Under different circumstances saying “I got a ride home with a pink mustache” would provoke great concern from friends. In Seattle’s it’s becoming normal, though that doesn’t mean the ride is legal – yet.
I chair the Seattle City Council’s Taxi, Limousine and For Hire Regulations Committee. Over the past year my colleagues and I have wrestled with the inheritance of a heavily regulated taxi system under attack from upstart disrupters who’ve recognized a market demand for a slick smartphone interface and a dependable ride.
As is the case with many startups, the disrupters (Uber, Lyft, and Sidecar in this area) dash in as swashbucklers, seizing market share, daring enforcers to act, and pressing to bend the regulatory world to their demands.
There’s a lot to admire about that model. Until you start to unpack the problems a bit.
First, taking people from Point A to Point B for compensation beyond the “let’s split the gas” limit of 56 cents per mile, set by the IRS, is not a “ride share.” It’s called a “for hire” ride under state law in Washington. That means you’re supposed to live under the “for hire” rules requiring additional licensing of the driver and car, and commercial-level insurance just in case another car somehow ends up under, over or through the one you’re in.
I get a lot of email from Uber and Lyft fans begging that we unchain the free market and reward innovation. However, a lot of this is less about rewarding innovation and more about measuring government’s role ensuring the basics of safety, consumer protection and ride availability. There’s a fourth area I’ll add in a moment – after we quickly compare the warring parties.
If you drive a taxi or a flat-rate car (in Seattle these are the two-color cars), you go through a multiple-day course to get a personal “for hire” driver’s license. You have dispatch rules and rules about where you can and can’t pick up rides. You live by the meter rate (filed with the City) with transparency and consistency in fares. You pay handsomely for insurance with limits and coverage areas way beyond state minimums for personal insurance. You also pay into State L&I insurance.
If you own one of the 650 cabs that can operate in the city of Seattle, you shelled out for a vehicle license (that little metal plate bolted to the trunk). The City hasn’t issued a new license in 20 years, so you probably paid more than $150,000 for yours in the gray market. You purchased and had painted a Crown Vic or a Prius, most likely. You can’t operate unless you’re part of an association (of at least 15 cabs), so you pay association fees. You pay for installation of a small camera on the dash because that’s required for safety.
If you don’t own, but instead lease, you pay a dispatch fee each shift and a lease amount on top of your insurance and L&I costs. As a driver, after all your costs, you might make as little as $100 for your 12-hour shift. You might make more if you’re in the company with the SeaTac Airport contract, but only Yellow Cab can pick up at the airport.
You’re not supposed to decline a ride unless you feel unsafe, and then you need to report that to dispatch. (Anecdotally and through “secret shopper” work, we know cabs do decline some short, less profitable trips and that paying with a credit card can feel like you offered the driver something offensive.)
OK, let’s shift and say you sign up with Lyft or UberX. You drive your own, newish model car (you purchased it, but no one makes you paint it yellow or orange). The companies run a background check and they take a look at your car. No driver training/safety course, no deep check of the car’s condition. No camera on the dash, but the app shows pics of the driver and passenger to each other.
You pay your smartphone data package. The companies keep 20 percent of what you make. And you might make a little or a lot, the latter especially if you drive during a high demand time when “surge pricing” is in effect. Your passengers are a little ticked off at times about the surge price, but that’s the not-so-invisible hand of the market showing up on their smartphone.
You carry your own personal insurance and the companies say they’ll cover any “incident” with a $1 million umbrella policy, however recent suits in California have highlighted a gap in this structure.
That all sounds great until you learn no one covers you while you’re trolling the Pike/Pine box on Saturday at 1 a.m. and somehow end up with your fender in another car’s fender. Personal insurer? Probably not since you were “live” on the system waiting to be chosen for a ride and the insurer will construe that as commercial activity, a no-no under virtually all personal policies. Uber or Lyft? So far, both have said they won’t cover you until you’ve been selected for a ride.
In our committee work we’ve spoken with riders, drivers, owners, hotels, hospitals, bars and more, and we hired a team to analyze the local market for rides. We got (and get at every committee session) an earful about dissatisfaction with taxi dispatch and driver courtesy. We hear (mostly) raves from users about the new kids in town. We hear cries of “Foul!” from drivers depending upon their perspective.
I said I would add a fourth area where we’re measuring government’s need to be involved. What about guaranteeing ride availability at a “reasonable price” coupled with the ability of the driver to earn a living? Local governments all over the country have done this for years. Before you say, “No! We want apps and the free market!” think about the people taking you from Point A to Point B for money.
Acknowledging these are generalizations, taxi owners in this area tend to be immigrant East Indians who have invested their savings in owning one or many vehicle licenses. Flat-rate owners tend to be East African immigrants who have pooled money together. Taxi drivers and flat-rate for-hire drivers tend to be East Africans. The bankrollers of Lyft and UberX tend to be venture capitalists (think Google and Jeff Bezos), while the Lyft and UberX drivers might be East Africans “migrating” away from taxi work for more flexibility; people of any race or ethnicity who lost a job in the recession; or part-timers seeking to bulk up income.
Protect the low-income person? Protect the immigrant? Sure, just tell me which one.
This leads to the idea of caps, the big topic between now and the committee vote February 27. Caps have been part of taxi regulations since Columbia Mammoths roamed South Lake Union. The idea seems to be that if you set the right number of vehicles, everyone gets a ride when they need it and the drivers have enough work to make a decent living.
People who oppose caps on the number of UberX or Lyft cars over the next two years say it will “kill” the companies; that caps kill innovation. The model is predicated on the idea that rides are virtually instantaneous and that there’s always a tide of fresh drivers coming onto the system to replace anyone logging off – and that The Market determines if you make enough money or not.
I support a temporary cap and I need the companies’ help figuring out the right cap. No, I don’t want to “temporarily” kill innovation, but I do want to buy a year for the taxi world to adapt – and they must adapt quickly. UberX and Lyft have changed the game. They’ve elevated the bar for customer service. That’s good for all of us.
Let’s recognize that as far as taxis go, we have the system we apparently wanted. Over decades we regulated taxis to ensure you know what you’ll pay; that the drivers have gone through a standardized training; and the cars have gone through a safety check by a mechanic. We required the cameras after assaults on drivers. Heck, until we vote at Full Council in March, we even regulate what color shirt taxi drivers can wear.
We need to strip down our regulations on taxis and start from scratch focusing on safety and consumer protection. We need more mobility choices for all in our city – and they need to be accessible and safe for all.