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New York City’s New Ride-Hail Rules Fail to Fight Uber

In an attempt to fight poverty and congestion, the city may end up hurting drivers.

by Edward Ongweso Jr
Aug 12 2019, 4:39pm

Bloomberg / Contributor

Disclosure: I worked with the Independent Drivers Guild as an organizer during their 2018 campaigns for a cap on new ride-hail drivers and the implementation of a livable wage.

On Wednesday, New York City’s Taxi and Limousine Commission (TLC) voted to approve two controversial new rules regarding for-hire-vehicle drivers—despite opposition from the City Council, community organizations, driver advocacy groups, and the drivers themselves.

The vote comes after a July 23 hearing in which drivers expressed concerns that the rules were flawed and would end up hurting low-income drivers. The first proposal was to extend a “vehicle cap” passed in August 2018 freezing new vehicle licenses for Uber, Lyft, Juno, Via, and other ride-hail apps. The second was to introduce a "cruising cap" to help fight traffic congestion in Manhattan below 96th street by placing a limit on how much time cars can drive without passengers and fining companies that fail to meet the cap.

The new rules have been dogged by criticism since their inception by the ride-hail companies and the drivers they aim to protect, some of whom see the rules as half-measures. Part of this concern stems from how Uber steamrolled Mayor Bill de Blasio in a 2015 battle over similar problems. The mayor’s attempt to curtail Uber's expansion was met by fierce opposition as the company organized drivers and lobbyists to fight the mayor. The city’s subsequent hesitation to challenge Uber was overcome only after driver protests and a string of driver suicides.

The vehicle cap was the first of its kind passed by a major American city, and also came with the first pay floor introduced to guarantee a livable wage for drivers. At the time, full-time drivers were paid so little that 40 percent qualified for Medicaid and 18 percent for food stamps. The new pay standard aimed to increase pay by $9,600 annually, while the vehicle cap sought to increase driver utilization rates (total time spent driving with a passenger).

When the vehicle cap and pay floor were first passed in 2018, de Blasio took to Twitter and made clear that the rules were fighting "a crisis that is driving working New Yorkers into poverty and our streets into gridlock." In the same tweet thread, he added, "more than 100,000 workers and their families will see an immediate benefit from this legislation. And this action will stop the influx of cars contributing to congestion grinding our streets to a halt." The argument went that each rule would be ineffective without the other: pay increases would disappear if for-hire-vehicle registration grew unchecked, while a vehicle license freeze would give City Council one year to investigate how best to protect those gains and further reduce congestion.

On the question of the 2018 pay floor, driver groups were in agreement. The Independent Drivers Guild (IDG), an app-driver labor group, raised concerns that the proposals “underestimated driver costs, namely in vehicle renting costs and benefits.” In December, the TLC introduced a new pay structure built on the August pay rules standard that incorporated those concerns by tying driver pay to utilization rates (how much time was spent riding with a passenger). Pay would now account for "deadhead" trips (empty and lengthy trips between pickups), time spent driving around for passengers, and app drivers were now protected from pay cuts. In a rare moment of unity, the IDG and the New York Taxi Workers Alliance (NYTWA), a union for taxi drivers, called the December pay rules “the first real attempt anywhere to stop app driver pay cuts.”

When it comes to extending the 2018 vehicle cap, however, the groups agree and disagree on different points. The IDG originally sought a driver cap and cap on leasing fees as part of a long-term solution, arguing that a vehicle moratorium would empower predatory leasing companies already exploiting drivers (so far it has). The NYTWA, on the other hand, called for extending the vehicle cap and a cap on leasing fees. Tina Raveneau, an Independent Drivers Guild member who uses both Lyft and Uber, said in a statement that extending the moratorium was tantamount to “gambling with the livelihoods of eighty thousand low-income New York families." After the vote, the NYTWA Executive Director Bhairavi Desai said: “even though Uber, Lyft drivers and yellow cab owner-drivers are at different stages of their struggle for life out of poverty, stopping the oversaturation of cars is the starting point for all drivers to recover in this race to the bottom.”

Now we move to the second proposal, the cruising cap. Again, the driver groups are at odds again. The proposal is part of a larger plan to fight congestion. This part comes from a report released by the TLC revealing 29 percent of all Manhattan traffic comes from for-hire vehicles spending 41 percent of their time empty (a 59 percent utilization rate). The goal here is to increase the utilization rate to 69 percent by 2020 with the help of a congestion surcharge that went into effect earlier this year. NYTWA supports the cruising cap, while IDG opposes it. On the congestion surcharge, however, the IDG and NYTWA are united in their opposition. The NYTWA argues the congestion plan will "force drivers to choose between food and medicine" while the IDG claims it doesn’t target the worst offenders: commercial, construction, and delivery vehicles.

This complicated debate about how best to check the exploitation of drivers and the city by ride-hail companies is happening at the same time as a debate over how to handle a taxi industry crisis that threatens to bankrupt thousands—without anyone leading the TLC. For those reasons alone, the delay members of City Council called for would’ve made sense. The real problem, however, is that NYC has no clear vision for what to do with these ride-hail companies. The ride-hail companies have a clear strategy: a business model built on exploiting workers and takes advantage of political dysfunction long enough to build a monopoly. It’s not clear what New York's strategy is beyond addressing problems as they emerge. To take one example, even as ride-hail companies strangle public transit, there will likely be no response to Uber’s new plan to profit off of public transit until it is too late.

In the short-term, all these measures are good first steps. The measures will improve utilization rates, driver compensation, and reduce traffic congestion. They’ll help raise funds for the city’s ailing transit system (by taxing low-income drivers instead of wealthy elites). They do nothing to address the fundamental problem here.

The ride-hail companies are exploitative firms, backed by tens of billions of dollars and have already tried to fight these rules. Any solution has to begin with critically examining the role ride-hail companies play in our political economy. New York City has to ask itself whether it wants a fully public urban transit system or a private system that starves and cannibalizes the public option.

The city has spent years envisioning a dynamic system of carrots and sticks to ensure the firms are on their best behavior. There is no carrot the city can offer that can compete with a company willing to lose $5.2 billion this quarter, or the $20 billion it lost in the decade before, just so it can corner the market. The sooner the city realizes this, the sooner a real fight can begin.