Uber/Lyft Destroy NYC Taxi Cartel In Under 5 Years; Drivers Still Losing
It's hard to believe less than a mere 5 years ago, a vicious scramble at the "Taxi Medallion Auction" would result in a market clearing price of $1,300,000 simply for the right to drive a yellow car around an overpopulated island in the hope of clearing something close to $20 an hour after expenses.
Now it's more like $185,000, and likely heading down further.
One of the advantages of running a near-slave-labor operation is your business is very competitive - so competitive, that it will likely run all other competitors out of town at record-breaking speed - even if that requires subjecting all your employees to deliberately understated risk and coercing them into violating Federal and State regulations as a matter of normal routine business operation.
As I've covered on this blog previously, the pay for Uber and Lyft is a lot lower than most of the drivers think it is. They simply fail to account for all the costs and risks that have been foisted on them in the contractual arrangement that they don't understand.
The reality of (almost) every single Uber (and Lyft, etc.) driver is they are all driving illegally. Why? They do not maintain commercial insurance. They do not pay for the "ridesharing endorsement" on their policy, which means they are not covered for any activity that is commercial.
(Almost) All of these ride-sharing drivers are underinsured, potentially illegally operating, their vehicles are all subject to impounding and their licenses are all subject to suspension for driving without the correct insurance for much the same reasons you and I can't simply hop in a semi-truck and legally operate it. Uber and Lyft's insurance ($2500 deductible or more) is pathetic and meets neither legal nor practical requirements. These drivers are all one accident away from a legal judgment that will render them a destitute drifter, and they don't even know it.
In other words, Lyft and Uber knowingly run a business model that depends greatly on foisting off liability to individual drivers while lying to them about the risks - all while carefully concealing how terrible the pay actually is after the cost and risks involved in operating an illegally unlicensed taxi service.
If you think this is progress...I don't know what to tell you. The only thing its progress toward is Mussolini's definition of fascism: "The seamless merging of State and Corporate Interest."
But if you're a driver...you better run those numbers again, with liability added back in.
Uber/Lyft should be picking up the tab for either the insurance endorsements to make their drivers legal, or at bare minimum, an educational campaign which clearly delineates the risks of driving in a commercial enterprise without proper insurance.
The last thing we need is a "Wal-Mart" in the transportation industry, running everyone out with anti-competitive practices only to turn around and jack up rates ("surge pricing", ahem) once they have wiped out everyone else.
Note: This is not a defense or endorsement of the NYC Taxi Cartel, in case my use of the word "cartel" did not make that clear enough. I don't have to like either side, goshdarnit.
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If you aren't a regular cabbie taker in NYC, then here are a few things the readers should know.
A yellow cab is driven into the ground. The car must operate 24 hours a day to be profitable in most cases. Most yellow cab drivers rent the cab for a 5 or 7 day period (weekend rates are much higher), which if i remember correctly, was anywhere from $200 to $300 a day after you calculate all expenses. Which means you have to take a weekday rate, and you bust, you can't make your money back because you have to return the car.
If you ever try to leave the borough of manhattan and you tell them you're going to brooklyn, they'll either speed off, or give you a bit of a run around, yes even though it is illegal, this still happens. With the ride share setup, they don't know where you are going until they confirm pickup. But the driver can set general zones that they are willing to drive to.
Taxi's perform a shift change at 5PM, extremely inconvenient since there is a surge of people trying to use them at that time. I don't know why they do this, but it sucks to get a cab at that time.
Atleast in NYC, all uber/lyft drivers are required to carry a TLC tag, hence carry the same insurance as any other professional driver service. This is uncommon in nearly everywhere else in the country though.
The price difference between lyft, uber and yellow cab really isn't as great as one would think in NYC. My typical commute home when I use a car service is $55 Uber $43 Lyft, and $50 yellow cab. In NYC we also have green cab service, which do not operate with a medallion, and cannot pick up passengers inside the borough of manhattan. They often cross their services with Uber or Lyft. The pricing has varied in the past few years, but generally speaking the price is the same.
Every cabbie i've spoken to have said that driving yellow cabs suck because the car is in terrible shape, and the rental fees are extremely high.
The most common money flow issue for uber/lyft is if they use the tolled roads, they dont get the money back immediately since they have to wait for their pay check to come in, otherwise, it comes out of their own pocket.
Generally speaking, if I had to put a number on it, my average cab ride is about 30 minutes, and over 90% of the drivers i've spoken to prefer driving for Lyft, then uber, and avoid yellow cab.
At the end of the day, unless you own your own medallion, it's a crap shot for the driver. For the consumer on the other hand, nothing has changed in terms of $ spent, but the service for ride share is significantly better.
My biggest gripe is that I don't get why Uber needs to earn so much money for literally nothing. All they do is connect the driver and passenger.
Again, this is for NYC, the overwhelming vast majority of the US operates without TLC licenses or insurance. The markets outside of NYC also have far less passengers eager to get home.
Interesting perspective.
Thanks for the info
Its good information provided. Thanks for sharing the blog.
It would appear both situations suck pretty hard .
You either accept the scam upfront and shell out 1.3M or opt for Scam as you go option with Uber !!
I was just having this conversation with my aunt who is an UBER driver. When you calculate all of the expenses that the driver assumes you're basically working for less than minimum wage.
BASIC EXPENSES
-Car Insurance
-Oil Changes, Tire Rotations
-Daily Maintenance/Car Washes
Basically UBER started out by paying drivers high commissions to suck them in. An over the years as the company grew they started to raise the fees on the drivers. Now after dealing a massive blow to the YELLOW TAXI CAB industry and squeezing their drivers. They're testing driver less cars in certain states which will eventually lead to them no longer needing human drivers.
While I'm a huge proponent of free markets and technology, you can't escape the fact that technology does make life easier but at a cost. And that cost is the loss of jobs for many low skilled workers.
I'm assuming there are at least some insurance companies that are bringing in/have brought in new policies to cover rideshares etc.? I know this happened in Australia. There's at least one company I can think of that offers 'uber insurance'. Also, since uber's end game is to operate a fleet of driverless vehicles, I assume this problem will go away at some point (although yes, it's shit for the drivers involved in the meantime).
Unfortunately many who enlist themselves and their cars to promote the uber/lyft brand are unaware of the risks they pose to themselves. The reason they have been so successful in the industry is making the use of uber cool and also a quick way to make money for the drivers with no responsibility to the parent company should any problems arise.
They bring in a model that prey's on laziness to seek information and foolishness of people. Then they use this strategy to kill of an already established industry.
....................seems like they are pretty much conforming to the modern way of doing things. By cheating and lying. I would have enjoyed the stupidity of the situation if it wasn't just so sad.
Indeed, you can't fault their innovation.
We didn't do anything about Wal-Mart, nor Amazon, so I doubt this trend will reverse.
offers for medallion sales below $300,00 at this time
All you need to know
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I like this article. eye opener for me. I upvote & resteem.
When the cat is away the mice will play. The West has had no political authority for some time, the mercantile parasites having corrupted virtually every political institutions with their money. The technical innovation merely allows for transfer of mercantile fiefdom from one perception to another. Gone are the days of Pres. Theodore Roosevelt who smashed monopolies because they wielded too much power; now the West has merchant parasites in the highest political offices. Summa sedes non capit duos. Something the decadent West forgot.
London Uber drivers won their legal case against Uber, the Uber final court appeal is late Sept 2018 they will lose again and have to pay $20,000+ to each London driver for hols pay, backpay 8% interest etc.
Uber lost their London licence several months ago but still operate as another appeal to Transport For London heard soon.
Judge in London said UK Uber former manager Jo Betram "methinks you protest to much".
Other Judges calling Uber liars, crooks.... Uber execs pull an IT switch in Holland when the authorities want to inspect their records after rape and criminal allegations against Uber drivers.
Uber crashing all over London and causing passengers and the public life changing injuries.
Ex UK Prime Minister David Cameron and Conservative ex Chancellor George Osborne allegedely under investigation for treating Uber "favorably".
40,000+ Uber Toyota Prius car now clogging up the streets of London causing huge pollution and traffic jams, 7 miles per hour is now the average speed in central London.
Blockchain and Steemit will soon be used to destroy Uber and new blockchain companies run on Steemit etc will shortly be owned by the drivers and passengers.
Great reply, Was going to say the same thing!
London has become ridiculous, whilst at the same time small taxi firms are losing out! (Not bothered about black cabs)
Currently in Quito Ecuador, Uber has only been here for two months, and the yellow cabs are suffering already. Once they go, the Uber price will soar.
This information is right