Laura Bliss is CityLab’s west coast bureau chief, covering transportation and technology. She also authors MapLab, a biweekly newsletter about maps (subscribe here). Her work has appeared in the New York Times, The Atlantic, Los Angeles magazine, and beyond.
In Massachusetts, New York, Portland, and beyond, ride-hailing companies have made some gestures of conciliation.
Reuters reported Monday that Massachusetts Governor Charlie Baker signed into law a 20-cent per-trip fee on ride-hailing apps such as Uber and Lyft. That in itself is not too strange: Plenty of municipalities already levy sales taxes on those services. With the Bay State’s new tax, 10 cents will be designated for municipalities and 5 cents would be dropped in a state transportation fund.
What was weird was that the remaining five cents of that tariff will be handed over to the ride-hailers longtime arch-enemies, the traditional taxi industry. As Reuters reported, it appears to be the first subsidy of its kind in the U.S. And it seems to be a win-win resolution in a battle over taxi-industry “disruption” that’s raged as hard in Massachusetts as anywhere.
For years, Massachusetts taxi industry advocates have fought to place the same stringent regulations on their start-up competitors as they face, including fingerprinting and background checks for all Uber and Lyft drivers. Previous state bills have also proposed banning ride-hailing pick-ups at airports, giving traditional cab and livery companies exclusive rights to this coveted territory.
That five-cent fee buys Uber and Lyft a way around these requirements: The new law makes no mention of fingerprinting requirements, and it makes no airport ban. For their part, the taxi companies could pocket millions of dollars per year, given that “Lyft and Uber alone have a combined 2.5 million rides per month in Massachusetts,” according to Reuters. It’s not clear yet how those funds would be transferred to taxi companies, or how they will be spent, but representatives appear to be excited about the potential windfall.
"We definitely need some infrastructure changes," Larry Meister, the manager of the Boston area's Independent Taxi Operator's Association, told Reuters, referring to possible improvements in taxi-hailing apps and payment systems. Brishen Rogers, a professor of law at Temple University who specializes in labor issues concerning the “sharing economy,” suggests that the funds could also be used for retraining taxi drivers to take other jobs. “It would also be fair to help taxi owners and drivers get out of debts incurred when the value of their medallions dropped,” he says.
Can’t beat ‘em? Join ‘em
Over just the past few months, Uber and Lyft have made other conciliatory gestures in cities where taxi lobbies have fought hard and loud for a fairer playing field. In Portland, Oregon—a union stronghold that’s seen some of the country’s most consistent anti-ride-hailing protests—Uber agreed to let a local cab company make its services available on the Uber app. The move opens the pool of potential customers for Portland cab drivers, who saw rides drop 16 percent after Uber and Lyft were legalized in 2015, according the Oregonian.
The concession was a minor victory in what’s so far been a losing war against ride-hailing: For the most part, the taxi industry hasn’t been successful in pushing Oregon’s proposed regulations forward. (And Uber gets to pocket 15 percent of the taxi fares booked through its platform.)
Elsewhere, ride-hailing drivers made enough noise to overcome the companies’ insistence on treating drivers as temporary contractors. Seattle passed a law at the end of 2015 allowing Uber and Lyft drivers to unionize. Earlier this year in New York, Uber struck a deal with the state’s Independent Drivers Guild to let their drivers form a guild. The company made similar concessions in 2016 as part of proposed settlements with two driver lawsuits in California and Massachusetts, permitting drivers to form local associations in those states, according to Fortune. These developments are clearly good news for drivers. ”In the long run, the most important reforms will be protecting ride-sharing drivers’ rights at work—guaranteeing them minimum wages, decent hours, non-discriminatory treatment, and collective bargaining rights,” Brishen says.
When the levies take
Just today, in Victoria, Australia, local regulators greenlit an unusual strategy to compensate their hard-hit taxi industry. Uber passengers are set to pay an extra $2 AUD for every ride to help compensate existing drivers and buy back taxi licenses, according to Melbourne’s Herald Sun. The value of taxi licenses in the state plummeted about 70 percent over the past decade, and the plan is thought of as a way to level the playing field for all drivers. This “fairness fund” essentially deregulates the whole field, wholly legalizing Uber and allowing all drivers to set their own fares.
Another variation on the Massachusetts model can be found in New York —also a hard-fought Uber/Lyft battleground—where a proposed bill would give 25 percent of the sales tax passengers pay on ride-hailing services to the Metropolitan Transportation Authority. According to the New York Daily News, “the transit agency has been collecting 50 cents from every yellow and green taxi trip—on the decline since car service apps hit the road.”
But over the long term, the big winners in these arrangements will be Uber and Lyft: The regulations legitimize the companies in the places that have fought the hardest to keep them out, and they’ll be able to operate free of the legal onslaught that’s become their calling card. In exchange, cities can eke out some measure of compensation and control from a new industry that’s refused to play by old rules. And, in the case of Massachusetts, the taxi industry gets a modest token of appreciation.
Neither Uber nor Lyft responded to CityLab’s request for comments, but in previous coverage of Massachusetts’ new law, representatives from both companies sounded appropriately pleased. Uber told the Verge: “We are grateful for Governor Baker’s support and the legislature’s effort towards creating a framework that embraces an innovative industry that has changed the way the Commonwealth moves. We look forward to working with the Administration to implement the law to ensure it increases transportation options and economic growth.”
No doubt they’re grateful. As Slate put it, they really should be thrilled—by bending ever-so-slightly to cities’ wishes, they’re now far better positioned for success.