crapholes.

  • Hank Phillips||

    Jitneys were invented in Los Angeles. All New York ever invented was the New York Society for the Suppression of Vice to fasten the Comstock laws (and current looter Administration) on the populace.

  • wef||

    shakedown town

  • turco||

    central planners are gonna plan

  • turco||

    central planners are gonna plan

  • gordo53||

    Another nail in the coffin of the urban lifestyle so many currently crave. Living in a city such as New York continues to get more expensive. Young urban professionals are finding it more and more difficult to maintain their lifestyle. That coupled with the fact that digital technology is making "place" less and less relevant means that more and more corporations will be shedding the financial burden of both high rents and high salaries and leaving the city. Corporations know it is only a matter of time before they are targeted by cities to help bail them out of withering debt and unsustainable pension funds. Time to skedaddle.

  • NoVaNick||

    Most young folks who simply MUST live in NYC could care less that they are getting much less than they are paying for. The right to brag about it is worth a lot more than you can imagine-some are even proud to pay $20 for a pint of basement-brewed hipster beer to go with their $30 sandwich and $50 cab fare home If you choose to live in NYC, you are getting the government you deserve.

  • Muzzled Woodchipper||

    Anyone who continues to talk about driving Uber in terms of pay per hour should be summarily ignored.

    Pay per hour means virtually nothing when ones expenses are calculated per mile driven.

  • croaker||

    Their subway is falling apart, so they shit on one of the viable alternatives. Time to list progressive thought in the DSM.

  • David Emami||

    Time to revive Lochner v. New York.

  • BYODB||


    Chief among these new regulations is a year-long freeze on the issuance of new licenses for rideshare drivers, during which time regulators at the city's Taxi and Limousine Commission will study every dimension of the industry, including how much drivers make, vehicle utilization rates (the percentage of time Ubers spend with a passenger in the back), and the impact of these services on traffic congestion.


    The outcome of this 'study' is already predetermined, as its the ultimate action that will be taken to protect the Taxi and Limousine services that already exist.


    This is the dog and pony show to justify that end result.

  • Hank Phillips||

    The Los Angeles Record editorialized October 1, 1914: "If the City Council or Board of Public Utilities can't or won't tame the Trolley Trust there is something else that can and will. And that is the 5-cent fare autos." The paper soon doubled down with "The Trolley Trust will not succeed in throttling the People's Five cent auto car service. The masses are aroused on the question and they will come to the front in such numbers and in such vigorous fashion in defense of the auto men that it will result in greatly extended auto service on behalf of the public."
    Americans had cojones and valued freedom back in them thar days.

  • ||

    They need a study for what? To confirm their bull shit?

    Anyway. We've been to Nashville, Vegas and L.A. this year and we got around in each with Lyft and Uber. More convenient you can't get.

    Idiot NYC.

  • Restoras||

    Reason #198,272,648,594,827 why New York City sucks.

  • DrZ||

    "Lander and others, of course, skip over the fact that by freezing the number of new rideshare licenses—and allowing for future reductions—they're ensuring that people who would otherwise have signed up to drive for Uber and Lyft will be excluded from the marketplace, making their driving wage $0 an hour after expenses."

    The left only deals with the "seen". The "unseen" cannot be used in the next election campaign for they are the political road kill and using road kill in a campaign speech to get re-elected doesn't work.

  • SimonP||

    *scans for obligatory jab at mass transit* Ah, there it is.

    This reads like a straight-up promotion from Uber/Lyft. Is this Facebook? Am I getting promoted content or something?

    It's a "mystery" whether ridesharing is contributing to congestion... except that it's not. It may not explain the entire phenomenon, but ridesharing is most certainly contributing to the number of miles being driven and so, to congestion and slower traffic speeds. There are studies out there on this. Look them up before you "report."

    Caps on new licenses is not the way to go, but NYC is boxed out of congestion pricing by a state legislature that is not interested, a governor who's running for president, and a mayor who's an idiot on transportation issues. My hope is that it perversely moves the political needle in Albany so they'll finally allow the toll equalization and cordon tolling proposed under the MoveNY plan, maybe as a grand plan to reverse the city council's action capping rideshare licenses.

    I've said it before, and I trust I'll have to say it again: Ridesharing is not the solution to poor transit. It just isn't. Not in NYC, not anywhere as dense as NYC.

  • jagjr||

    I note that you do not provide a suggestion for "a solution for poor transit". imagine my shock.

    you also don't cite any of the "studies out there" on how rideshare is driving congestion. they may be out there, but assuming that it is rideshare that is the driver increased congestion, as opposed to other potential causes, without evidence is singularly unhelpful.

    I also note that you do not address the availability of rides (cab or rideshare) outside of specific areas of Manhattan, which is probably the biggest positive impact that rideshare provides. this is especially true as areas of the 5 boroughs that had fallen fallow are now becoming economic drivers for the City.

  • jagjr||

    & btb, "jabs" at mass transit are less "obligatory" than they are "warranted by the inability of the transit system to contain costs, remain relevant as conditions change, and be responsive to customers and potential customers". as currently constituted, mass transit in most cities is an industrial age solution that is quite simply not suited to a post-industrial economy.

  • Rockabilly||

    communists love to tax regulate and control.

    It really turns them on.

    Freaky, eh?

  • Duelles||

    Good for NYC! (Sarcasm) Limiting wages and services are just what the big Apple needs. Regulations to cause pricing low wage earners, working stiffs right out of the city just the restrictions on rent has been doing. DeBlasio is our commie friend from days of Nicaragua influence. Hope that the New York Stock Exchange moves to Jersey. . . Or, he'll, Montreal.

  • JFree||

    This is a loss for mobility, and for the promise of a freer market in transportation

    No it isn't a loss for mobility or anything else. It can only be a loss if there was at some point a chance for a win. This is more like a WWE wrestling match or a medieval morality play. Everyone played their part well and can bow. The audience can applaud and go home. A good time was had by all.

  • Whorton||

    Oh Boy, Oh Boy, Oh Boy. . .

    New York is setting the stage to ban the illicit competition to the cozy relationship between the city and cab drivers. I anticipate nefarious banning of the rabble Uber drivers.

    Remember, CARS don't carry people, UBER drivers do!

  • tlapp||

    The city wants the revenue from their tax medallions. The traffic is just an excuse.

  • Fk_Censorship||

    I'd love to see Uber leave New York City. And to make a big announcement: we have been forced to abandon our operations in this city due to pressures from your mayor Bill De Blasio, and the following council members: a, b, c.

    I have a feeling those guys will be beginning Uber to come back to the city on their knees, after their constituents let them know how they feel.

  • ancestrialLocke||

    This kind of reminds me when people decided to regulate the credit card business. Now they all suck and have large monthly payments on them. Thanks democratic assholes!

  • jagjr||

    does de Blasio ever get tired of being wrong about every issue on which he speaks?? apparently not. & what color is the sky in the reality in which this Landers character lives?? how does one limit participation in providing a service without reducing its availability to consumers?? & in what universe does government regulation ever, ever, ever make anything more "efficient"??!!

  • jagjr||

    & while I'm at it, what happened to those corruption charges against de Blasio from a couple of years back?? did those just evaporate??

  • Devastator||

    Well it couldn't last long with Big Taxi and Socialism being powerhouses in the city government. They don't like free market forces, that's why their population has been stagnant for 20 years.

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