Un-Free Markets: New York City doesn’t like ride-sharing services. That’s been clear from the start. But recently it’s started taking action on that disdain, imposing burdensome economic restrictions on companies like Uber, Lyft and other ride-sharing companies. New Yorkers will pay dearly for it.
New York’s Taxi and Limousine Commission (TLC) , exercising its extraordinary regulatory power, issued new “rules” this week that would mandate the Uber, Lyft and others pay their drivers a minimum of $17.22 an hour after expenses. That’s an actual per-hour hike to $27.86 an hour.
“About 96% of the city’s 80,000 drivers who work for ride-sharing services would get a raise,” USA Today noted, citing the commission’s own estimates.
We have no reason to doubt that’s correct. It’s a de facto miniumum wage imposed on ride-sharing services. The sole reason for the TLC to do this is to protect taxi and limo drivers from powerful, new competition. It’s an attempt to stifle innovation by imposing what amounts to a sweeping new tax on transportation in New York.
New York under socialist Mayor Bill De Blasio has engaged in what amounts to a war against ride-sharing services. Taxi drivers are suddenly finding their back seats empty, as more convenient, cost-efficient ride-sharing services undercut their prices.
Ride-Sharing: Wrecking The Model
Taxi medallions, the tradeable permits to operate taxis in Manhattan, cost as much as $1.3 million as recently as 2013. Today, they go for as little as $160,000, and even that might not be the bottom for the market.
The TLC’s Chair Meera Joshi made clear that the commission holds average New Yorkers in contempt: “Companies are saying paying drivers fairly will cause longer wait times and higher prices. But I believe all New Yorkers are willing to pay a little more and wait a little longer so the people transporting them are able to proved for themselves and their families.”
Joshi said ride-sharing drivers will take home about $10,000 more a year on average.
So Joshi’s whole rationale for denying people cheap, convenient transportation is that she “believes” New Yorkers are “willing” to pay more and wait longer? Actually, they voted on it already, with their dollars. They voted to have cheap, easy ride-sharing opportunities over taxis.
She’s doing no one a favor. New Yorkers have just been hit with a major new transportation tax imposed by a non-elected bureaucrat and endorsed by their own mayor.
Paying Up For Rides
With the New York subway under major repair, trips will be longer, there will be fewer choices, and costs will rise. Because inevitably, when the cost of a ride goes up, fewer people make use of ride-sharing services.
This has been brewing for some time. Last August, New York’s city council approved letting TLC set pay standards. At the same time, TLC imposed a limit on new licenses for ride-sharing services.
In essence, they’re destroying the ride-sharing app-based business model in New York because it’s been too successful. As recently as January of 2015, Vox.com reports, the four largest ride-sharing apps had 12,500 cars registered as working for them in New York. By July of 2018, that number had soared to 78,000.
It’s been a major boon for New Yorkers who are fed up with the poorly-run and foul-smelling New York subway. They also don’t like the high prices and often rude service of taxis. That’s why ride-sharing has been bad for taxis. And why TLC moved to wreck the ride-sharing business model.
“The TLC’s implementation of the City Council’s legislation to increase driver earnings will lead to higher than necessary fare increases for riders while missing an opportunity to deal with congestion in Manhattan’s central business district,” said Uber spokesman Jason Post. “Companies use incentives and bonuses as part of driver earnings to ensure reliability citywide by providing a monetary incentive to drivers to complete trips in areas that need them the most.”
Sweet Smell Of Success: Taxes
Leftists hate success, but like milking successful companies for taxes. That’s what the city’s latest assault on Uber and Lyft represents.
New York’s transportation grid, already sclerotic and falling apart, desperately needs innovation and lower prices. Uber, Lyft and other app-driven ride-hailing services were providing that. But now, with increasing levels of taxes and regulations imposed on them, they’ll more and more come to resemble the tax companies they should be replacing.