New York restrictions on Uber will increase inequality?

“New York City Caps Uber and Lyft Vehicles in a Crackdown” (nytimes):

New York became the first major American city on Wednesday to halt new vehicle licenses for ride-hail services, dealing a significant setback to Uber in its largest market in the United States.

The legislation passed overwhelmingly by the City Council will cap the number of for-hire vehicles for a year while the city studies the booming industry. The bills also allow New York to set a minimum pay rate for drivers.

This is being sold as a way to reduce inequality:

“More than 100,000 workers and their families will see an immediate benefit from this legislation,” Mr. de Blasio said, referring to the city’s army of for-hire drivers.

I wonder if the effect will actually be to increase inequality. There might be a small increase in income for Uber drivers. Presumably Uber itself will capture most of any increase, in the same way that taxi medallion owners capture all of the value of any taxi fare increase, with the drivers continuing to earn a (low) market-clearing wage. But if prices to consumers go up, the result will be kicking middle-class New Yorkers back to walking, waiting for the bus, being jammed into subway cars.

If, as promised, street congestion is reduced that will increase the mobility of a New Yorker wealthy enough to purchase a Bentley and hire a chauffeur. But the mobility of the non-rich, especially those who aren’t physically fit enough to walk long distances, stand for hours each day waiting for public transit, etc. will be reduced by higher prices:

Ride-hail apps have become a crucial backup option for New Yorkers swept up in the constant delays on the city’s sputtering subway, as happened on Wednesday when signal problems again snarled train lines across a large swath of the city. Ride-hail services have also grown in neighborhoods outside Manhattan where the subway does not reach.

Readers: What do you think? Is this “help the struggling Uber driver” regulation mostly going to help Uber shareholders and help the rich in New York distinguish themselves from the proletariat?

[An interesting data point from the article:

The taxi industry has also been decimated by Uber’s rise. The price of a taxi medallion, which is required to operate a taxi in New York, has plunged from more than $1 million to less than $200,000.

]

16 Comments »

  1. paddy

    August 9, 2018 @ 1:25 pm

    1

    Check into how much Mayor de Blasio got from the taxi medallion owners … you’ll have your answer!

  2. suzanne goode

    August 9, 2018 @ 1:55 pm

    2

    Michael Cohen was apparently heavily leveraged in taxi medallions

  3. Mememe

    August 9, 2018 @ 2:23 pm

    3

    New York recently increased its minimum wage.

    One anecdotal data point: an employee of six years tenure at a grocery store saw management cut down on hours. Break and meal times started getting strictly regulated. Eventually, she was shitcanned for a one dollar discrepancy on a mis-scanned item. The store has since stepped up in hiring illegal aliens.

    In other words — what is predicted by classic economic theory happened.

    Also see what Paddy said. There are men in jail for bribing DiBlasio, yet Big Bill remains and out on the streets.

    I am brought to mind of an earlier post about the successive Cambridge pizza shops shut down twice in the same location by the efforts of an entrepreneurial labour lawyer.

  4. Jack

    August 9, 2018 @ 2:47 pm

    4

    I think we all know that the NYC municipal government is corrupt and incompetent and the reasons for restricting ride sharing are a pretext. NYC is a one party political system controlled by the municipal labor unions. Taxes are high. Municipal services dismal. The rich pay most of the taxes in return for the privilege of living in NYC but opt out of public services. The interests of the poor and disadvantaged are way besides the point.

  5. superMike

    August 9, 2018 @ 2:47 pm

    5

    This is just blowback from uber messing with the financial state of mobbed-up taxi medallion holders

  6. toucan sam

    August 10, 2018 @ 1:17 am

    6

    This is no different than Rent Control. Trying to legislate supply and demand ends up hurting those it tries to help most!

  7. tonatiuh

    August 10, 2018 @ 2:14 am

    7

    completely off topic (sorry), but I would love to hear your opinion on this story: “An Oakland psychologist stepped down from her role as CEO of an East Bay mental health clinic after she was captured on video Saturday claiming to be an immigration attorney and demanding that a group of people speaking Spanish and English move their parked vehicle from the curb in front of her home.”: https://www.sfgate.com/news/article/New-viral-video-shows-Oakland-woman-threatening-13145676.php?utm_source=sfgate&utm_medium=article&utm_campaign=breakingnow

    #MentalHealthMatters

  8. crazytrainmatt

    August 10, 2018 @ 5:16 am

    8

    If you are worried about transportation inequality in NYC, you could start with the fact that while 5% of commuters in Manhattan drive and only 24% of Manhattan households are car-free, cars are allocated far more of the public space than that and non-drivers made up 70% of traffic fatalities in the city last year. Most people in NYC don’t drive regularly, whether in a cab or a limo. Uber is already only a regular commute option for the rich.

    This legislation was prompted by a report [1] showing a 60% increase in FHV (basically all cabs including yellows, Ubers, et al.) hours in the downtown and midtown Manhattan. Occupied hours went up 48% and unoccupied hours 81% (i.e. circling while looking for a fare). This is a clear sign of an oversupply of drivers relative to fares. This is combined with consistent data from DOT showing that traffic speeds have gone down 1-2 MPH (which is pretty significant given that average speeds are ~8MPH).

    This case doesn’t fit the narrative of overreaching socialists trying to halt innovation; amazingly enough for NYC, it shows the effectiveness of strong regulation and data-driven legislation. The Taxi Licensing Commission was able to force Uber to release trip data from the start, so there’s a rich set of analyses available; I don’t know of any other city that was in a position to require this. De Blasio tried to cap Uber a few years ago, and his motives then could fairly be attributed to contributions from medallion owners, but this time the council is leading the charge and they have gotten to this point exactly because of the data and analyses out there.

    The real issue is how to fix the subway, which is a long-running political problem of politicized management, regionalism, gutted investment, labor politics, and an explosion in capital costs.

    [1]
    http://schallerconsult.com/rideservices/emptyseats.pdf

  9. crazytrainmatt

    August 10, 2018 @ 5:17 am

    9

    edit: “only 24% of Manhattan households have cars”

  10. Colin

    August 10, 2018 @ 7:09 am

    10

    @Crazytrainmatt: “This is a clear sign of an oversupply of drivers relative to fares…”

    Oversupply according to whom? Those drivers are there because they’re making a market-clearing price for their time.

  11. anon

    August 10, 2018 @ 11:11 am

    11

    > If you are worried about transportation inequality in NYC..

    I am personally worried more about transportation in NYC. Inequality is not an issue. The rich have always used limos in Manhattan, always have and always will. There are also privately-owned helipads for commuters from outer boroughs and beyond. 🙂

    All data is just data, it requires interpretation and can be chosen selectively to support any conclusion at all. IMHO, this data suggests that there is a need to fix the roads and parking facilities, as well as to improve public transportation. Rationing is a very NY way of solving a supply problem, of which Mao would have been proud.

    In other words, the report conclusions look like a warning that the serfs are about to start making a living, and without serfdom who is going to vote for democratic socialism?

  12. Viking

    August 10, 2018 @ 12:21 pm

    12

    The real conclusion is that taxi fares need to drop, to reduce the amount of “cruising”, and make it cheaper to get a ride.

  13. anon

    August 10, 2018 @ 10:32 pm

    13

    @Viking:
    This is a tough one: the prices are somewhat high, but the take-home of an average cabbie is way too low, and given a choice I’d rather pay a driver than a medallion owner.

    In addition to that, cabbies are often caught on the wrong side of the racial divide as most drivers are of Bengali or Sikh origin, most of them first-generation immigrants. They are a wrong kind of a minority: a quiet, non-violent, hard-working one, family people, often desperately poor, but never beggars or loudmouth protesters. A horrible, deplorable kind of people for Democratic Socialists.

    Most Bangladeshis have (almost!) the right religion: they are Muslims, but they are not the virtuous refugees. They go for prayers on Fridays, leave their shoes at the door, don’t eat pork, don’t drink, donate to the mosque to support their most unfortunate neighbors. In short: really bad people, not real Americans and not undocumented either. Simply deplorable! Real Nazis! To add insult to injury, they are proud of their language and literature and many can recite from Tagor.

    It’s gratifying to know that The Mayor finally got them! and he took their money, and he gave it to the the right kind of minorities!

  14. Mememe

    August 11, 2018 @ 1:55 pm

    14

    One more note on NYC taxis. Taxi drivers used to be treated as the employees of the medallion owners. They were assured an hourly wage, had no additional costs of employment, and earned (untaxed) ccash tips.

    Then the rules were changed allowing medallion owners to lease their cars to drivers and treat them as indrpendent contractors. The medallion owners became millionaires overnight, and hacking a cab ceased to be a job worth pursuing by any but the most desperate immigrant. These desperate immigrants then got imported en masse. Going broke in Brooklyn still beats relative prosperity in Shitholistan.

  15. anon

    August 11, 2018 @ 3:44 pm

    15

    @Mememe:
    Not sure you are arguing with me, so I hope you don’t mind…

    I do agree with what you said, and it’s easy to see that Bangladesh is indeed a s***hole, but those people were “imported” legally and not against their will, and I ask you to trust my word that they are working to the best of their (very modest) ability to integrate into our society. There is no need to shove the weakest, as I trust you to be kind enough not to kick even a stray dog crossing your path.

    Those are *people* who legally came to the US, and we shouldn’t blame them, and we should change the law if we don’t like the way it works, but we cannot just blame those in compliance with an existing law. My point is that progressives hate legal immigrants from poor countries, and I couldn’t possibly offer a better explanation than https://quillette.com/2018/08/06/democratic-socialism-is-a-scam/

    Instead, our “elite” focus on importing indentured labor, such as illegals^H^H^H undocumented in the hope that those people would: (i) work very cheaply due to their shaky legal standing; (ii) vote for the Left as their saviors. The Sanderistas are nothing but hopeful slave owners masquerading as humanists, and what smart slave owner wouldn’t do that? And in addition, that’s a middle finger to the office of the president and to Trump personally.

    The irony is in self-selecting of those who are willing to show contempt for our laws and our ways of life. Those people are not stupid of course: they will take what is offered, but they won’t assimilate and they will probably laugh at out naivete. We now call them undocumented immigrants to choke off those true immigrant minorities who are weak, silent, and law-obedient.

  16. Mememe

    August 12, 2018 @ 5:25 pm

    16

    anon:

    Arguments about immigration aside, the liberalization (in the classic economics sense of the word), fundamentally changed the economics of labour in the taxi cab business. That we agree on.

    I do not know the legal status of all the NYC taxi drivers, but I am willing to bet that quite a few of them turn to that business because as independent contractors, they do not face the legal scrutiny of whether they are legally allowed to work in this country. This is speculation on my part.

    It should give anyone pause to see an entire industry taken over by foreigners. It should give us pause that New York City is no longer a demographically American city.

    I no longer wish to be generous in spirit to the hordes of foreigners overrunning my city. I understand they are trying to do the best for themselves and theirs. So am I. Our interests are not compatible.

    Round up all the illlegals and send them to Martha’s Vineyard.

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