Today, Explained - No fair, ride share

Episode Date: August 20, 2018

New York City has approved the first cap in the U.S. on Uber and Lyft vehicles. WIRED’s Aarian Marshall explains who’ll be impacted the most, and whether this is scooters’ big chance to zip ahead. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for the show today comes from Google Play. You can find all sorts of things on Google Play. They've got movies, they've got music, but also audiobooks. They've got thousands of titles to choose from a la carte, no subscription necessary. You can find them at g.co slash play slash explained. And you can also get $10 off when you visit that website, g.co slash play slash explained. In this city we love, do we let big corporations tell us what to do? No! Do we let the big oil companies or the big pharmaceutical companies tell us what to do?

No! So are we going to let Uber and Lyft and all the other big companies tell us what to do? The New York City Council approved a measure that will cap the number of ride share providers in the city. And it is sending shockwaves through the car service industry. These four hire cars have been clocking city streets, making it nearly impossible to park in front of storefronts. Cab drivers have been lamenting how much harder it is to make a living. They put a cap on the cars in New York City. So it's a major setback for Uber.

They've frozen for one year how many Uber and Lyfts are operating there. For cities who have struggled for almost a decade with how to regulate these cars, this is a big step. Arian Marshall covers transportation for Wired. I'm Anna Sale, host of the podcast Death, Sex, and Money. And I'm covering Today Explained for Sean Ramos-Furham. This is the first kind of firm step we're seeing from a big American city to say, we want to regulate these guys for real. So how is New York City going to do this? Because when I think of Uber and Lyft, I think of them taking advantage of the Wild West of no regulation and the gray area about whether their drivers are employees or if they're independent contractors. Like, how is New York City saying, we are in charge and we are going to make you follow some rules?

So New York is pretty unique in that they actually slotted companies like Uber and Lyft into an existing category. So they are for hire vehicles, just like a black car. And because they're for hire vehicles, they actually issue licenses for them. So they have control over how many cars there are in that way through that licensing process. The cap is $100,000? The cap is just frozen at the level where it is right now. There are about 130,000 for hire vehicles overall, and that includes the black cars. The number of Uber and Lyfts is somewhere around 80,000, we think. What happened in New York City where they were like, this is

the moment, this is the moment where we're going to make a rule? I think it's a confluence of a lot of things. The first is that there has been this terrible spate of taxi driver suicides recently. And that's really drawn a lot of attention to the fact that taxi drivers are having a really hard time making a living driving. Another thing is that New York City is also worried about the amount of traffic that these cars are bringing on the road. New York's been trying to regulate these things for a while. They've had a big kind of embarrassing failure in 2015. cars are ringing on the road. New York's been trying to regulate these things for a while. They've had a big kind of embarrassing failure in 2015. Something that's changed now is that I think the political situation has changed a bit.

Uber had a really terrible year of press last year. A lot of allegations of a really sexist, racist corporate culture that's made the companies look not as great as they used to be. They used to look like this great solution to a lot of transportation problems. And now it's looking like, well, maybe they don't treat their drivers well. Maybe they don't treat their engineers well. And I think the perception around them has changed a bit. I was living in New York City in 2015, and I remember the question of whether Uber was going to start to be regulated and how quickly it became a non-issue. Uber just trounced the political leadership in the city at the time. How did they do that then, and why did it not work this time? What Pioneered, which was really brilliant, is they actually used their app to mobilize their customers. So they pushed notifications onto people's phone that says, your city council member wants to get rid of Uber forever. They said, click here to contact your city council member. And there was a huge uproar.

People said, we love this service. Please don't take it away. And actually put a de Blasio mode, who's the mayor of New York, Bill de Blasio. There will be rules. I don't care how much money they have. There will be rules. They put a de Blasio mode, who's the mayor of New York, Bill de Blasio. There will be rules. I don't care how much money they have, there will be rules. They put a de Blasio mode that showed very long wait times for the cars, a sort of dystopian transportation nightmare right on your app. The de Blasio tab appears along the bottom of the screen, where you select what type of Uber service you want.

If it's selected in Manhattan, the wait time is shown as a staggering 25 minutes. In Brooklyn, users are told no cars. They tried to do that again, but for whatever reason, it didn't quite work this time. Did they do those same push notifications this time? I believe they did. They also did calls to customers as well. Uber called customers? Yeah. But if I'm a driver and now all of a sudden New York City is saying you're not going to have more competition on the road, are the actual drivers for these companies stoked about this cap? If you have a license already, you're good to go. The drivers were in favor of this cap and they were also in favor of the other big legislation

that New York passed, which is they created a minimum wage for Uber and Lyft drivers. They really like that. How much are they going to get paid? They haven they created a minimum wage for Uber and Lyft drivers. They really like that. How much are they going to get paid? They haven't set the minimum wage yet, but we think they're going to base it off of these economists created this formula, and it's probably going to be about $17, which is above the minimum wage in New York. And the reason why it is is because there's the cost of having the car. You own the cars in Uber and Lyft drivers, so they're trying to build in that cost.

I did an episode of Death, Sex, and Money last year where I interviewed Uber drivers all around the Bay Area, and I heard again and again how many hours they just had to be on the road to get enough of a day's work pay, and a lot of that time they were driving around with empty vehicles. So is the actual workday of an existing Lyft or Uber driver going to change, do you think? Are they going to be driving less with empty cars around the streets of New York City? It really depends on how the driver is operating. A lot of people drive just a few hours a week. Uber has come out and said they are going to get in touch with their drivers and they're going to say, hey, if you don't drive 24 hours a day, you should

rent your vehicle out to other Uber and Lyft drivers. So they are hoping to kind of squeeze utility out of the number of vehicle registrations they already have to keep the level of service up to where it is now. Well, because it basically recreates the taxi medallion system that has long existed in New York City, where if you have a permit, basically, to run a yellow cab taxi, it's very valuable. So it's another revenue stream, potentially, for an Uber driver to be able to say, like, yeah, you can use my permit, but it's going to cost you. Yeah, exactly. One of the big questions I'm still investigating is whether this will create a system where someone just owns a bunch of Uber cars and they rent them out to people in a system where someone just owns a bunch of

Uber cars and they rent them out to people in the same way that people own a bunch of taxi medallions and rent them out to people and that's a big source of income. It'll be really interesting to see how the market develops. So they're going to do a study for a year to see what the ideal level of for hire vehicles on the road is and who knows what that'll be. But for a year, there might be this kind of interesting market that develops, we'll see. I remember when they first were on the road, they were sort of touted as solving this transportation problem that had existed forever, the last mile question. If you take public transportation, but then your house is two miles from there.

So it was kind of exciting, like this is going to fill some gaps that we haven't been able to with our local infrastructure. Now our city's saying, problems outweigh the positives, even though our residents are using these companies. I think for a lot of people, it still solves the first mile, last mile problem. And there are a lot of people in New York City who are very worried that this cap will make their waits longer for cars, make it harder for them to get to work. That said, there are a few other options that have kind of popped up on the market in the last decade or so. Bike share has exploded. If you are able to ride a bike, that's a really nice option. Scooter share has exploded in, gosh, the past six months. It's still a big problem, and it's

something cities would really like to solve. The question is whether this is the best way to solve it for your city. There was this Uber ad going around last month that was all about how Uber will pick people up no matter where they are. It may not be a tourist spot or a hot spot or one of those in the know spots, but it's your spot. And even if it's far away from Manhattan, Uber's there. And here. And here too. From Brownsville to Bayside, Soundview to Stapleton, it's how you get from here to there. No matter when, no matter where, Uber's there. Is capping the number of Uber and Lyfts going to mean that if you live in a place that is further from the center of commerce, say a neighborhood far outside of Manhattan, are you going to be less likely to be able to get an Uber or Lyft car quickly? That's a big, important question. Some groups that were pushing against this cap were actually local civil rights groups in New York City who said Uber and Lyft have been a great

solution for communities that have historically been underserved by taxis. They've been underserved by public transit. An industry that has discriminated against communities of color for almost 100 years is now crying foul because they don't have a monopoly anymore. The public transit system in New York City is not doing great right now. What do those people do once these go away? There are also networks of informal transportation options. The dollar van systems in New York have been going for a long time, taking outer borough residents to the city center. The other thing that the Taxi and Limousine Commission, which regulates for hire vehicles in New York, has said is that they've retained the power to actually

lift this freeze in very specific areas all over New York City. So they've said, if we see that one area in outer Brooklyn is showing really long wait times, terrible service, we can actually lift the moratorium and try to get more drivers to go there and hire more drivers to go there. But it's still kind of an open question exactly how that mechanism is going to work. But that's something they've tried to build in. One of the things I thought was interesting in New York City was that part of the argument for the cap was that Uber and Lyft are diverting people from public transit. People are not taking the subway, they're taking Uber and Lyft because it's an option. I know from my time living in New York City, when I took an Uber or Lyft instead of the subway, it was when the subway was a complete disaster and it was going to take

two hours to get where I needed to go in the city. And so it's interesting to me that the city is making this argument that like you're leaving the subways. The subways have notoriously been a complete disaster and seem to be getting more so. So how is that going to resolve the fact that people need to get around this very crowded city? It's a big problem. One of the things Uber said after the city council voted for this cap is, this is not going to fix the subway. And it's true. A lot of the transportation professionals, planners have said this is a real clarion call to transportation across the U.S. We need to fix our mass transit system. If we're going to try to regulate these companies that have provided valuable services for a number of communities,

we need to really invest in fixing our transit systems because if the subways aren't fixed and there's no Uber and Lyft, then what do you do? Stand clear of the closing doors, please. Cities aren't just dealing with black cars now. They've got docked bikes, dockless bikes, and the invasion of the scooter bros. But who's greasing all these wheels? That's in a minute on Today Explained. because right now you get a $10 credit if you go to g.co slash play slash explained. There's a bunch of titles to choose from.

One of them's A Dog's Purpose, a novel for humans by W. Bruce Cameron. It's heartwarming, insightful, and often laugh out loud funny, it says here. A Dog's Purpose is not only the emotional and hilarious story of a dog's many lives, but also a dog's eye commentary on human relationships and the unbreakable bonds between man and man's best friend. The moving and beautifully crafted story teaches us that love never dies,

that our true friends are always with us, and that every creature on earth is born with a purpose. Check out audiobooks on Google Play at g.co slash play slash explained. Arian Marshall, let's talk about some of the other tech innovations for ride sharing. You work in San Francisco right now. How often are you stepping over a scooter that someone has abandoned on the sidewalk? Actually, San Francisco's been a little different because we had the scooter rapture in June.

For the past few weeks, they seem to be everywhere. But as of today, electric scooters are nowhere to be seen in San Francisco. The rental companies have been ordered to haul them away until they get a city permit. This after numerous complaints of riders illegally on sidewalks, clashing with pedestrians, and the scooters being ditched all over the place. The San Francisco Metropolitan Transportation Agency said these guys have to leave right now. They kind of came in in March without any permission, and the SFMTA cracked down on them and said you actually have to apply for a permit process, and that permit process is still ongoing.

Before the rapture in San Francisco, did you see them a lot? Yeah, definitely. And explain to me exactly how they work. So the way they work is the companies generally come out every morning and they put the scooters out on the sidewalk where they think people are going to use them. And people can either use an app to locate the one closest to them or they can just be walking on the street and see them. And you use your smartphone. You take a picture of the QR code and it unlocks it

and you can drive it and you get to your destination and you park it on the street in an orderly fashion in theory and go on your way. Did you ever ride a scooter? I am actually not allowed to ride scooters in the state of California because you have to have a driver's license and I don't have a driver's license. Is that a personal choice to not have a driver's license as a transportation reporter? Well, my loved ones would tell you that it's dragging my heels, which it might be.

But I think it gives me a very interesting perspective as a transportation reporter. That's my official excuse. Your entire life, no driver's license. Yes, I had a permit that expired recently. What about, like, bike sharing? I feel like that was very in vogue. They've recently showed up in the East Bay in a big way.

I'm noticing them around Berkeley, where I live. But those are the ones that have the big docks. You know, there are Ford bikes in the East Bay. There were City bikes in New York City. Dockless bikes are now a thing. How do those work? Dockless bikes work kind of the same way as scooters. You happen upon them or you look for them on an app, and you go up and unlock it and go on your way.

But the docked systems like the ones City Bike in New York are still going strong. And actually the company that owns all those systems, the big systems like Ford Go Bike, City Bike, Capital Bike, Sherin Washington, D.C., Divvy in Chicago. They actually just got acquired by Lyft. So Ride Hill has entered the mix with bikes. And now it's all kind of mixed up in one big transportation melange. What do you think are the potential unintended consequences of a whole lot of new rules in different cities across America? I think for consumers, the consequences could be much longer waits. There could be much higher fares in the end. These companies are still highly subsidized by venture capital funding. And if they were really to raise the price of your ride to what it actually costs,

I think a lot of people might stop taking the cars. They're still trying to figure out how to make themselves profitable. When you think about the time horizon for when that venture capital infusion of cash might fall off, when are we talking? Uber is trying to go public next year in 2019. They really have to lay all their financials on the table there in a way that they haven't had to in the past. So that'll be a really interesting look into the company and how it's actually operating. I'd say maybe, gosh, like five to 10 years is probably a fair time horizon. And so Uber is looking at going public. Was that something that they had been planning for next year before this New York City vote?

Yes, they had. They've been slowly contracting overseas, getting out of some markets where they're not doing well. They got out of China. They got out of Southeast Asia. They got out of Russia. So we're kind of starting to see them get their ducks in a row. And this has been happening, I'd say, for almost a year now. I hadn't thought about VCs in Silicon Valley basically subsidizing our urban transportation infrastructure.

Yeah. And that's true of scooters as well and of bike share. They have a lot of sudden enthusiasm for the area. But at the same time, what happens when that enthusiasm goes away? What happens when that becomes an unhip investment? Yeah. I thought scooters were so dorky when I first saw them. What happens when that becomes an unhip investment? Yeah. I thought scooters were so dorky when I first saw them. And then you see... I haven't changed from that position. When you see like a good looking person on it who's well dressed, you start to think, maybe this is kind of cool.

God help me. So maybe instead of push notifications to voters, they should just spend that money on hiring models. Yes, that would clearly work on me. Arianne Marshall writes about transportation for Wired. I'm Anna Sale, filling in for Sean Ramos-Furham. To hear the episode of my show where I interviewed Uber drivers all around the Bay Area while I took rides with them, go to deathsexmoney.org to find the episode, for your movies, for your TV, for your news. You can also go there for your books.

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