Something tells me there's a lot more Surge Pricing in our futures. And just when you thought the modifiers were high enough, or that surge hours already have become any-waking-hours...
Rather than the bait and switch, why not just raise the price rather than feign at lowering it? Kill the lie that the Surge Pricing brand has become. Just be honest.
This must depend on the city or your typical usage. I'm not a daily Uber user here in NYC (I commute by subway as most sane people do), but I'm not an infrequent user either (particularly on weekends or evenings with my family). I haven't paid surge since February 2014 (apparently on Valentine's Day), and I can't remember the last time I saw surge pricing, although it looks like twice I paid more and used regular Uber instead of UberX because there weren't enough UberXs available and I was in a hurry for appointments.
I don't see any reason to see surge pricing as "bait and switch," although I'd be open to seeing some actual data that backs this up.
I don't see it as bait-and-switch, either. Uber makes it clear when the ride you're considering will be subject to surge pricing, and it's very easy to abandon the reservation at that stage. I can't think of a time (in NYC) that I've seen surge pricing and been surprised, it's always been during inclement weather or peak times (e.g., Valentine's Day, New Year's Eve).
Yeah, I've seen what happens to taxis when there is no surge pricing. The dispatchers don't even pick up the phone if you call for a pickup, because there's enough business that they don't want to waste a taxi's time driving to pick you up. Not exactly an improvement.
The types of Uber cars available varies depending on the city. If available, choose BLACK CAR if you want a better car. In NYC we have uberT, uberX and BLACK CAR (and sometimes RUSH, for deliveries). Inside those major categories are subs; uberX has uberX, uberXL, CAR SEAT. BLACK CAR has BLACK CAR and SUV.
I think people just want a decent car, not a luxury car. A $20k car from the last five years is perfectly sufficient. Uber Black is overkill for them, and the price is around 2.5x of UberX.
Also, in a lot of cases, I find that the customer gets upgraded anyway (at least in off-peak times).
Many, many times I have ordered a regular "black car", and been picked up by a big SUV (Escalade or Suburban). Likewise, a lot of times I have ordered Uber X and been picked up by a luxury car and sometimes an SUV (Audi Q5, etc).
True--while most Uber vehicles are black, it's not a requirement according to a few drivers I've queried. The BLACK category indicates a luxury vehicle for which a BMW 5 would certainly qualify.
That's a good one. Remember UberCHOPPER (just USD 3,000 from Manhattan to the Hamptons) with Blade? They had a promotion to have a smart AC unit delivered for a flat fee during the summer 1.5 years ago, if I recall.
When gasoline is down 30% or more, those savings should go towards growth and competitive pricing. Uber seems to understand this, but the drivers complain. My how things always seem to come full circle -- before we know it, Ubers will be rude, yapping on their phone in unknown languages, and the cars will have torn upholstery and reek of incense.
> before we know it, Ubers will be rude, yapping on their phone in unknown languages, and the cars will have torn upholstery and reek of incense
I understand that you mean to say that you expect the quality of Uber rides to drop, but can you do so in a way that doesn't draw upon negative stereotypes of other ethnicities?
If "unknown languages" and imagery of incense isn't racially coded I'm not sure what is. The statement was plainly racist, whether it was intentional or not.
My question is what are they talking about on the phone. I can't imagine sitting on the phone talking to my friends or family for 8+ hours a day, everyday, which is what seems to be happening.
I had a parking lot attendant at work who for years was always on his phone when I arrived. One day I asked him who he always talks to. He says he has another business besides the parking lot. So maybe at least some of these cabs are having business calls as well. If you can hustle to be a cab driver, you can hustle in other ways as well at the same time.
It's other cab drivers for the most part, sometimes friends and family. Driving around all day is extremely boring - as much as cell phone use sucks in general while driving, they do what they do to stay sane.
Besides the obvious boredom-killing, I've also heard of it being used as a safety feature. It wasn't that long ago that drivers would be robbed or assaulted (heck, an UberX driver here was just robbed a few weeks ago).
There is nothing that prevents Uber/Lyft from being a race to the bottom re driver revenue. I think that should've been obvious to anyone looking at the model from the beginning.
One of the first questions is to ask about a business is whether there are any barriers to competition. In the case of Uber or Lyft, they have network effects but the drivers themselves have no barrier.
Years ago some Subway franchisees sued Subway because they were selling franchises right across the street from existing franchises. Same issue. There will always be more drivers, Uber/Lyft control the rate, so no limit to how far drivers can be squeezed.
But one of the biggest complaints about taxis is the artificial scarcity of medallions driving up prices. How would Uber creating an artificial scarcity of drivers (to drive up prices) be any different?
I once talked to a taxi driver (who didn't own the medallion), who said he paid the owner $1,500 per month to drive for him. Plus the cost of his car, gas, and high insurance. He had to earn $3,000 per month just to break even.
Taxi drivers never made a lot of money, even in the old system. But at least the system protected them to a degree by limiting competition. Now there is no protection. It's a free market. Anyone with a Toyota Yaris can fire up Uber-X and compete during the busy couple of hours of the night. It will be a race to the bottom for driver incomes, for sure.
Except in the Uber/Lyft scenario, we see no $1500/month deadweight loss going to an economic rent.
There's also no reason to presuppose that personal transportation SHOULD provide a livelihood. The goal of companies like Uber/Lyft is to take advantage of the currently wasted extra carrying capacity in personal vehicles. There's no reason to expect a priori that the value of extra capacity is enough to provide an income.
The goal of these companies is to provide cheaper transportation to those without cars, not to provide a living for those with cars. If less money overall is spent on transportation (which is >90% means to an end, excepting joyriding and competition), which is the case when currently excess capacity is utilized, and consumers also spend less (and consequently capital tied up in personal vehicles), then more capital and income is available for other goods and services.
Obviously, any major paradigm shift in the provision of a good or service will cause some level of upset for those accustomed to the current paradigm, but that does not make the shift a negative one. Further, attempts to ease the transition only draw out the period where we operate in a lossy manner.
In another manner of speaking, when I heard of Uber and Lyft, I did not think that I could quit my day job since I have a car, nor would I have decided to go buy a car if I didn't have one for the purpose of earning income. I did think that they could be a valuable way to defray a portion of my already sunk cost of owning a vehicle. If I hadn't owned a vehicle, these services may have lowered the marginal cost of acquiring a vehicle enough that I could now reasonably afford one.
In both of the above lines of reasoning (currently owning or deciding to purchase), they are not a means of supporting myself, but a means of sharing some of my costs with others who are willing to pay. A car still costs money, but by renting space in it, I can lower the cost.
Think of it more akin to AirBnB - if I own an apartment with an extra room, I don't expect to pay my whole rent with AirBnB-ing out the extra room, but I certainly expect to pay part of my rent out of it. The only difference is that Uber/Lyft rent room in a car.
"no reason to presuppose that personal transportation SHOULD provide a livelihood" This.
It's not Uber's goal to make it so you can live off of Uber. It's to provide people with extra money the side. Does this hurt the livelihood of regular taxi company drivers in the long run? Of coarse. But with so many cars on the road, maybe it's an outdated occupation.
This article[0] (available with free registration) is a very interesting read on the history of jitney services in the US, and the fall of this massively popular form of ride-sharing.
It is a useful case study in regulation used anti-competitively, and the misaligned interests between consumers (those wanting cheap convenient transport) and the incumbent services backed by municipalities (those wanting monopoly rents and the tax income from it). These arguments hold parallels to many infrastructure and service provider debates we see today (heck we even come across the term common carrier in the article).
There were, of course, valid objections at the time, and there are today. Many of the same ones are repeated in the article.
The most interesting part to me, though, is the several page exposition (295-303) on the characteristics of jitney transportation. It is clear that in its natural form, ride-sharing does not lend itself to long-term full time employment. Some anecdotes from the article are a doctor who keeps a car for house calls allowing his son to use the car (sunk cost) as a jitney; the commuters who post their destination and only pick up passengers on their way to/from work; and those individuals who supplement their income with several hours a week of jitney work.
This article supports my original comment (the grandparent) and the parent here that Uber/Lyft should not be viewed as traditional employers.
I would alter the quote below to indicate that taxi driver as an occupation was never an occupation until regulation in the interest of a more lucrative (for the incumbent firms and for the municipalities they operated in) business forced an artificial constriction in the market for public transport.
>But with so many cars on the road, maybe it's an outdated occupation
> There's also no reason to presuppose that personal transportation SHOULD provide a livelihood. The goal of companies like Uber/Lyft is to take advantage of the currently wasted extra carrying capacity in personal vehicles. There's no reason to expect a priori that the value of extra capacity is enough to provide an income.
I don't buy it. Uber flies the flag of "the sharing economy" but their requirements for the car and the drivers make it look way more like a professional car service than an opportunity to share rides if you have a car.
I don't have a lot of time right now, so couldn't find an explicit listing on Uber's site of their driver requirements (I don't have the app and don't want to register - so I imagine it's behind this page[0]), but here's a third party listing of requirements for non-commercial drivers[1]. There are also commercial driver versions of Uber services, which I imagine would have more stringent requirements.
Please let me know if [1] is not an accurate representation of requirements for non-commercial drivers.
We may be focusing on different segments. To me, the commercial version is just a taxi-hailing service with a custom pricing model. This is not too innovative - just a convenience application on top of existing services.
What I consider the innovative portion, and the (I will admit unclear in my prior posts) focus of my argument, is the non-commercial service.
I don't disagree with you. There's no inherent "right" to earn a living as a taxi driver. A driver chooses to enter that "market" with their service, knowing how it works in advance.
But the $1500 rent real taxis pay to medallion holders is now going to Uber. This disruption really just replaced one middleman with another and switched to a per-ride model instead of flat rate monthly.
The increased insurance cost (I heard it was double normal insurance rates) will go away, since most people will not tell their insurance companies they are using their car for business. That means insurance rates will go up for all of us over time as accident and claim rates go up.
All I'm saying, I guess, is it will clearly lead to a reduction in driver incomes overall. I can't see how this business model can lead to them making more. The average wage will be below minimum wage, because how can it not be?
First, I'm going to use the term "taxi service" below and I'd like to clarify that I mean this in a very general sense - paid transportation in vehicle classes that would normally be used for private transport, whether provided by a firm or individual, and facilitated by any means. I don't think we disagree based on the tone of your post, but this is for other potential readers. Please let me know if you do disagree.
In this case taxi service need not be supplied by full-time taxi drivers, which is a central point to most of my thinking on this matter. Taxi service can be provided in any quantity (subject to the limits of time and space, obviously) by any individual with a car. A person may provide taxi service once in their life or dozens of times a day.
Second, I will refer to Uber below for simplicity, but I intend my argument to apply to all similar services that exist (Lyft so far as I know) and may come into existence as competitors.
In the status quo the number of medallions is a rough approximation of the limit of taxi services. I think we can agree that the current number of medallions currently limits the supply of taxi services (the supply curve is shifting toward the origin because cost of entry is higher than in the complete absence of medallions or equivalents), and therefore raises the equilibrium price of taxi services. Currently the medallion represents an economic rent (regardless of who owns the medallion a rent is being collected).
In the future state (this is a very general future state - anything where the current limit imposed by medallions is weakened or removed entirely and at least some of the rent that exists in the status quo is transformed into revenue for Uber) the situation is improved. The revenue collected by Uber is not an economic rent, but rather a transactional cost.
First, the cost structure is different - a transactional cost is marginal, whereas the medallion rent (this is specific to a medallion, not all economic rents in general) is either not marginal or marginal at a much coarser granularity. If I rent a medallion on a monthly basis, then I am deciding whether it is worth it to me to drive a taxi for another month. With a transactional cost, I decide whether it is worth it to me to provide one more trip of taxi service. This allows someone who might just pick up people on their normal commute (this is just an example that I find easy to discuss, not the entire basis of my argument) to provide taxi service. Right here we see an increase in supply of taxi services. Our first order analysis should lead us to expect that this increased supply should lead to downward pressure on the cost of taxi service.
Second, the transactional cost is incurred by a competitive firm (currently one competitor in Lyft (that I know of), but even nonexistent competitors can provide pressure[0]). If a competitor can provide a similar service to Uber (matching willing drivers to willing passengers) at a lower cost, then the transactional cost will be driven downward and since there is clear competition in this case among drivers, the cost to end users will ultimately be driven down[1]. In this case, even if we accept your equivalence of Uber's profits and the current economic rent of medallions (note: I do not accept this equivalence, which I think the rest of my post makes clear) the $/ride of this money will decrease, resulting in a net gain.
I have not yet addressed your points about insurance, but first I would like to conclude my current line of reasoning by addressing your fourth paragraph.
You discuss driver incomes and wages, with a comparison to minimum wage. I do not believe the connotation of these terms is in alignment with what is made possible by the service Uber offers in matching casual drivers with occupants. I believe the innovation of Uber is just a re-realization (with some obvious improvements) of the jitney service of the early 1900s. I discuss this concept in more detail in another post[2] with a link to a very interesting hist...
It would drive the revenue into Uber's pockets rather than into the pockets of taxi medallion owners. So for Uber, it's a plus. For others, not so much.
I'd take it a step further. Not only is there nothing that prevents it but that it's the natural order. It's basically a commodity. Margins on such things are thinner than razor thin.
In a great twist of irony I'm sure we'll soon see Uber lean on regulations to protect their foothold as that will eventually be their only competitive advantage.
I predict that as soon as self-driving cars become available, Uber, Lyft, or whoever occupies that space will march in and start replacing drivers.
The only way this doesn't happen is if drivers gain regulatory or bargaining power in the duopoly. And if that happens a startup will come along, adopt self-driving cars and eat the duopoly's lunch.
To survive, they have to stay unencumbered by regulation that would get in the way of replacing drivers.
Drivers can switch companies pretty easily too. Some drivers work for both Lyft and Uber already. If a new player enters who is able to lure drivers away from the incumbents, they might have an advantage.
Lower gas prices in most UberX cars is barely going to matter.
They really do need to replace casual car use/ownership, but I think rather than continually drop effective wages for their drivers, they need to focus on how good a deal it already is. (compare to mileage on your car, fuel, parking time, parking cost, Parking location)
Except it's really not that good of a deal in most places Uber is active. There's no amount of spin that will make spending $40+ on transportation to and from the bar be less than parking fees, gas, and mileage. All that totals up to $20 max. If I'm bar-hopping, forget it.
You're cutting out certain sources of overhead but introducing others, specifically a driver and the organization managing that driver. Uber has to find a way to cut costs to the bone because humans are more expensive than machines and resources and that's not going to change anytime soon.
It's even worse for commuting, because you'd have to be working for a real a-hole if you're paying parking fees at work. Uber estimates that it costs $16-22 one way for my commute. $32-40 is pretty steep to get to and from work.
They have a long way to go before I'd be able to replace my car with Uber.
>because you'd have to be working for a real a-hole if you're paying parking fees at work
It depends. It's pretty common in a large city not to have parking included. (And, in fact, I know of at least one city that doesn't allow employers to provide free parking.)
But your basic point is entirely correct. Driving or taking commuter rail into a large city may cost $20 per day or so but then Uber/taxi is going to cost more as well. For the vast majority of people, you can't replace a personal car with a taxi for anything like the same price. It's only practical at the margins; i.e. you only marginally need a car anyway.
It's a bad deal on those metrics outside of some very small cases (basically, ones where you'd otherwise park for a long time in an expensive location).
And you're paying the fuel and milage costs any way you look at it (in fact, you're paying for more fuel/milage, since the driver has to drive to you). I don't understand why this error constantly crops up -- surely everyone understands that car fairies don't come down from the sky and put gasoline into the tanks of UberX cars. You're the one paying for the ride, so you're paying for the gas. The fact that you aren't physically present when the gas gets put into the tank of the car has no effect on it.
If Uber drivers haven't figured out yet that the company's goals are to create a huge workforce of barely-employed "contractors" who each earn just barely enough to survive (probably have negative earnings in the long run, when car depreciation is factored in - Uber knows that humans undervalue the car depreciation and don't take it into account when figuring their profits and losses), then I don't know what to tell them. They should figure that out.
I think calling it a 'goal' overstates it. It's a pure consequence of the model and I don't think it's possible to change because there is an Uber/Lyft duopoly now. Because they are in competition with each other, either can profit if the other incurs the cost of being more driver-friendly.
Yes, there is competition for drivers and drivers influence quality. Honestly, I think that the only way these two players survive is to stratify their services: high end with good drivers vs. the college kid with a junker full of empty pizza boxes.
Yep. Uber apparently pays $1.50 per mile before its various surcharges [1], while the standard reimbursement rate for depreciation is $0.575 [2]. So employees, er, I mean "contractors" make less than $1/mi. Include the mileage driving between fares and the time waiting for a new fare, and I'll bet many drivers are below minimum wage. But that's what "disruption" looks like.
$12/hr is okay pay for sitting in a parked car, but it's below minimum wage if you drive more than about 8 miles per hour, and below no wage if you drive more than about 21.
Realistically 0.575 reimbursement rate overstates actual expenses. I have spreadsheet with all my car expenses for last 8 years inclsuding car depreciation and it works our to about 0.37/mile including gas.
I think their long-term goal is probably to replace drivers altogether with driver-less vehicles.
It might seem a long way off or even fantasy to some, but carving out a dominant market-share now will mean big profits if/once drivers are eliminated from the equation.
The goal of Uber is to earn money by allowing utilization of the massive unused transportation capacity bound up in personal vehicles.
As detailed in a child post of the linked thread, taxi-driving was not a long-term full time opportunity until many regulations (supported primarily by trolley/streetcar incumbents who could not compete with jitney service and by municipalities who could more readily collect fees/taxes from those incumbents than the jitney ecosystem) forced huge scarcity in the provision of point-to-point on-demand transport.
Disclaimer: I am not claiming all was perfect, and the thread linked indicates several of the negatives, and the article[1] referenced in the other thread goes into more detail. The argument is that transportation need not be a full-time job; there is sufficient excess capacity that the primary benefit of Uber/Lyft comes not from providing a new livelihood, but in destroying a large source of deadweight loss (large sunk costs in personal vehicles with often-superfluous carrying capacity).
I received an email notification from Uber that the fare for my most used route is dropping 46%. My normally route is only about $8, so it might be a best case scenario.
Uber and other similar type of taxi dispatching apps are facing new government regulations in countries like Singapore and India after the rape case involving an Uber driver in India last year.
The quality of Uber/Lyft drivers and the service in general has plummeted so much lately that I've just switched back to local car services. I just had a nice conversation with a car service driver, who also does Uber, and he said he prefers the car service over Uber because they pay better and only uses Uber when he isn't getting anything else but the pay has dropped over the past year pretty significantly for him whereas when he had started it was pretty good. That's an anecdote so take it for what you will but I just don't see how lowering prices further helps anyone out long term.
Because there is an entire generation of driver now weaned on Uber. They're all over London: guys who got a foot onto the driving ladder and know no other way. They take what they're given.
The disaffected professionals are probably the ones who bitch and gripe about money compared to the old days. Uber is now trying to swallow up huge amounts of market share by creating mammoth demand which will presumably lead to more drivers (who haven't been weaned on better-paying services).
In my experience local car services (taxis) or a combo of public transport and taxi have always been cheaper.
Uber rides to downtown back to my house ~$100-150, Taxi ~$75-125, MARTA/Taxi combo ~$40-75. I hope to see the prices decrease for Uber.
The things that Uber really has going for it that I absolutely hate about Taxis are getting the price up front and knowing when the driver is going to be there. Taxi's will never update you to say if they are coming or not and many times I have been left out in the cold waiting for taxis that never comes.
I feel that atlanta is special though, because its ridiculously spread out.. its almost financially impractical to use Uber routinely.. For many more dense cities, it makes much more sense
The price cutting makes me more reluctant to use car services...and I realize I'm speaking from a position of privilege here in which I can say that I have enough expendable income to not be against paying a little more for the drivers. I feel that the wage is already so low that it's impossible not to feel guilty using them, what with all the other costs they have to deal with. I try to be as conscientious of a user as I can be: I'll watch the app and only request a ride if a driver is fewer than 3 minutes away from me. And if I have a driver take me from somewhere busy on a busy night to a more secluded area (thus denying him/her the easier fares in the busy area), I'll usually tip.
The car services are already such an improvement (in terms of technology) over taxi services that I'm happy to pay for the convenience. And I'm getting less and less enthusiastic about funding a race to the bottom, nevermind the impact it has on customer service.
Last year, I had several Uber Black drivers in a row complaining about how unfair the rating system was or how their employer was unfairly requiring them to accept UberX requests even though they had a livery. Uber threw a decent black car service under the bus to save a shitty ride-sharing business that it is almost certain to get undercut out of. And now they are treating their Uber Black drivers like UberX drivers and it ruins the experience consistently.
Interesting. My girlfriend gets upset with me because I always tip. Generously, regardless of the level of service. I also empty my wallet of coins and give it to the first person asking for change. That's driven entirely by knowing that by earning over $100k you're in the top 1% of earners on the planet (median world-wide income is just $10k).
Instead of lowering the base fare why don't they introduce the opposite of "surge pricing" and sometimes delight riders to offset the times they upset them with surge pricing?
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[ 2.8 ms ] story [ 145 ms ] threadRather than the bait and switch, why not just raise the price rather than feign at lowering it? Kill the lie that the Surge Pricing brand has become. Just be honest.
I don't see any reason to see surge pricing as "bait and switch," although I'd be open to seeing some actual data that backs this up.
That, or create another service tier like Uber XL but for better cars instead of bigger cars.
Many, many times I have ordered a regular "black car", and been picked up by a big SUV (Escalade or Suburban). Likewise, a lot of times I have ordered Uber X and been picked up by a luxury car and sometimes an SUV (Audi Q5, etc).
I understand that you mean to say that you expect the quality of Uber rides to drop, but can you do so in a way that doesn't draw upon negative stereotypes of other ethnicities?
I'm surprised more cities don't ban cell phone use by the drivers. It's the single thing I hate most about NYC cabs.
EDIT: Next time perhaps report your cabbie?
We were in New Orleans last week, and took a dozen cabs, and not a single driver talked on their phone. Shows the importance of enforcing regulations.
Besides the obvious boredom-killing, I've also heard of it being used as a safety feature. It wasn't that long ago that drivers would be robbed or assaulted (heck, an UberX driver here was just robbed a few weeks ago).
One of the first questions is to ask about a business is whether there are any barriers to competition. In the case of Uber or Lyft, they have network effects but the drivers themselves have no barrier.
Years ago some Subway franchisees sued Subway because they were selling franchises right across the street from existing franchises. Same issue. There will always be more drivers, Uber/Lyft control the rate, so no limit to how far drivers can be squeezed.
Taxi drivers never made a lot of money, even in the old system. But at least the system protected them to a degree by limiting competition. Now there is no protection. It's a free market. Anyone with a Toyota Yaris can fire up Uber-X and compete during the busy couple of hours of the night. It will be a race to the bottom for driver incomes, for sure.
There's also no reason to presuppose that personal transportation SHOULD provide a livelihood. The goal of companies like Uber/Lyft is to take advantage of the currently wasted extra carrying capacity in personal vehicles. There's no reason to expect a priori that the value of extra capacity is enough to provide an income.
The goal of these companies is to provide cheaper transportation to those without cars, not to provide a living for those with cars. If less money overall is spent on transportation (which is >90% means to an end, excepting joyriding and competition), which is the case when currently excess capacity is utilized, and consumers also spend less (and consequently capital tied up in personal vehicles), then more capital and income is available for other goods and services.
Obviously, any major paradigm shift in the provision of a good or service will cause some level of upset for those accustomed to the current paradigm, but that does not make the shift a negative one. Further, attempts to ease the transition only draw out the period where we operate in a lossy manner.
In another manner of speaking, when I heard of Uber and Lyft, I did not think that I could quit my day job since I have a car, nor would I have decided to go buy a car if I didn't have one for the purpose of earning income. I did think that they could be a valuable way to defray a portion of my already sunk cost of owning a vehicle. If I hadn't owned a vehicle, these services may have lowered the marginal cost of acquiring a vehicle enough that I could now reasonably afford one.
In both of the above lines of reasoning (currently owning or deciding to purchase), they are not a means of supporting myself, but a means of sharing some of my costs with others who are willing to pay. A car still costs money, but by renting space in it, I can lower the cost.
Think of it more akin to AirBnB - if I own an apartment with an extra room, I don't expect to pay my whole rent with AirBnB-ing out the extra room, but I certainly expect to pay part of my rent out of it. The only difference is that Uber/Lyft rent room in a car.
It's not Uber's goal to make it so you can live off of Uber. It's to provide people with extra money the side. Does this hurt the livelihood of regular taxi company drivers in the long run? Of coarse. But with so many cars on the road, maybe it's an outdated occupation.
It is a useful case study in regulation used anti-competitively, and the misaligned interests between consumers (those wanting cheap convenient transport) and the incumbent services backed by municipalities (those wanting monopoly rents and the tax income from it). These arguments hold parallels to many infrastructure and service provider debates we see today (heck we even come across the term common carrier in the article).
There were, of course, valid objections at the time, and there are today. Many of the same ones are repeated in the article.
The most interesting part to me, though, is the several page exposition (295-303) on the characteristics of jitney transportation. It is clear that in its natural form, ride-sharing does not lend itself to long-term full time employment. Some anecdotes from the article are a doctor who keeps a car for house calls allowing his son to use the car (sunk cost) as a jitney; the commuters who post their destination and only pick up passengers on their way to/from work; and those individuals who supplement their income with several hours a week of jitney work.
This article supports my original comment (the grandparent) and the parent here that Uber/Lyft should not be viewed as traditional employers.
I would alter the quote below to indicate that taxi driver as an occupation was never an occupation until regulation in the interest of a more lucrative (for the incumbent firms and for the municipalities they operated in) business forced an artificial constriction in the market for public transport.
>But with so many cars on the road, maybe it's an outdated occupation
[0]http://www.jstor.org/discover/724795?sid=21105612783593&uid=...
I don't buy it. Uber flies the flag of "the sharing economy" but their requirements for the car and the drivers make it look way more like a professional car service than an opportunity to share rides if you have a car.
Please let me know if [1] is not an accurate representation of requirements for non-commercial drivers.
We may be focusing on different segments. To me, the commercial version is just a taxi-hailing service with a custom pricing model. This is not too innovative - just a convenience application on top of existing services.
What I consider the innovative portion, and the (I will admit unclear in my prior posts) focus of my argument, is the non-commercial service.
[0]https://get.uber.com/drive/
[1]http://www.ridesharingdriver.com/uber-driver-requirements-qu...
But the $1500 rent real taxis pay to medallion holders is now going to Uber. This disruption really just replaced one middleman with another and switched to a per-ride model instead of flat rate monthly.
The increased insurance cost (I heard it was double normal insurance rates) will go away, since most people will not tell their insurance companies they are using their car for business. That means insurance rates will go up for all of us over time as accident and claim rates go up.
All I'm saying, I guess, is it will clearly lead to a reduction in driver incomes overall. I can't see how this business model can lead to them making more. The average wage will be below minimum wage, because how can it not be?
In this case taxi service need not be supplied by full-time taxi drivers, which is a central point to most of my thinking on this matter. Taxi service can be provided in any quantity (subject to the limits of time and space, obviously) by any individual with a car. A person may provide taxi service once in their life or dozens of times a day.
Second, I will refer to Uber below for simplicity, but I intend my argument to apply to all similar services that exist (Lyft so far as I know) and may come into existence as competitors.
In the status quo the number of medallions is a rough approximation of the limit of taxi services. I think we can agree that the current number of medallions currently limits the supply of taxi services (the supply curve is shifting toward the origin because cost of entry is higher than in the complete absence of medallions or equivalents), and therefore raises the equilibrium price of taxi services. Currently the medallion represents an economic rent (regardless of who owns the medallion a rent is being collected).
In the future state (this is a very general future state - anything where the current limit imposed by medallions is weakened or removed entirely and at least some of the rent that exists in the status quo is transformed into revenue for Uber) the situation is improved. The revenue collected by Uber is not an economic rent, but rather a transactional cost.
First, the cost structure is different - a transactional cost is marginal, whereas the medallion rent (this is specific to a medallion, not all economic rents in general) is either not marginal or marginal at a much coarser granularity. If I rent a medallion on a monthly basis, then I am deciding whether it is worth it to me to drive a taxi for another month. With a transactional cost, I decide whether it is worth it to me to provide one more trip of taxi service. This allows someone who might just pick up people on their normal commute (this is just an example that I find easy to discuss, not the entire basis of my argument) to provide taxi service. Right here we see an increase in supply of taxi services. Our first order analysis should lead us to expect that this increased supply should lead to downward pressure on the cost of taxi service.
Second, the transactional cost is incurred by a competitive firm (currently one competitor in Lyft (that I know of), but even nonexistent competitors can provide pressure[0]). If a competitor can provide a similar service to Uber (matching willing drivers to willing passengers) at a lower cost, then the transactional cost will be driven downward and since there is clear competition in this case among drivers, the cost to end users will ultimately be driven down[1]. In this case, even if we accept your equivalence of Uber's profits and the current economic rent of medallions (note: I do not accept this equivalence, which I think the rest of my post makes clear) the $/ride of this money will decrease, resulting in a net gain.
I have not yet addressed your points about insurance, but first I would like to conclude my current line of reasoning by addressing your fourth paragraph.
You discuss driver incomes and wages, with a comparison to minimum wage. I do not believe the connotation of these terms is in alignment with what is made possible by the service Uber offers in matching casual drivers with occupants. I believe the innovation of Uber is just a re-realization (with some obvious improvements) of the jitney service of the early 1900s. I discuss this concept in more detail in another post[2] with a link to a very interesting hist...
In a great twist of irony I'm sure we'll soon see Uber lean on regulations to protect their foothold as that will eventually be their only competitive advantage.
The only way this doesn't happen is if drivers gain regulatory or bargaining power in the duopoly. And if that happens a startup will come along, adopt self-driving cars and eat the duopoly's lunch.
To survive, they have to stay unencumbered by regulation that would get in the way of replacing drivers.
They really do need to replace casual car use/ownership, but I think rather than continually drop effective wages for their drivers, they need to focus on how good a deal it already is. (compare to mileage on your car, fuel, parking time, parking cost, Parking location)
You're cutting out certain sources of overhead but introducing others, specifically a driver and the organization managing that driver. Uber has to find a way to cut costs to the bone because humans are more expensive than machines and resources and that's not going to change anytime soon.
It's even worse for commuting, because you'd have to be working for a real a-hole if you're paying parking fees at work. Uber estimates that it costs $16-22 one way for my commute. $32-40 is pretty steep to get to and from work.
They have a long way to go before I'd be able to replace my car with Uber.
It depends. It's pretty common in a large city not to have parking included. (And, in fact, I know of at least one city that doesn't allow employers to provide free parking.)
But your basic point is entirely correct. Driving or taking commuter rail into a large city may cost $20 per day or so but then Uber/taxi is going to cost more as well. For the vast majority of people, you can't replace a personal car with a taxi for anything like the same price. It's only practical at the margins; i.e. you only marginally need a car anyway.
And you're paying the fuel and milage costs any way you look at it (in fact, you're paying for more fuel/milage, since the driver has to drive to you). I don't understand why this error constantly crops up -- surely everyone understands that car fairies don't come down from the sky and put gasoline into the tanks of UberX cars. You're the one paying for the ride, so you're paying for the gas. The fact that you aren't physically present when the gas gets put into the tank of the car has no effect on it.
So gas price seems like a red herring to me.
Yes, there is competition for drivers and drivers influence quality. Honestly, I think that the only way these two players survive is to stratify their services: high end with good drivers vs. the college kid with a junker full of empty pizza boxes.
[1] http://drivingforuber.com/?page_id=20
[2] http://www.gsa.gov/portal/content/100715
> To reassure drivers worried about lower fares, Uber said it would guarantee a minimum fare per hour for drivers in these cities.
$12/hr is okay pay for sitting in a parked car, but it's below minimum wage if you drive more than about 8 miles per hour, and below no wage if you drive more than about 21.
It might seem a long way off or even fantasy to some, but carving out a dominant market-share now will mean big profits if/once drivers are eliminated from the equation.
The goal of Uber is to earn money by allowing utilization of the massive unused transportation capacity bound up in personal vehicles.
As detailed in a child post of the linked thread, taxi-driving was not a long-term full time opportunity until many regulations (supported primarily by trolley/streetcar incumbents who could not compete with jitney service and by municipalities who could more readily collect fees/taxes from those incumbents than the jitney ecosystem) forced huge scarcity in the provision of point-to-point on-demand transport.
Disclaimer: I am not claiming all was perfect, and the thread linked indicates several of the negatives, and the article[1] referenced in the other thread goes into more detail. The argument is that transportation need not be a full-time job; there is sufficient excess capacity that the primary benefit of Uber/Lyft comes not from providing a new livelihood, but in destroying a large source of deadweight loss (large sunk costs in personal vehicles with often-superfluous carrying capacity).
[0]https://news.ycombinator.com/item?id=8875039 [1]http://www.jstor.org/discover/724795?sid=21105612783593&uid=...
It will be interesting to see what happens next.
The disaffected professionals are probably the ones who bitch and gripe about money compared to the old days. Uber is now trying to swallow up huge amounts of market share by creating mammoth demand which will presumably lead to more drivers (who haven't been weaned on better-paying services).
You're dealing with humans here and nobody wants to work twice as hard for the same amount of money or very slightly more.
So what happens is that the quality slips and good drivers will go where there's more money to be earned easily.
There's a limit to how low you can drive the prices before the good contractors start ditching the ship.
I foresee bad things in Uber's future.
Uber rides to downtown back to my house ~$100-150, Taxi ~$75-125, MARTA/Taxi combo ~$40-75. I hope to see the prices decrease for Uber.
The things that Uber really has going for it that I absolutely hate about Taxis are getting the price up front and knowing when the driver is going to be there. Taxi's will never update you to say if they are coming or not and many times I have been left out in the cold waiting for taxis that never comes.
The station I go to usually has 1 or 2 taxis waiting so I haven't needed an Uber.
Good Suggestion!
The car services are already such an improvement (in terms of technology) over taxi services that I'm happy to pay for the convenience. And I'm getting less and less enthusiastic about funding a race to the bottom, nevermind the impact it has on customer service.
Interesting. My girlfriend gets upset with me because I always tip. Generously, regardless of the level of service. I also empty my wallet of coins and give it to the first person asking for change. That's driven entirely by knowing that by earning over $100k you're in the top 1% of earners on the planet (median world-wide income is just $10k).