California’s Uber Hunt

uberThe way things are going, Uber may soon face a court challenge in California over its failure to use an umlaut. The popular ridesharing startup has already been hit by an administrative law judge’s recommendation that the company pay $7.3 million in damages and suspend operation in the state. At issue: Uber’s alleged failure to provide the California Public Utilities Commission with internal data about how many customers with service animals or wheelchairs Uber drivers serve, along with time, location and fare data.

This decision came just a month after the California Labor Commission redefined the app-based ride-hailing service’s business model. In that case, San Francisco Uber driver Barbara Ann Berwick demanded that the company reimburse $4,000 worth of expenses. The commission ruled that Berwick, a transsexual who previously operated a phone sex business — Linda’s Lip Service — was a full-time-equivalent employee during four months of sporadic driving for Uber. (Berwick, now a financial consultant, expressed disappointment with the money an Uber driver makes.) The decision directly threatens Uber’s business model, in which drivers sign up as independent contractors with a minimum of the fuss and paperwork associated with modern hiring, choose their own hours, and are clearly remunerated on a piecework basis.

Last week, a U.S. district judge in San Francisco allowed a group of cab companies to proceed with a false-advertising lawsuit against Uber. The same judge also greenlit a suit against Uber claiming that it spammed potential drivers with recruitment text messages. That suit was dismissed when electronic records showed that one of the plaintiffs had begun pursuing the company herself.

Notably, complaints about Uber typically aren’t coming from customers, and even among the firm’s drivers, crusades like Berwick’s are rare. In fact, what’s striking about the various campaigns against ride-sharing is their reliance on paperwork and credentialing instead of outcomes. The CPUC, for example, doesn’t assert that Uber is harming actual handicapped people, only that the company has failed to produce paperwork that proves the absence of harm. Similarly, the cab companies’ speech-related lawsuit — which focuses on safety claims made in Uber ads — does not claim that traditional taxis are safer than Uber rides. The plaintiffs assert instead that cab drivers are subjected to more paperwork than Uber drivers.

The anti-Uber campaign’s reluctance to assess outcomes is understandable, given the public’s strong revealed preference for the company. Interest groups can complain, but drivers and customers continue to vote for Uber with their time and money. In a free country or a sane state, a clear market decision in favor of a business would be the end of the discussion. But Uber is increasingly under pressure to furnish evidence that its model works in theory as well as in practice.

The company recently commissioned Los Angeles-based BOTEC Analysis to measure service in low-income neighborhoods — a market in which anecdotal evidence already suggests that Uber’s influence has been positive. BOTEC compared UberX with taxi services in Van Nuys as well as Central and East Los Angeles. The median wait time for an UberX ride in L.A. neighborhoods was five minutes and 52 seconds; for a taxi ride, it was 14 minutes and 33 seconds. The maximum recorded wait time for UberX was 20 minutes; for a cab, 57 minutes. Despite Uber’s widely maligned practice of “surge pricing” — a concession to the law of supply and demand that is for some reason considered outrageous — UberX also soundly beat traditional cabs on price, with a median cost per ride of $6.28, versus $15 for taxis. Surge pricing didn’t even produce a higher maximum price. UberX’s max cost per ride was $11.68, against $22 for cabs.

BOTEC is led by UCLA public policy professor Mark Kleiman, a thoroughly un-libertarian, good-government figure. Nevertheless, Uber opponents have dinged the study as free-market propaganda from the Uber central command. SHOULD YOU TRUST UBER’S BIG NEW UBER VS. CABS STUDY? New York asks. (Answer: a definite maybe.) Meantime, L.A. Weekly wonders, “Is Uber really being straight-up about its commitment to serve folks other than young, white professionals and party people?” But defenders of the taxi status quo face an even bigger hurdle: Uber’s very existence is an advertisement for the free market. It’s an obviously less-regulated initiative that has produced measurable, positive outcomes across a wide spectrum. No wonder people hate it so much.

Long Beach allows taxis to lower fares as they compete with Uber, Lyft

As reported by the L.A. Times:

Long Beach officials are pursuing a new strategy to resolve the growing rift between taxi drivers and ride-hailing services such as Uber and Lyft, becoming the nation’s first large city to relax restrictions on cabs, rather than increase regulation of their new competitors.

Removing requirements that taxi drivers say have put them at a competitive disadvantage, the City Council voted Tuesday to allow its exclusive cab franchise to rebrand itself, update the appearance of its fleet and offer variable, discounted fares, free rides and other price promotions to lure customers.

In addition to a new name (Yellow Long Beach) and a new Uber-like app (Ride Yellow), Long Beach Yellow Cab will repaint its traditional mustard-colored taxis a more vivid lemon. …

Click here to read the full article

Regulated Uber? Or Deregulated Taxis?

Considerable disagreement continues over whether or how to regulate ridesharing companies, but both sides concur on the need for regulatory parity uberbetween taxis and ridesharing services.

Policy experts on both sides of the debate met Tuesday for a discussion hosted by the Cato Institute, a libertarian think tank, and while they generally agreed that the same regulatory framework should apply to both taxis and ridesharing services, this was the extent of their accord. (RELATED: Five Ideas to Put Taxis, Ridesharing Companies on an Equal Footing)

Brink Lindsey, Cato’s vice president of research and the moderator of the discussion, framed the issue by saying that, “ridesharing is the hot new industry of the last few years,” but has come under fire from traditional taxi operators, who claim it has attained success mainly by “evading existing taxi regulations.”

Lindsey also pointed out that since 2012, when Uber and Lyft began operation, the market valuation of both companies has increased substantially, while the markets for taxi medallions in New York City and Chicago have all but collapsed, suggesting that ridesharing enjoys certain advantages over traditional taxis.

According to Marc Scribner, a research fellow at the Competitive Enterprise Institute, modern taxi regulations date back to the 1920s, when streetcar operators “first began lobbying for anti-competitive regulations.” (RELATED: Anti-Uber Efforts Mostly Fizzling)

By the 1940s, those restrictions had been adapted for the taxi industry in most cities, primarily in the form of taxi medallions, minimum fares and geographical service requirements, all of which, he claimed, serve to limit competition, and thus service quality, in the industry.

Dean Baker, co-director of the Center for Economic and Policy Research, acknowledged that ridesharing is “a great innovation,” but said it is also important “to decide what legitimate regulation is,” especially when it comes to passenger safety.

He claimed, for instance, that, “it doesn’t make sense not to have a uniform policy for insurance,” because ridesharing passengers should be entitled to the same reasonable expectation of compensation in the event of an accident that taxi passengers already enjoy, even if the requirement does impose some costs on business.

Similarly, Baker also asserted that ridesharing companies should be required to perform background checks on drivers, just as taxi companies must, saying, “It seems reasonable to ensure that drivers don’t have a violent criminal history.”

Besides, he added, “I would hate the idea of my 87-year-old mother driving an Uber.”

In addition, Baker proposed that, “minimum wage and overtime rules should apply, and ridesharing drivers should be able to bargain collectively,” claiming those steps would help to ensure commensurate pay rates for both taxi and ridesharing drivers.

However, Matthew Feeney, a Cato policy analyst, countered that ridesharing companies have been impressively responsive to concerns such as those Baker raised, which Feeney takes as evidence that the market is better able to handle such challenges than is the government.

“Before we ask if government should regulate,” he said, “we should ask if companies will regulate themselves.” (RELATED: Adam Smith Opposes Regulation of Taxi Industry)

“Insurance is a legitimate concern,” Feeney granted, but he said ridesharing companies have already taken steps to address that shortcoming. In the case of Lyft, for example, “a $1 million insurance policy takes effect as soon as a driver accepts a passenger.”

There is a “gray area” in that coverage when a driver has their ridesharing app turned on and is not carrying any passengers, but Feeney said that in most major cities, companies have already sprung up to “fill the gaps” by offering per-mile insurance coverage.

Moreover, Feeney maintained that ridesharing services are inherently safer than traditional taxis for both drivers and passengers. (RELATED: Illinois Governor Vetoes Anti-Ridesharing Bill, Taxis Protest)

Driving a taxi, he explained, is essentially the same as “picking up hitchhikers for a living,” with the predictable result that it is among the more dangerous professions an individual can engage in. In fact, in all but two years between 2006 and 2013, “more taxi drivers were killed on the job than police officers or firefighters.”

The occupation is so risky, he said, not only because taxi drivers are known to carry large amounts of cash (“the mother’s milk of crime”), but also because “their job consists of giving rides to anonymous strangers.”

With ridesharing services, in contrast, “drivers and passengers are not anonymous, and they rate each other,” which serves to deter crime by making it easier to identify and apprehend perpetrators.

“Taxis are not destined to go extinct,” Feeney concluded, “but to maintain relevance they must tap into what makes ridesharing so popular.”

Follow Peter Fricke on Twitter

Originally published by the Daily Caller News Foundation