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Rideshare Rundown

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.

Sofia Liu was struck by a vehicle operated by an Uber driver who was using the Uber smartphone app but was not making a trip for the company at the time of the accident.

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.

 

About The Author

Seattle City Council member Sally Clark chairs the Council’s Select Committee on Taxis, For-Hires and Limousine Regulations. Her partner, Liz Ford, is a proud graduate of Northeastern Law. Connect with Councilwoman Clark’s blog here

 

 

11 comments

  1. Councilwoman Clark,

    Do you also regulate the taxi drivers staying off their cell phone, yelling loudly at someone on the other end while they drive? No. You apparently don’t, because every time — EVERY SINGLE TIME — I’ve taken a taxi in Seattle, I’ve had a driver talking on the phone.

    Do you also regulate whether taxis in Seattle stringently follow traffic laws? You apparently don’t because I constantly see taxis running red lights, turning without signaling, cutting drivers (myself included) off, and today — my favorite — stalling traffic on a three-lane one-way while he waited at an intersection to make a right turn in the left-most lane, crossing the other two lanes so he could make the turn, almost getting T-boned with a passenger in the back.

    With Uberx and Lyft — the companies you are so concerned about protecting society from — passengers can rate their drivers on when these safety issues come up. They report the safety problem to the company when the ride is completed and the company deals with the drivers. Anyone presenting a legitimate safety problem will be taken off the systems.

    I can’t complain to my taxi driver because he’s too busy on the phone, too busy yelling at me because I want to pay with a credit card, or he’s not even the person whose identification is posted in the car because sometimes multiple people share the same vehicle.

    Councilwoman Clark, your draconian desire to cap Uberx and Lyft is nothing but protectionism for the taxi industry which is outdated, has failed to adapt (you acknowledge all of this) and now should get a government protected reprieve to get up to speed?

    That’s not how it works in the new world. I can’t wait for someone to disrupt the model of Sally Clark being a member of the city council. Your lack of leadership and forward thinking is not becoming of what Seattle deserves. You have failed the city on this matter and when your time for re-election comes up, I can’t wait to devote every ounce of energy I have to supporting your opponent.

    • yourestalkingme (@yourestalkingme)

      Pfff Tyler Riggs…stop with the mantra that council members are protecting taxi interests. They’re not getting paid by the taxi lobbyists, if they were…then you’d be seeing these illegal taxi’s facing stricter proposed regulations. If the free market sorted this out, you’d see the death of taxis, no consumer protection and you’ll be paying 20X surge pricing all the time because the “free market will sort it out”. Yea, UberX and Lyft aren’t going to keep rates “affordable” when there’s no competition, what would motivate them to? To provide safe, convenient transportation for you and the rest? No way, that’s not their interest at all. Cash rules everything around me…

      Also, your claim that taxi drivers are cutting people off, running red lights, etc…. I agree, they are pretty bad drivers. BUT… Seattle drivers are also absolutely horrible, tonight I saw a UberX driver cross two lanes to turn onto a one way street, cutting off the driver in front of me almost causing an accident. When I pulled alongside of him, I could see the cell phone with the Uber app open on his dashboard and the driver was talking on his phone. He didn’t have a bluetooth earpiece or a hands free device, he was holding his nice gold iphone up to his ear and talking away. Taxi drivers aren’t the only terrible drivers in this city, 99% of Seattle drivers are just as bad. Once the taxi drivers have lost their jobs, they’ll start driving for UberX and Lyft, because they won’t have a choice…same problem, different name and packaging. Enjoy it.

    • I don’t think you need to be a free-market libertarian to think this cap thing stinks.

      I think the simple point that cab companies have had long enough to improve their miserable service is spot on. What will they do in a year that they couldn’t have already done? Have you *tried* to use Yellow Cab dispatch? It’s a case study in surliness. Taxis don’t want to satisfy customers, they just want the revenue. Why is this an industry worthy of regulatory protection? Show me what they’ve done in the last six months to improve service and, maybe, I’ll reconsider.

      You know what I want to see from taxis? Customer service. I want to see something like The Knowledge tests like they have in London. I want taxi drivers to obey traffic laws and rules of the road. I want them to keep their cars clean and reasonably odor-free. I want them to accept credit cards without duplicity or excuses. I want to know how long it will be before they arrive and I want them to keep their promises. In short, I want taxis to deliver the same level of service that Uber and Lyft provide today. I want them to deliver a level of service they *should* have been delivering long before these upstarts came along. Until then I say No to the cap and will oppose the reelection of any CMs that support it.

      • I am disgusted by the city’s decision. This is one of the services (UBER in particular) that is making this city more friendly, manageable and competitive and frankly has changed my life as I have knee problems and cant always walk to work. You will force me to drive versus take UBER as I will not take yellow cab due to ongoing customer service issues which are horrendous.

        I cannot believe our city would go this direction. UBER is a beloved service and their workers amazing and I personally will be impacted greatlly by this decision and it will be another reason I will want to move OUT of Seattle.

        Shame on the city for not being progressive and recognizing a service that is greatly improving the living environment in the city.

        Customers should be able to decide where they want to spend their money and place their trust!

        I have been using UBER daily for over a year and it has been a dream – WHY would you take this away!

        Shame on the City of Seattle. Sounds like personal interest to me. You have bigger issues – go spend your resources elsewhere. This is ridiculous.

    • I think that these shared ride companies are a hype and that they will die out. They are not real companies. Real companies own and take pride in their service to their customers. These companies are just Aps!

      Sorry, although they are a great concept. I think that you will see many negative stories in the coming year as they lower the bar for drivers and cars that they accept to compete and choke out the taxi industry.

  2. “People who oppose caps on the number of UberX or Lyft cars over the next two years say it will “kill” the companies;”

    Why is that? These companies have a very low cost of operation. They are not paying for dispatchers or anyone to answer the phone. Their apps take care of all that.

    What this complaint really boils down to is that the TNCs would not be making the kind of quick easy money that their big VC investors feel that they are entitled to receive.

    The TNC investors are not interested in dirtying their hands with the transportation side of the cab business. They see themselves as a tech companies that run apps that automatically suck 20% of cab fares without any messy liabilities, such as paychecks or insurance on their vehicles.

    • Yup, the VCs who are behind TNCs are greedy jerks. Do you suppose, though, that cab companies are beacons of civic charity? That cab companies share a higher percentage of their profits than these disruptors? Evidence would suggest not.

      As to “safety concerns” you’re simply passing along cab industry propaganda. Uber drivers are licensed limo drivers; they have the same liability requirements as their cab driver counterparts. Lyft drivers have to have insurance and are vetted before being signed up. This notion that TNCs are hiring uninsured and reckless drivers at pennies on the dollar is borderline slander.

      How about this? Let cab drivers register with Uber, Lyft, and other TNCs. Cab drivers are treated like independent contractors so let them act like it. I’m sympathetic to the financial needs of people who drive us from point A to point B. But none of us should give a damn about the bigger cab industry. By allowing cab drivers — and not the companies — to federate with TNCs consumers would have choice: Uber limo, cab, or community driver. Better still, cab drivers have access to a whole new (and modern) pool of customers.

      Given that capitalists profit from the labor of others then let’s come up with mechanisms that provide more opportunity to those who choose to drive. TNC caps block hard-working folks from earning a living while, at the same time, protect a failed industry from customer accountability.

  3. I appreciate the insightful, well researched info in this post. Thank you!

  4. Hi, Councilmember
    Well observed. Keep up your good work.
    Thanks

  5. I appreciate nearly all of what you are setting out to do. Ensuring that Lyft and like companies emphasize safety is paramount. I would add that there are plenty of incidents of Seattle cab drivers striking other vehicles and pedestrians so you’re being a bit misleading by posting the picture of a girl stuck by an off-duty Uber driver.

    All that being said the cab industry does not need another year to figure it out. They’ve had quite some time to respond and their most visible action has been to plead for regulatory intervention. Further, taxi service in Seattle is terrible. Credit cards are often refused, drivers are lost or distracted by GPS units, and dispatch service is downright obnoxious. Had the taxi industry been serving their customers better I suspect these new competitors would not be so disruptive.

    For me the cap is one thing too far. I seriously question those who support it and do consider it a watershed moment that I will not only remember but remind others when election time comes around.

  6. I appreciate your time spent researching and sharing this info with us. Thank you!

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