New York City Flexes Again, Extending Cap on Uber and Lyft
In many ways, New York stands apart from other American cities. It’s got yellow cabs and Broadway and these goofy things called boroughs. It has a sprawling subway system. Another way the city differs: New York regulates ride hailing more thoroughly. The city licenses Uber and Lyft vehicles, and collects information on where they drive. (In places like Los Angeles, Boston, and Austin, the state, not the city, regulates.) That’s turned New York into the country’s premier ride-hail regulation lab—often to the ride-hail companies’ chagrin.
New York is again flexing its control. On Thursday, Mayor Bill de Blasio announced the city would seek to maintain its almost year-old freeze on “for-hire vehicle” registrations, a category that includes black cars, livery cabs, limos, and vehicles hailed by app. About 80,000 of those vehicles—two-thirds of them—are operated by drivers working for ride-hail companies like Uber, Lyft, Via, and Juno. (There are 13,500 traditional taxicabs in the city.) De Blasio also said New York would force the ride-hail companies to cut down on how much time their drivers spend “cruising”—that is, waiting for their next rides, or driving to their next passengers.
Officials in New York and elsewhere say the ride-hail business model depends on crowding the streets with as many drivers as possible, keeping both wait times and driver wages low. That’s not fair to workers, and it’s not fair to the other New Yorkers who get stuck in traffic, de Blasio said Thursday.
Other cities have observed similar phenomena. A recent study blames ride hailing for the bulk of congestion increases in San Francisco between 2010 and 2016, though the study didn’t account for other factors such as the growth of home delivery services.
According to a report released this week by New York’s Taxi and Limousine Commission, 29 percent of all Manhattan traffic is now for-hire vehicles, and those cars spend 41 percent of their time empty (and not making their drivers money) as they pick up or wait for fares. (The report assumes that cars spend a lot of this downtime double-parked or circling the block, which would also affect traffic.) New York would like to force the companies to reduce such “cruising” to 31 percent by August 2020.
As for how New York would practically limit cruising—that’s to be determined. The city is slated to post a more specific proposal next week. Both of these new ride-hail regulations will be subject to public hearings, and then a vote by the nine-member Taxi and Limousine Commission.
In a statement, Uber spokesperson Harry Hartfield said extending the cap would “create another medallion system,” a reference to New York’s 80-year-old system requiring a taxi owner to purchase a special license to operate in the city. The company suggests that the owners of licensed for-hire vehicles might sell or lease those licenses, and that prospective Uber drivers might have to rent more expensive licensed cars instead of using their own. In other words: Uber says the city is re-creating the system that ride-hail so successfully “disrupted”—and that the city allowed it to disrupt.
At Lyft, a spokesperson said in a statement that congestion pricing would be a better solution to New York’s traffic issues. The New York State legislature passed a first-in-the-country congestion charge plan for the busiest parts of Manhattan in March. But it’s not yet clear how the new road charge might apply to ride-hail vehicles. Via, which operates a fleet of minivans, called the cap on for-hire vehicles “counterproductive,” but the company said it supports rules to cut down on cruising.
In the past year, New York has implemented other rules that affect Uber and Lyft. It added a $2.75 surcharge to any ride-hail trip that begins, passes through, or ends below Manhattan’s 96th Street, the most congested part of the city. (Taxis got an extra $2.50 fee.) The city also passed a law requiring ride-hail companies pay drivers a minimum wage of at least $17.22 per hour, which has netted them an estimated $172 million extra in pay since that rule went into effect in February. Lyft and another local ride-hail company, Juno, argued the city’s rationale for its wage floor was biased towards Uber, and sued. A judge dismissed that case last month.
There’s a reason ride-hail companies are so prickly about the rules in New York. It’s one of their most important global markets. Uber’s public S-1 filing shows New York is one of its top five markets globally, which are together responsible for nearly a quarter of all its bookings. As some guy once said: “If I can make it there, I'll make it anywhere.” Ride-hail companies hope that goes for their business model, too.