More than 70 years ago, New York City created the first taxi cab medallion. At the time, it was an attempt to ensure cab companies operated safely and transparently. Over the years, however, it has created a system where banks and lenders benefited while hardworking, largely immigrant drivers paid the price.
Now, the mayor is proposing a similar system for the for-hire vehicle industry.
For decades, the medallion system forced hardworking drivers to choose — either pay hundreds of dollars to rent a vehicle upfront; or take on crippling debt to cover the cost of a medallion with loans. No matter the choice, the result was the same: bankers and taxi kingpins got rich while thousands of first-generation immigrants and everyday New Yorkers were left footing the bill.
In a recent investigation by The New York Times detailing how banks rigged the medallion system to bury drivers in a vicious cycle of debt, one leading expert labelled it “modern-day indentured servitude.”
For-hire vehicle apps are different. They offer the opportunity for anyone to earn outside of the medallion system. Drivers set their own schedule instead of having to work 12-hour shifts, and the vast majority of fares go directly into the pockets of drivers. There are no artificial barriers to entry that force everyday New Yorkers to take on mountains of debt.
Sadly, it looks like the people who got rich off medallions, the banks and the city, want to recreate a system that lined their pockets with cash. If approved, Mayor de Blasio’s proposal for a permanent cap on for-hire vehicles will mirror the medallion system that forced thousands of drivers into bankruptcy.
The moratorium on new for-hire vehicles blocks new drivers from licensing a vehicle they already own, and prevents individuals who have been driving rentals for years from ever plating their own vehicle. In order to drive with an app, new individuals looking to break into the market will have to rent a car, which is much more expensive than owning one — and under this system the costs will only grow.
There are already thousands of drivers stuck renting, and that is simply not fair.
Artificial caps don’t work. The mayor’s plan will create a permanent underclass of drivers, beholden to the whims of fleet owners who can charge them high fees. Taxi & Limousine Commission (TLC)-issued license plates will replace medallions. As the demand for TLC license plates increases, a small handful of people who can afford to buy more than one will bid up prices and pass the costs onto drivers. Regulators cannot replace one failed medallion system with a new one and expect different results.
Drivers who are forced to rent because of the cap already have to spend an average of $8,000 more a year out of their own pockets. For the mayor, who makes $258,000 a year and owns two rental properties in Brooklyn, $8,000 a year might not be much, but for people in my community, that’s real money when you’re trying to your support family.
The city was smart in passing rules to ensure that all drivers earn a living wage, but this cap effectively undermines those reforms.
None of the mayor’s proposals punish the bankers and taxi kingpins who donated more than $550,000 to his 2013 Mayoral campaign. Nor do they help the hundreds of taxi drivers facing bankruptcy as the result of shady lending practices. Instead the mayor has offered more of the same in spite of the fact that, according to The New York Times, “taxi industry veterans said the cap did not address the cause of the crisis: the lending practices.”
We don’t need more policies that make it harder for New Yorkers to earn money, and we don’t need more policies that trap first-generation immigrants in debt they can’t repay. What we need are smart policies that allow hardworking New Yorkers to earn money. The mayor promised to end the tale of two cities, not exacerbate it by making it harder for middle class New Yorkers to find work.
Biggest quarterly loss ever: Uber earnings disappoint as share prices tank
Uber lost $5.24 billion in the second quarter – its largest quarterly loss ever – after making huge stock-based payouts in the months following its initial public offering.
The ride-hailing giant said Wednesday it paid $3.9 billion in stock-based compensation and expenses during the quarter. It also paid $298 million in stock and cash to drivers to show appreciation in connection with the IPO.
Uber’s earnings release comes a day after rival Lyft improved its 2019 outlook, despite a projected loss of nearly $1 billion.
The loss per share including those expenses totaled $4.72 while revenue jumped 14% to $3.17 billion. Analysts surveyed by FactSet expected a loss of $2.03 per share on revenue of $3.31 billion, on average.
“We could push the company to break even if we wanted to, frankly, but I think what you will see from us is…lower losses going forward while at the same time we aggressively invest in new growth levers,” said Uber CEO Dara Khosrowshahi in a conference call with reporters. “But there’s no doubt in my mind that eventually the business will be a break even and profitable business.”
Khosrowshahi said he expects 2019 to be the company’s peak loss year and for the losses to be smaller in the next two years.
Khosrowshahi said he’s confident in the scale of Uber’s ridesharing business and its technical capabilities. He does not expect the Eats food delivery business to be profitable next year or the year after, but said “I think what we have is a great combination of a ride business that is going to turn more profitable over the next couple years, that will allow us to invest aggressively in the Eats business and also carry a bottom line that improves.”
Uber’s shares fell 11% in after-hours trading.
Gross bookings, which is the total dollar value of rides and Uber Eats meals and the amount paid by freight shippers, grew 31% – or 37% in constant currency – compared with the same time last year.
Revenue for the Uber Eats service rose 72% to $595 million. Ridesharing revenue grew just 2% to $2.3 billion because of the one-time driver appreciation payments, the company said.
TLC set to vote on new e-hail rules
The Taxi and Limousine Commission is ready to move ahead Wednesday with new rules for app-based car services despite opposition from some City Council members and hundreds of pages of comments criticizing the plans.
The vote comes two weeks after a daylong hearing that featured a procession of app-based drivers worried about how the rules will affect their livelihood. The TLC is looking to extend a year-old moratorium on new vehicle licenses for Uber, Lyft, Juno and Via, and to reduce the amount of time app-based drivers can cruise without passengers in Manhattan below 96th Street.
The proposals, which would cut empty cruising time to 31% in the next year from the current average of 41%, grew out of a City Council–mandated study of how for-hire vehicles have contributed to congestion. The new regulations would be in addition to a minimum-wage rule that took effect in February along with a congestion surcharge on both FHVs and taxis.
Uber and Lyft, leading a drive against the rules, say that too many regulations have been enacted at once and are threatening their business. Groups such as the Hispanic Chamber of Commerce and the Haitian American Caucus have echoed those complaints, arguing that the TLC is closing off opportunities for recent immigrants, who make up a large share of the drivers.
Some City Council members have also asked the TLC to think twice, saying that the pace of regulation should slow until a new agency head is appointed. The regulator is currently led by acting Commissioner Bill Heinzen.
Many drivers say the license cap has forced them to rent vehicles at a premium rather than drive their own car.
The TLC argues that ridership continues to grow for Uber and Lyft, and drivers have gotten an average pay raise of $500 a month since the minimum-wage regulations went into effect. The agency sees the cap extension and the cruising regulations as essential to reducing congestion and making the app-based companies more efficient.
As for drivers who are paying more to drive because the moratorium prevents them from getting a TLC license for their own car, a spokesman for the agency said it would “seek more information from the vehicle-leasing companies about the rates they charge and the terms of their leases.”
Appy medium: The Taxi & Limousine Commission is right to keep a cap on app-car growth in place
It’s not true that everyone complains about traffic but no one does anything about it. On Wednesday, the Taxi & Limousine Commission is poised, we hope, to take smart action — by voting to continue the freeze on adding new vehicles to the 80,000 app cars driving for Uber, Lyft, Via and Juno now on New York’s roads, and to require that not too many of them are driving empty south of 96th St.
From zero in 2011 to 80,000 today, the app cars have been a boon to many in the four-and-a-half boroughs that yellow taxis ignore. But 80,000 extra cars jockeying for passengers cause lots of traffic, especially on the skinny island where they tend to congregate.
The TLC’s new rules, coming after a thorough study, maintain the pause on the growth of app cars imposed last summer. Contrary to predictions, that didn’t result in longer wait times or people losing their ride. TLC says it’ll raise the cap if service suffers.
Limiting empty cars in the core of Manhattan is also sane. App cars account for almost 30% of all traffic below 60th St., outnumbering even yellows — and 41% of those app cars are empty at any given time (by comparison, there are just 13,587 yellows, 2,000 of which are mothballed). The new rules require no more than 31% of them to cruise empty in the zone.
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