NYC slaps one-year cap on ridesharing operators while promising to investigate traffic congestion and financial losses of taxi industry
by Mike Beggs
In what could be a stunning blow to Uber and Lyft, New York City Council voted 39-7 in favour of placing a temporary, one-year freeze on the number of ridesharing cars in the Big Apple.
On August 14, Mayor Bill de Blasio signed the bill into law, capping the number of Transportation Network Company (TNC) vehicles for a year (unless they are wheelchair accessible). In that time, the City will address the devastating impact of TNC’s on traffic congestion, pollution, taxi driver incomes, and the value of medallions.
Saturated with 100,000-plus TNC’s, New York has seen six taxi and limo drivers pushed to suicide over the past year, and many medallion holders ending up in bankruptcy. Bhairavi Desai, executive director of the New York Taxi Workers Alliance told Jacobin magazine cabbies have been, “driven to despair with the feeling that the deterioration of their livelihoods was not visible to policymakers, or the community.”
Similarly, a study commissioned by the City found that 85 percent of New York’s app-based drivers are earning below the minimum wage. The package of bills passed by Council also sets a minimum wage for ride-sharing drivers of $17.22 an hour (representing a 23 percent increase), and requires high-volume PTC’s to provide data on usage and charges.
“The City is sending a clear message: we’re putting hardworking New Yorkers ahead of corporations,” Di Blasio stated.
“Our city is directly confronting a crisis that is driving working New Yorkers into poverty, and our streets into gridlock. This unchecked growth of app-based for-hire vehicle companies has demanded action – and now we have it.”
The Taxi Workers Alliance issued a statement that, “Driver incomes across all sectors have been in a downward spiral, as Uber and Lyft have flooded our streets. The immediate cap on new for-hire vehicles puts a stop to that. Now, yellow taxis, green cabs, black cars, livery, Uber and Lyft drivers can finally hope for stability.”
Independent Drivers Guild founder Jim Conigliaro Jr. agreed, stating, “We cannot allow the so-called “gig economy” companies to exploit loopholes in the law, in order to strip workers of their rights and protections.”
The new bill could also find TNC drivers applying for benefits, and the right to unionize.
According to an outside study commissioned by New York’s Taxicab and Licensing Commission (TLC), at present TNC’s outnumber yellow cabs by 4 to 1, and up to 40 percent of ride-hailing vehicles are unoccupied at any given time.
However, there will be no effect on the current numbers of TNC’s out there. And the Mayor’s office told Uber and Lyft customers they should not expect a change in service, nor a significant increase in wait times, The Verge reports.
But Uber and Lyft say the cap WILL result in lengthier wait times and less reliable service, especially in the boroughs outside of Manhattan.
“We’re worried the impact will be felt the most in areas not well-served by mass transit, and where taxis refuse to travel,” Uber spokesperson Jason Post told The New York Times. He warned that this could mean price increases for Uber riders, down the road.
WIRED observes that for Uber and Lyft this change in fortunes was a long time coming.
Back in 2015, Uber fought off Be Blasio’s attempt to impose a cap in New York, via a huge lobbying and advertising campaign. But this time such efforts fell short, in light of the driver suicides, and a past few years marred by scandals, bad press, and mounting reports of adding to downtown gridlock in many cities.
One of Uber’s most lucrative markets, New York becomes the first major U.S. city to place a limit on the number of TNC’s. And The Verge suggests that, if successful, the new bill could become a (template) for other cities, “struggling under the strain of TNC’s.”
San Francisco is, likewise, looking to limit the number of ridesharing cars.
“I’m hoping that the experience in New York will show a model to the state of California, that there’s a way for cities to be responsible partners in the regulation of TNC’s like Uber and Lyft,” stated Tom Maguire, San Francisco Municipal Transportation Agency’s director of sustainable streets.
The taxi-Uber wars are also heating up again in Chicago, where two aldermen are reportedly drafting legislation similar to New York’s, including a cap, and minimum wage requirements. According to Crain’s, the proposed bill can be expected to be filed after Council’s summer break.
Crain’s observes that while Uber and Lyft initially provided a transportation alternative that was welcomed by many, both offered heavily subsidized rideshare prices in order to gain market share, causing a decline in the use of public transit in virtually all major cities.
Taxi Action president Behrouz Khamseh is among those Toronto operators encouraged by the New York law.
“It can be a step in the right direction,” he says. “All of these cities talk about congestion and pollution, and TNC’s add to it. If they want to be credible in front of the public, this issue is going to come up. The public, they’re stuck in the traffic, too. These cars, they don’t fly. Everybody notices it.”
Independent Toronto Taxi Inc. president Mike Tranquada observes,
“It should spread (to other major cities). But with the current Mayor, I don’t see it (happening in Toronto).”
He deemed these measures, “a big step for drivers’ rights.”
Owner/operator Gerry Manley agrees the probability of a cap on ridesharing cars is slim in Toronto, but that with caps now in place in New York, and Kingston, “it could open the floodgates for other municipalities to follow suit.”
And he emphasizes that if cap numbers are made proportional to the existing number of taxis, “companies like Uber, and Lyft will not survive, as they will not generate enough money to pay drivers and show a profit to their investors .”
And while the cap is “a good start”, he believes the greater impact in New York comes from companies like Uber and Lyft now being required to guarantee a minimum wage of $17.22 per hour.
“Under this scenario, their workers will most likely now seek employee status, and companies like Uber and Lyft will have to pay all the benefits associated with being an employer,” he adds. “With the cap, and perhaps their drivers becoming employees, their rates would skyrocket past taxi-cabs, and that finishes the advantage they have enjoyed for almost five years.”
Mississauga plate owner Peter Pellier stresses that under the one-year freeze, “the veritable flood of so-called ridesharing vehicles remains in place, much to the detriment of the New York taxi industry.”
“That said, it’s a definite start,” he offers.
Given the size of the market in New York, Pellier says “it’s a virtual certainty” Uber and Lyft will mount a court challenge” against these measures.
“Neither company has any appetite either for limiting the number of affiliated drivers, or for treating said drivers as employee/dependent contractors,” he alleges. “As for paying drivers a minimum wage – anathema. Clearly, both measures run totally contrary to their respective business models.”
“Having lost the political battle in the Big Apple, the one recourse available to Uber and Lyft is to seek relief in the courts,” he continues. “The $64,000 question is, will the courts side with the City and its taxi industry, or with the interlopers?”
Manley points out that courts can be fickle, and, “what happens in American courts may or may not support any court action in Canada.”
“Where we are in a much better position is because already we have a federal definition of a taxi business in place through a federal act, that provincial, or municipal law can’t take precedence over,” he observes.
“Does that mean municipalities won’t try to challenge this under their rights to license as they deem fit? I would be surprised if they didn’t try, as they certainly don’t want to lose the licensing revenue stream. Will the Province intervene as they should, especially since they have the power to do so? That is the $1 million question.”
London Mayor Sadiq Khan has just followed New York’s lead by asking for the power to cap private hire drivers, with the city’s number of TNC’s having skyrocketed up from 60,000 in 2011 to more than 110,000 today (compared to 23,800 licensed taxi drivers).
Since passing new rules for TNC’s in February, Transport for London has awarded licenses to several other ridesharing companies; and in August, Uber’s Indian rival, Ola announced plans to expand into the U.K.
And of course, Uber had its operating license renewed by the TfL in June, after tightening up on several procedures.
In a statement, Uber said it wants to help the City address traffic congestion, and air pollution.
“By competing with private cars, getting more people into fewer vehicles, and investing in our clean air plan, we can be a part of the solution in London,” it read.