The Tragic Case of Transportation Evolution in NYC

The New York Taxi Workers Alliance (NYTWA) stated that Uber and Lyft drivers are killing their taxi drivers, literally. This horrific statement made by a desperate group of people comes after years of constant reduction in income from a decrease in demand forced on them by Uber and Lyfts presence on the streets of NYC. Regulators have allowed Uber and Lyft to penetrate and saturate the NYC market, only regulating the need for a livery license which is not an issue for anyone that wants to earn a living as a driver.

Bhairavi Desai, President of the NYTWA, told the media that taxi drivers in NYC are "sick and tired of burying our brothers." And this was expressed in a city hall protest, where four coffins were lined up, and protesters shouted, "stop Uber's greed."

The big difference between yellow cab drivers in NYC and their Uber and Lyft peers are the regulations that are set differently for both groups. Current regulations tend to bend towards the rideshare industry rather than the taxi cab sector, where surge pricing, as well as the number of cabs, are regulated.

For now, only 13,600 yellow cabs are licensed to operate in NYC, while there are 61,000 rideshare cars on the roads. This saturation of the market has led to taxi idle time to rise by 81%, so while it is easier to get a cab, the number of cabs is starting to dwindle since it is no longer economically viable to drive a taxi.

The impact is even more intense when considering the cost of a taxi medallion. The medallion is the regulated taxi license, and it was worth close to $1 million in 2014. Now they are worth around $200,000, and this has the following impact:

  1. Drivers have taken loans against this asset, only to have its devalued drastically.
  2. The decrease in income is causing loans to default
  3. Taxi pensioners see their pension schemes (medallion for sale) devalue

The bottom line is that Desai wants there to be equality in regulations for both industries. Where the competition will be on the service and not the price. Once the price is equal, then the taxi companies have a chance at survival. As of now, Uber and Lyft are devaluing the market in unfair competition, since they support the drivers financially (subsidized income) through surge pricing, bonuses, and guarantees, something that taxi drivers do not have.

Up till now, four taxi drivers have committed suicide in a public display; one shot himself in his car opposite City hall, another killed himself at home. The deaths are all related to financial ruin brought on by the saturation of drivers of Uber and Lyft.

Bill de Blasio, New York City Mayor, issued an official statement to the media, "We've worked closely with the [Taxi and Limousine Commission] and City Council to reduce regulations on drivers while balancing the need to protect customers and keep city streets safe—efforts which will continue as we seek to reduce the stresses drivers face."

As of now, the battle for survival is still on, and the 61,000 NYC residents that drive for Uber and Lyft are also voters, which means that they have an electoral advantage over the 13,600 medallion owners, where size does matter. Another issue is that the drivers of Uber and Lyft are the same as the drivers of taxi cabs, people with a need to supplement or make a full-time income, many are immigrants and driving for Uber and Lyft gives them an opportunity to survive as well as help finance their or their family members education. This war and the deaths that come from it are not the drivers fault, it is also not Uber's fault, it is the regulators fault for not introducing limitations and restrictions to the number of rideshare drivers allowed on the streets, as well as not giving the taxi cab companies time to adjust to the new reality that is rideshare driving.

Nothing is obvious, yet it seems that regulation is coming to ridesharing, and I expect that within the coming year the while rideshare-taxi imbalance will shift.

I am noticing two changes in the environment:

  1. Taxi drivers are getting more frustrated but most are learning to adapt.
    2 Cities are starting to evolve, they are cashing in on the regulatory side and are starting to charge Uber.

I think that both these changes will start to converge, where Uber is regulated to a level that reaches Taxi regulations and taxi drivers will become more independent of conventional structures, using more taxi app systems to increase their income nd compete with Uber on price.