Special Report: Uber and The Taxi Industry

August 24, 2015
By Steven Wishnia

Part 1: An Ex-Cabbie Looks at Uber

When I drove a taxi some 30 years ago, I dreaded getting late-night fares to the Upper East Side. Few people were leaving the area at that hour, so I would inevitably find myself in a pack of 30-odd cabs headed downtown on Second Avenue, jostling and jockeying for position to catch the one person who might be sticking out their arm.

If I thought that was bad, I wasn’t driving in the era of Uber. The app has poured some 25,000 more vehicles into the business. While Uber vehicles are technically “black cabs,” which are not permitted to take street hails, its smartphone-app system enables it to compete with yellow cabs for relatively instant hails. In the last four years, the number of black cabs in the city has increased by two-thirds, from about 40,000 to about 66,000. Uber vehicles now outnumber the 13,587 yellow cabs by almost 2 to 1.

This obviously hurts drivers’ incomes. The first rule is “you don’t make any money when you’re empty.” Now imagine trying to find a fare at Second Avenue and 86th Street when there are 50 other cabs on the block instead of 30, and when some of the few people looking for a cab have clicked on Uber instead. The Daily News reported Aug. 16 that the number of fares yellow cabs picked up in the first half of 2015 had declined 10% from the previous year.

“We can see drivers’ incomes dropping,” says Bhairavi Desai, executive director of the New York Taxi Workers Alliance. James Conigliaro, head of District 15 of the International Association of Machinists, the union representing black-cab drivers, says the number of new drivers and vehicles flooding the city has made earning a living “like 20 people sharing a pizza.” 

That trend will continue. Uber won the first round last month, when Mayor Bill de Blasio and the City Council agreed to postpone legislation that would have limited the company to a 1% increase in vehicles while the city studied its impact on traffic. Instead, the city will do a four-month study, and Uber promised to turn over some data.

That deal came after Uber launched a massive lobbying campaign, claiming that the cap would cost the city “10,000 jobs,” touting its “opportunity and innovation.” It hired David Plouffe, President Barack Obama’s 2008 campaign manager, as its lead lobbyist, and he claimed that de Blasio was doing the bidding of taxi-fleet owners who contributed to his campaign. The company also insinuated that it was standing up for black people and outer-borough residents who are “ignored” by yellow cabs. Governor Andrew Cuomo weighed in just before the scheduled vote, calling Uber “one of these great inventions, start-ups, of this new economy” and adding, “I don't think government should be in the business of trying to restrict job growth.”

“Uber can only continue to provide reliable service—with wait times around 3 or 4 minutes in every borough—if the supply grows enough to match that growing demand,” a company Web site said. “Limiting the number of cars will make it harder to meet that demand, which in turn, will mean higher prices and/or longer pick-up times—and in some cases, no available rides at all.”

For all the techno-utopian prattle about “the sharing economy,” however, Uber is in many ways simply a high-tech version of the developing-world "microentrepreneur" model for taxis: You have a car, you pick people up and charge them money, and you alone are responsible for gas, maintenance, and any complications from accidents—all with little or no government regulation. Uber's hook is that its app connects drivers and fares. In return, it sets prices, it can cut off drivers who get low ratings, and it gets to wet its beak a good bit—25% of every fare, according to the company’s Web site for new drivers.

The unions criticizing Uber are not trying to turn back the clock against technology, Conigliaro emphasizes. “New technology is great,” he says, “but you also have to look at what kind of jobs they’re creating.” It doesn’t do any good to create 30,000 jobs, he adds, if they pay a quarter of a living wage. The Taxi Workers Alliance hopes to unveil a competing app or pilot program this fall, says Desai. It would be not-for-profit, with the fees generated being put into health-care and pension funds for the drivers.

Desai sees a much more sinister Uber agenda. She believes the company’s ultimate goal is to wipe out the yellow-cab industry and turn taxi driving into a low-paying part-time gig. Flooding the streets with cabs cuts drivers’ incomes, but increases Uber’s chance of catching a fare. “They’re Walmart on wheels,” she says. “Once they flood the streets with vehicles, it gives them a chance of monopolizing the industry.”

The transition to leasing in the 1980s was a major change in the way taxi work is structured, she continues, but the fleet owners who imposed it “were not $50 billion companies.”

“This is a war. It’s something we’ve never seen,” she says. “This is the fight of our lives. If this generation of taxi drivers doesn’t stand up, there will be no future generation.”

Part 1 of a four-part series. Tomorrow: Driving for Williams: How Cab Drivers Make a Living.

August 24, 2015

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