The Fuse

NYC’s Battle with Uber and Lyft Could Hurt Middle Income Riders

by Leslie Hayward | August 07, 2018

The relationship between New York City and transportation network providers (TNCs) is at an inflection point. The city council is scheduled to vote as soon as tomorrow on a five-bill package that would cap new licenses for on-demand ridesharing services such as Uber, Lyft, and Via. The legislation would have other significant implications for these companies in New York, such as expanded oversight from the Taxi and Limousine Commission, with which the TNCs have a sometimes fraught relationship, and the creation of minimum wage and occupancy requirements.

The cap, which would be the first of its kind in the nation, is intended to reduce the downward pressure on fares and oversupply of drivers, which some see as contributing to congestion issues from the explosive growth of ridesharing. However, Uber and Lyft point to potentially serious downsides from such a dramatic action. As many drivers work part-time or when they are between jobs, churn can be high—according to Lyft, about 25 percent of drivers leave the network every year, which could leave the TNCs unable to meet demand if the cap is implemented. Furthermore, there isn’t conclusive evidence that TNCs have contributed significantly to urban congestion, which has been worsening for decades.

There are also economic justice implications. The proposed cap could push more drivers towards the central business district, where fares are more common. Yellow taxis have operated under caps for decades, which contributes to the lack of availability outside the central business district. Limits in the number of vehicles would likely decrease overall service, increase costs for passengers, and reduce service to neighborhoods that don’t have easy access to mass transit–where the need for TNCs to meet transportation needs is highest.

Given the expansion of the industry and its impact on the urban environment, some regulation is necessary, but policymakers must be cautious to avoid preventing TNCs from offering affordable, shared rides to neighborhoods that lack alternatives.

A recent study estimated that TNCs will serve more than 11 million riders every day by the end of 2018. While taxis historically have not served non-urban or middle-class households, the growth in TNC usage has been incredibly strong for these previously underserved groups. Research from SAFE based on the recently released 2017 National Household Travel Survey provides further evidence of these benefits. Our team sought to evaluate the impact of TNCs on large-scale trends in travel volume and access to for-hire ride services, vehicle occupancy rates compared to taxi and personal vehicle travel, the extent to which the expansion of TNCs have improved transportation access outside of city centers, and whether TNCs have impacted the speed of travel in communities.

Findings represent the state of play in early 2017. Some toplines include:

  • TNCs have improved transportation access for middle and lower-income families—there has been a 3-fold increase in ridership in for-hire vehicles since 2009 from those earning between $25,000 and $50,000, reflecting the unmet demand from taxi services;
  • Occupancy rates of TNC trips are 50% higher than taxis and higher than personal vehicles;
  • The same volume of demand can be met with 33% fewer vehicles if driven by TNCs rather than taxis;
  • TNCs increase transportation access outside of city centers, with ridership rates in for-hire vehicles in non-urban households tripling since 2009, and;
  • In total, speed on U.S. roadways has remained unaffected by the surge in TNC use, including across urbanized areas.

SAFE’s initial findings point to significant public benefits from TNC availability. Additional research is still necessary to understand the broader and system-level impact of TNCs. In particular, there is a need to understand the interplay of TNCs with other modes of transportation, whether public, private, or active (e.g. walking and biking). This will require better understanding the fleet fuel efficiency of TNCs, role of efficient vehicle routing, the “deadheading” rates of TNCs, as well as the interplay of transit modes.

New York City faces the daunting task of regulating an industry that has created permanent changes in urban transportation. TNCs are not only incredibly popular, they fill a gap that public transit and taxi service left unfilled for decades. Given the expansion of the industry and its impact on the urban environment, some regulation is necessary, but policymakers must be cautious to avoid preventing TNCs from offering affordable, shared rides to neighborhoods that lack alternatives.

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