Rideshare Companies Uber, Lyft, and Sidecar Are Not What You Think They Are, and I’ll Tell You Why

By Greg Cayea, a traveler, writer, and wanderer by nature, a publicist by trade, and the Founder & CEO of Black Apple International, a lifestyle and entertainment public relations firm in Hollywood, California.

In 1937, when Mayor Fiorello H. La Guardia of New York City signed the Haas Act, it introduced official taxi licenses and the medallion system to America. Having your medallion was a way of stating to the public, “Don’t worry, the taxi drivers we hire aren’t lunatic rapists; we have our medallion, we are safe to do business with.”

It was the formal introduction of taxicab regulation, which is still in place today.

What made the taxi medallion so valuable was its scarcity. For that reason they are, and always have been, very difficult and expensive to obtain. In Boston, the price of a medallion is $625,000.

I share this brief bit of history so you understand what an advantage ridesharing companies have since they are not required to obtain one.

Because of that, Uber, Lyft, Sidecar and other ridesharing companies decrease the value of every taxi driver and taxi company in the world, not little by little, but big by big.

Here’s why this is such a big deal.

Ever heard of Clutch Magazine? Well, I certainly hadn’t until they worded their title on June 26th about the protest held by DC Taxicab drivers so precisely that it got my attention: Dear DC Taxi Drivers: STFU & Stop Being Jerks or Uber & Lyft Will Destroy You.

But they worded it wrong. What Clutch meant to say (should have said) was: “Dear Washington DC Taxi Drivers: Goldman Sachs Could and Will Squash You, Especially Your Little Taxicab Company, so STFU!”

Wondering what Goldman Sachs has to do with Uber?

They’re one of Uber’s three main backers. So let’s get one thing straight. Uber is not an exciting entrepreneurial endeavor. Not anymore. Quite the opposite. It’s backed by three of the largest corporations in the world, all merged together to again outspend the underdog and disrupt the middle class.

The other two corporate giants behind Uber?

Amazon and Google.

I don’t know who told you Uber was the underdog beating out the competition in a fair market. Uber is a giant shark gobbling up small taxicab companies and stealing drivers all over the world while Capitol Hill is busy looking the other way.

Not without reason. Let’s just say their lobbyists have been very influential within the public transit agencies, which seem to have looked the other way in regards to the regulation of Uber, Lyft, Sidecar, and the other ridesharing companies sprouting up such as Toro. Meanwhile, hundreds of thousands of families that built their livelihoods driving for regulated taxicab companies are already losing everything they have.

Why would ridesharing companies not have to play by the rules?

I agree with Anthony Weiner from Business Insider when he says there’s a better way to handle Uber. Up until now, it seems as if the protests have been unorganized, from DC to Paris to San Francisco to Boston to London. If we really want regulation, well, we’ll never get through the legislative process acting out of unison.

Okay. It should be known my name is Greg Cayea. I am 29 years old and come from an upper-middle class white family from Long Island, New York. I am the epitome of the class of millennials that have been plagued with a lack of employment, and I am the epitome of someone that could easily benefit and earn a living ‘Lyfting’ people around Los Angeles in my own car or driving for Uber via an Uber car lease.

YES: Uber and Lyft and Sidecar have made it very easy for people like me to make some extra money. However, it is at the extreme expense of a much larger population of older, middle class men and women who, without their hard-earned jobs at the taxi companies they drive for, wouldn’t have many other options.

Not every millennial has options. But it’s safe to say, if you even own a car to drive passengers around in, you probably have more options than you think you do.

Every millennial with a car joining in on the ridesharing driver community is another young freelancer stealing a customer from small business, which is, ironically, the very cornerstone of what the millennial generation has been advocating since they grew vocal chords.

Now I’m not saying Lyft or Uber or Sidecar don’t give a lot of people some extra cash and provide consumers with more convenience than a traditional yellow cab does.

But it’s unfair competition.

At the expense of small businesses around the globe.

There are currently 233,000 people in the United States alone who earn their living driving taxicabs according to the Bureau of Labor Statistics, and they make an average of $23,000 per year. According to the Census Bureau, median income of nonfamily households in 2012 was $30,880. Though there’s room for improvement – a completely different discussion – taxicab drivers have been building their families on that income.

They’ve been paying their mortgages with that income. They’ve been feeding their children on that income. It’s their job! Their foundation! And some iPhone app is going to strip that away from them, and no one cares?

Let me ask you this: If all those drivers (and that’s only in the US) lost their jobs, how many of their kids won’t be able to go to college? Would they end up even worse off than the millennials? At least they (we) had their (our) baby-boomer parents to foot the bill for their (our) education.

So why are we NOT regulating rideshare companies in the same manner as taxicab companies?

Here’s why: Uber AKA Amazon, Google, and Goldman Sachs have too much money and political clout for a bill to ever make it to legislation that would enforce the regulation.

According to KQED, there are three schools of thought when it comes to Lyft and Uber ridesharing in San Francisco:

This is the best thing that has ever happened to SF OMG freak out. This is the opinion held by techie early adopter-types who call anyone with any sort of negative feelings about tech taking over our lives ‘luddites.’

I don’t really have time to care about ride-sharing and disrupting things and the fabric of the community or whatever, but that pink mustache is really embarrassing.

Or lastly, the cornerstone of the problem put plain and simple:

Ride-sharing is destroying the fabric of the city. It is taking business away from the more democratic taxi system, which legitimately employs a bunch of people, not white, not rich people.

Alexandra Le Tellier of the LA Times wrote a much more informed article about ridesharing on April 25th entitled, Lyft expansion: Good for the sharing economy, bad for everyone else. She poses a great question when she asks, “Should we really be celebrating a system that is, in effect, a Band-Aid solution for unemployment and those people struggling financially in post-recession America?”

And as stated in LaborNotes, These companies [Google, Goldman Sachs & Amazon] pride themselves on ‘disrupting’ the taxi industry. Or as San Francisco Cab Drivers Association President Barry Korengold put it, “It’s making a full-time job into precarious labor.” And drivers say Uber and the like are pushing dangerous deregulation.

Even the Vice Chair of the Licensed Taxi Drivers Association (LTDA), Anthony Street, stated, “Our problem is not with Uber, it’s with the TFL [Transport for London, the city’s transportation regulatory body].”

A prime example brought to our attention by the folks at LaborNotes.org is a comment made by Arthur Rose, a Boston city taxi driver of 40 years, who said:

When Uber first appeared in Boston, the police commissioner was sympathetic to taxi drivers’ argument that it should be just as regulated as taxis are, but Uber lobbied state officials, who came out in favor of the company and pressured Boston officials to follow suit. If I tried to do what Uber does, the city would shut me down in two seconds flat because I’m not a corporation.

The Huffington Post’s list of “5 Very Good Reasons Why I’m Not On Board With Uber” really hit the spot.

  1. Uber not only flaunts regulation, it thinks it has the right to go unregulated.
  2. When things go bad, Uber plays that always-annoying ‘what, who, us?’ game.
  3. Uber doesn’t screen its drivers adequately.
  4. Cabbies may not be angels, but neither are Uber drivers.
  5. The company’s response to the growing chorus of negativity? Slap a surcharge on their customers.

In summation: Rideshare companies should get a chance at fair competition.

They need to employ, not contract out. If they employed their drivers, we wouldn’t be having this discussion. Why should three of the biggest corporations dodge payroll taxes and other employment related expenses when startups, like my PR company, have to pay thousands of dollars in taxes just to employ a little help? Uber alone has over a hundred-thousand freelance drivers it doesn’t have to pay taxes on.

And crap, they need to pay for their darn medallion. Not like they can’t afford one. It just may eat into their $18.2 billion valuation.

The bottom-line: this needs to stop. The time is now or never. By Greg Cayea, CEO, Black Apple International

Consumers are already struggling, “straining against rising prices on daily essentials,” and they are cutting back on things they want to buy, a new survey found. Read…..  Gallup Slams Lid On Hopes For US Economy

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  11 comments for “Rideshare Companies Uber, Lyft, and Sidecar Are Not What You Think They Are, and I’ll Tell You Why

  1. Petunia says:

    As a person who grew up in NYC I know that the medallion cabs only want to work in Manhattan. Taxis don’t take you to the Bronx or Brooklyn or work those boroughs. New Yorkers are used to gypsy cabs and private car service if they live in the outer boroughs. When you are in the Bronx at 10p.m. no medallion taxi will be around to take you anywhere. The medallion taxis’ did this to themselves.

    • JD Williams says:

      As a former cab driver, I can state unequivocally, that the taxi drivers did NOT do this to themselves. Regrettably, the violent thieves and gangsters that work these outer boroughs are responsible for driving the medallion services away. No rational person would work in an area where there are most likely to be victimized. Of course, the police are of absolutely no help. In fact, the illegal, unconstitutional anti-gun laws have left cabbies defenseless, and the criminal element is well aware of this. Nice try spinning this, but the facts speak to a very different reality. One which you have never faced.

    • David says:

      Really? Its come to this? You are advocating the preservation of a protected class! I say they (or no one else) owns the “rights” to particular good or service. Medallions!!! Sad! I”m more concerned with the consumer getting what THEY choose/want and not protecting medallions or the sad average income of a holder of one. Taxi Drivers around the world UNITE! “Throw” out those medallions and download Uber app! P.S. Not associated with ANY rideshare business but a family member uses LYFT and it has really helped his young struggling family after military service and a cratered job market and a economy in shambles. He doesn’t have 600,000+ for a medallion.

  2. Doug says:

    The high cost of cheap prices. Kind of reminds me of Walmart. Suck the life out of a delicate economic ecosystem by dangling low prices in front of the consumer herd. Walk away with $billions.

  3. Dave says:

    Comment synopsis: Driving a car is a low skill, low paying job.

    These companies are in business to make money and are built on a business model that best achieves that for them. If the model doesn’t work with employee drivers then demanding they be required to hire drivers as employees is moot. At the $23K level you noted for cabbies it’s not like being an official employee makes a substantial lifestyle difference does it?

    Next, please enlighten me as to the practical difference between 1. Goldman backs Uber, Uber hires contractors for pennies
    2. Company buys a $635K medallion then hires cabbies for pennies

    Lobbying and deal making exist in city hall as well as congress.

    I am sorry that millennials find it hard to secure good jobs; it doesn’t have to be that way but the voters insist on it in the choices make at the ballot box every two and four years.

    Here’s what will happen if the regulators stay out of the way. Many of these ride sharing companies will spring up, there will be a multi-year consolidation phase leaving a handful of big operators, the cities will require them to buy a franchise (a medallion), they will hire part-timers and contractor drivers for pennies because it is a low skill job. Maybe a union gets it foot in the door, which will could mean better wages for members. The resulting higher costs for rides will decrease demand for both rides and drivers.

    Regulation is not going to change anything. All it does is build the ranks of bureaucrats required to manage all of it.

  4. unspam@outlook.com says:

    Simple solution.

    Get rid of the medallion program.

    It is no longer needed.

    Refund the businesses their fees and get government the hell out of business.

  5. Don Sergent says:

    just had to chuckle at the ad banner for lyft drivers at the end of that article

    Too much “efficiency” = higher “redundancy”
    in the end we continue the wage death spiral and wonder why the “pent up demand” never materializes.

    • Wolf Richter says:

      Did you take a screenshot of the banner? If yes, I’d love to have a copy to file under “Google Humor.”

      • don sergent says:

        nah, missed it. but with the pattern/word keying algos embedded in the web transmission system, adware is no big surprise-it just doesn’t have a good sense of irony

  6. Don Sergent says:

    BTW: did you get your trademark people to clear Wolf(of wall) Street?
    Good switch, tho. more accessible to the PC phobics

Comments are closed.