Can I Get a Ride? Ridesharing Looking for a Place in the States

Committee of Jurisdiction: Business and Economic Development; Energy, Transportation, Environment; Labor and Workforce Development

 

Introduction

pic1Photo Credit: Getty ImagesDepending on where you live, getting around can be a challenge.  If your city does not have cabs zooming down the streets or a complex subway system, your options can be limited.  In areas that have an unreliable transportation system or low automobile ownership, ridesharing can help fill the void.  In a resolution recently passed at the 39th Annual Legislative Conference, NBCSL passed ETE 16-04 “TRANSPORTATION NETWORK COMPANY ACT” which called for support of ridesharing and support for insurance regulations that allow them to serve consumers and protect their drivers.   Though companies such as Lyft, Uber, and Sidecar, are being praised for closing that transportation gap, they continue to face challenges in localities, states, and countries they are launching their services.  These companies may be putting more drivers on the road, but are facing opposition from taxicab commissions and taxi drivers.  Much of that backlash is attributed to claims that Transportation Network Companies (TNCs) are creating an anti-competition environment, reserving access to those living in high-traffic areas, and reinforcing a transportation gap for those with disabilities. A looming issue for states moving into 2016 will be tackling these issues while creating room for one of the biggest leaders of the share economy.  Of particular note, will be the approach states will take to ensure that low-income and communities of color are not left out of the driver’s seat.

Background

Ridesharing, a part of the larger sharing economy, also known as collaborative consumption, is the process in which a user is matched with a nearby driver and taken to a destination.  What distinguishes ridesharing from a taxi driver is that TNC drivers tend to use their own vehicles, are independent contractors, and are non-professionals (1).   Uber was one of the first pioneers of the ridesharing model, officially launching their black car service in 2011.  Lyft launched their service connecting users to nonprofessional drivers using their own car in 2012 as a service of its predecessor Zimride.  Both companies focused on creating a new way to connect riders to drivers.  Each has grown rapidly, with Uber expanding into 58 countries and 300 cities worldwide and Lyft in 65 cities nationwide.  Utilizing smart phone applications, riders are able to request drivers and pay for the ride directly on their credit card.  TNCs also allow drivers to work as independent contractors.  Each company sets requirements for becoming a driver (2).   A recent study found that nearly half of all Uber drivers have a college degree compared with 19 % of cab drivers and chauffeurs.  Uber drivers also tend to be younger, whiter, and slightly more female, than employed taxicab drivers and chauffeurs.  When it comes to people of color, only 19.5 % of Uber drivers are African American compared to the 31.6 % of cab drivers who are African American.  The gap between Hispanic Uber drivers and Hispanic cab drivers is less drastic coming in at 17. % and 22.2 % respectively.  Thirty percent of Lyft drivers identified as women and 50 % identified as belonging to a minority group.  Lyft drivers also tend to use their income for their primary expenses, with 66 % noting the use of their income, which is particularly helpful for the 10 % of drivers that are also students.   

In addition to connecting individuals, ridesharing also creates business opportunities.   As independent contractors, drivers choose what schedules they work.  Drivers can decide to drive full-time and make this their own small business.  For communities of color, the injection of entrepreneurship contributes to economic growth.  Increasing transportation access also boosts local business by providing individuals a way to frequent businesses.   TNCs also increase employment opportunities and access to resources that do not exist in the neighborhoods they may serve.  Each of these companies continues to grow and create new methods to engage riders including carpool services and pickup services.

State Action

Totally On Board


Ridesharing started off slow in the states at their inception.  Currently, twenty-seven states and the District of Columbia have regulations governing TNCs.  These services have been readily embraced by passengers looking for alternative methods of transportation.  TNCs have worked within local jurisdictions to launch their services and work within their frameworks.  From cities, TNCs have grown globally.  Colorado recently became the first state to authorize TNCs within the state.  This bill requires that drivers pass a rigorous screening process, that their vehicle pass a 19-point inspection by a certified mechanic, and that each trip is insured up to $1million the moment each driver accepts a request for a ride. North Carolina also passed a measure that sets minimum standards for background checks and company liability coverage on cars owned by the drivers.  It also requires rideshare companies to pay $5,000 in state permit fees.  NBCSL Sponsor, Sen. Floyd McKissick, Jr. (D-Durham) stated that the bill provides extra protections for the general public as well as ensuring an environment that TNCs can operate within.   In cities like Pittsburgh and New Haven, Uber is utilizing its UberUP program to increase the number of Uber drivers by working with local chapters of the NAACP.  Creating job opportunities has been a heralded mission of TNCs especially among communities of color.  

For many, TNCs create an opportunity to equalize transportation options in different communities.    In an //medium.com/@BenJealous/hailing-a-cab-while-black-it-s-still-a-problem-a06c879a7bfc#.rhmh0dc55">Op-Ed, Former CEO of the National Urban League, Ben Jealous noted, “…. access to buses, trains and metros is a crucial link to opportunity and economic mobility. In fact, a recent Harvard study found the single strongest factor in determining economic mobility was commuting time. A lack of transportation options can keep a struggling community treading water.”  With the advent of ridesharing, communities can see an increase in mobility which can translate into better access to healthier foods and employment.  TNCs can also create employment opportunities for returning citizens.  Uber and Lyft conduct thorough background checks for their drivers.  There has been some debate on these methods; however, they contend that their methods are sound.  Not using fingerprinting actually enables more individuals to qualify as drivers because they are not being kicked out due to faulty fingerprinting, fingerprinting that may have been taken during as arrest that was wrongful or expunged. 

Pump Your Brakes

Several state and local taxicab commissions have opposed ridesharing pointing to the lack of regulation and oversight of these independent contractors.  Although taxi drivers embrace the idea of competition they also argue that TNCs are not engaging in fair competition because they do not have to follow the same regulations set for taxicabs.  This opposition has led to protests not only in the U.S. but also in other countries.  It has even gone as far as litigation. In New York, medallions, which are required to operate a New York City yellow taxicab, often cost over $1 million.  Companies that own medallions, such as White & Blue Group, filed a lawsuit against the city arguing ridesharing caused a steep decrease in their profits.    The companies, the Taxi Medallion Owner Driver Association, and individual medallion-holders also claim that regulating taxicabs without regulating TNCs violate the Equal Protection Clause of U.S. Constitution and the Takings Clause of the Fifth Amendment.  A local judge seemed to rule in favor of TNCs holding that medallion-holders could not stop the tide of technological revolution.   Some localities recognizing that Uber and Lyft will not be disappearing, are actually adopting some of their methods by creating hailing-apps for their taxi cabs (3).

Earlier in the year in Broward County, Florida, the Commission moved to regulate the companies like taxicabs, requiring they have the same certificates and licenses as taxi drivers.  Following months of debate, the Commission repealed many of the requirements it placed on TNCs, including requiring finger printing, a geography test for drivers, an FBI background check and others.  It also allows TNCs and taxi companies to self-regulate and determine what background checks will be used.   Maryland Governor Larry Hogan signed a measure that would regulate TNCs as common carriers and make them subject to the rules of traditional transportation providers, it also requires fingerprinting, a practice TNCs have been outspoken on not using.  One commissioner of the St. Louis Metropolitan Taxicab Commission has filed a complaint to the Federal Trade Commission (FTC) alleging that TNCs are engaging in anti-competitive behavior.  St. Louis has been grappling with TNCs over their background checks calling for fingerprinting to be included in their checks.   And other states like Kentucky are deferring to their commissions, the Kentucky Transportation Cabinet to develop regulations.

The Los Angeles Taxicab commission in an effort to even the playing field established a working group following a mandate from the mayor.  The working group is currently developing a hailing app that taxi drivers, who are independent contractors hired through different firms could use.  The commission has stated that a decrease in certified taxi cabs would have an impact on those using wheelchairs since Los Angeles taxicabs are ADA-accessible.   The San Francisco Metropolitan Transit Authority also weighed in on this issue stating that a quarter of its wheelchair-accessible cabs do not have enough drivers.  Lyft and Uber recognizing this portion of the population have filed disability-access plans with the city and are working with them to comply.  Labor issues will also more than likely continue be an issue for TNCs.  As recently as this year, the Seattle city council announced they would be considering a measure that would allow TNC drivers to unionize.  This could have a devastating impact on TNC drivers who do not wish to be a part of a union.  Furthermore, a class-action suit in California court over the status of Uber drivers as employees continues to unfold. 



Conclusion

It is undeniable that TNCs have had a huge impact on the world we live in. They link people to resources, neighborhoods, and areas they do not have access to.  Despite their reach, there are issues these companies should consider:  Servicing the unbanked (those without a bank account or credit card), filling the TNC workforce (creating incentives for drivers to grow their companies), and airport pickups (dealing with the push to add an additional fee for picking up at an airport).  Regardless of the issue, TNCs have proven themselves a juggernaut of the sharing economy that is poised to be here for a very long time.  It is a priority to ensure that these entities continue to be forces for good in underserved and unrepresented communities.  As they create more access, they should create equal opportunities for all to take part, and it is incumbent upon policy makers to make sure that they do.       


Resources
  • Lyft is a privately held American transportation network company based in San Francisco. The company's mobile-phone application facilitates peer-to-peer ridesharing by connecting passengers who need a ride with drivers who have a car.
  • Uber  is an American international transportation network company headquartered in San Francisco, California The company develops, markets and operates the Uber mobile app, which allows consumers with smartphones to submit a trip request which is then routed to Uber drivers who use their own cars.

     

1. Nicole DuPuis and Brooks Rainwater, The Sharing Economy, National League of Cities, Center for City Solutions and Applied Research.

2.
For more information on Lyft driver requirements, please visit https://www.lyft.com/safety. For more information on Uber driver requirements, please visit https://get.uber.com/drive/. 

3.
Chicago and New York Officials Look to Build Uber-Like Apps for Taxis New York Times Dec 11, 2014 Mike Issacs http://bits.blogs.nytimes.com/2014/12/11/chicago-and-new-york-officials-look-to-build-uber-like-apps-for-taxis/?_r=1