Opinion: Regulations Imminent to Correct Uber, Rideshare Wrongdoings
by Amit Srivastava
May 15, 2019
San Francisco: It has become fashionable to describe rideshare companies like Uber as disrupting the taxi industry. In reality, however, these companies, which offer the same services as the taxi industry, have destroyed the taxi industry.
Driving a cab in a major metropolitan city in the US used to be a sure way for many, including immigrants, to find a foot in the American economy, and raise a family in cities such as New York and San Francisco.
Today, in every major metropolitan city in the US, many taxi drivers that aspired to purchase a taxi license, or medallion, are left holding on to large loans that they are unable to pay off because they can hardly make a living wage anymore, courtesy Uber and Lyft. Some have even been driven to suicide.
Rideshare companies have become commonplace in the US and elsewhere and they have done so by running roughshod of the rules and regulations that govern the taxi industry. The result has been disastrous, both for the taxi industry which is unable to compete with the lawless rideshare companies, as well as the current crop of Uber and Lyft drivers who are barely making minimum wage, if that, in most markets, globally.
Uber, whose early investors are now being rewarded by Wall Street as they go public, started out as UberCab, and now insists, rather disingenuously, that they are not a cab company, that they are not in the transportation business.
Instead, they prefer to be categorized as a tech company, and consequently, none of the rules that applied to the taxi industry (such as minimum fare, fare per mile and minute, stringent background checks, etc) apply to it. (In December 2017, the European Court of Justice (ECJ), Europe’s top court, decided that Uber is a transportation service, and not a tech company.)
Such an artificial and false categorization, also found elsewhere in the rideshare business, cannot remain permanent, and investors in rideshare industries must ready themselves for major corrections which will come in the form of government regulations that will correctly regulate the rideshare industry to put it in its rightful place – as a taxi industry.
Rideshare drivers across the world, from San Francisco and New York, to Johannesburg to Mumbai and Nairobi, have been regularly protesting poverty wages of the rideshare industry, and the discontent is growing.
It is even more alarming that rideshare companies that have never ever made any profits, seek to further cut costs by reducing the drivers’ take, a move that Uber even admits will increase “driver dissatisfaction.”
If it is to survive, it is inevitable that rideshare companies ensure a living wage for its drivers, whether on its own volition, or through government action, as the city of New York has already done.
In states such as California, there is a serious effort underway to classify gig workers such as rideshare drivers as employees, and not independent contractors. If successful, rideshare companies will not only have to ensure minimum wage, but also provide benefits such as health care, worker’s compensation and overtime pay.
Drivers do the hard work for rideshare companies, and this is the least they deserve. Drivers provide the cars, do all the driving, take care of all the car’s maintenance, pay for all the fuel, deal with unruly passengers at times, and are left to fend for themselves in the case of work-related injuries.
Adding insult to injury, drivers are at the whim of passenger ratings, and a low rating can deactivate the driver from ever driving again – with no explanation or due process whatsoever.
By deliberately classifying drivers as independent contractors, rideshare companies are able to shirk major responsibilities and shave significant costs, estimated by some as 40%, of doing business. Misclassifying gig workers as independent contractors is a growing trend among gig companies globally.
There was rhyme and reason behind the regulations governing taxis, and one of them placed a limit on the number of taxis on the road. The reasons for having a limit on the number of taxis on the road are well established in history. It allows drivers to make a living wage by removing cut-throat, unregulated competition conditions where a free-for-all environment brings wages down for all.
Put simply, having too many cabs on the road at the same time means that drivers do not get enough business to make a living.
Major metropolitan cities in the US are inundated with rideshare cars at every corner, and it is particularly intense during rush hours in dense areas such as the business districts.
The number of rideshare cars on the roads at any given time must be limited.
Such a limit will not only allow for drivers to make a living wage but also ease the traffic congestion that rideshare industry contribute to significantly.
Rideshare companies made a lot of promises of their benefits to society, including the large amounts of money one could make as a driver, which turned out to be false. Uber was fined by the Federal Trade Commission for misleading “prospective drivers with exaggerated earning claims grandiose claims of what drivers could make in New York and San Francisco.”
Although rideshare companies had suggested that their arrival would mean less cars and congestion on the streets as more and more people would ditch their cars, quite the opposite has happened.
Not only has congestion increased due to rideshare cars, but people are abandoning public transport in favor of rideshare cars, a nightmare scenario for our world as we face the consequences of climate change.
According to Bruce Schaller, a well-recognized transportation authority, 60% of rideshare “users in large, dense cities would have taken public transportation, walked, biked or not made the trip” if rideshare was not available.
The advent of rideshare companies and the increased pollution and greenhouse gases, along with the abandonment of public transit in favor of rideshare cars does not bode well for our environment, our climate. If anything, it is antithetical to it.
Uber, on the other hand, makes no secret of its desire to replace public transit, stating that they plan to “replace personal vehicle ownership and usage and public transportation one use case at a time” in their prospectus for going public.
It is only a matter of time before rideshare companies will face government regulations – around the world – to protect society from the negative externalities of the rideshare business.
A living wage and basic social security benefits for its drivers, an environment with clean air and less greenhouse gases, roads free of congestion and a strengthened public transit system – that is the path the rideshare companies will be forced to correct to.
Amit Srivastava (@amsrivastava) is a San Francisco based corporate accountability campaigner who has also driven with Uber.
Uber Advertisement at Delhi, India Bus Stop Credit: India Resource Center
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