Will New York City's new ride-hailing regulations level the playing field for yellow cab drivers? Mary Altaffer/AP

The city council has voted to set sweeping, first-of-their-kind limits on ride-hailing services.

New York City muscled up against ride-hailing. Now it’s time to see what ride-hailing has up its sleeve.

In a much-anticipated vote Wednesday afternoon, the New York City Council moved to impose a slate of new regulations on ride-hailing services. If Mayor Bill de Blasio signs off on the new legislation, which he is likely to do, New York would be the first city in the U.S. to cap the number of Uber and Lyft vehicles, as well as establish a minimum wage for drivers. It would also impose a new license requirement with more robust data-sharing requirements for the fiercely proprietary companies.

“We’ve been working so hard to level the playing field for the taxi industry in the city of New York,” Council Member Ydanis Rodriguez, representing parts of northern Manhattan, told the Committee on For-Hire Vehicles as they conducted a preliminary vote on Wednesday morning. “Today we’re making history by voting on a package of legislation that will continue to do that.”

These requirements would only touch “high-volume for-hire services”—i.e., services that provide 10,000 or more trips per day. During the year-long cap on vehicle growth, the city would also conduct an impact study of the services. The legislation represents the most vigorous effort yet by a U.S. city to get transportation network services (TNCs) under a semblance of municipal control. But foes say it could lead to higher fares and more limited services.

Ride-hailing has devastated the yellow cab industry, which is highly regulated in New York City compared to Uber and Lyft. Taxi medallions, once highly sought, have plummeted in value since TNCs came onto the scene, casting many drivers into financial ruin. These grim prospects have driven a spate of cab-driver suicides in the past few months.

App-based drivers are not all thriving, either: A 2017 survey by the Independent Drivers Guild, which represents ride-hailing drivers, found that 57 percent of respondents bring in less than $50,000 annually, and 22 percent less than $30,000.

“Thousands of working families across the city right now are desperate,” Ryan Price, the executive director of the Independent Drivers Guild, said in a rally on the steps of City Hall on Wednesday morning. “City Council must send a clear message to these companies: If you want to operate in our city, you must pay workers fairly.”

A lack of regulation on ride-hailing services has also produced an astonishing volume of for-hire vehicles on New York City streets, generating congestion that would not likely have otherwise existed. As of fall 2017, Uber, Lyft, Via, Gett, and Juno had more than 63,000 black cars on the road, with about 61,000 of them affiliated with Uber. These services provided 159 million trips that year, according to a recent report by Bruce Schaller, a former New York City DOT commissioner and transportation consultant, and have added nearly 1 billion vehicle miles to the road between 2013 and 2017.

Less than half of TNC trips would have been made in taxis or in private cars, according to a 2018 commuter survey by the New York City DOT. Fully 50 percent of them would have been made on public transportation—strong evidence that ride-hailing has worsened congestion alongside population and economic growth. An expanding body of research points to similar effects in several major U.S. cities, including Washington, D.C., Seattle, San Francisco, Los Angeles, Boston, and Chicago.

While the new regulations would be a clear win for existing drivers, it’s less certain that capping vehicles would rein in the congestion and transit ridership draw-down effects of ride-hailing. Uber argues that, because the regulations would only affect new vehicles licensed for high-volume ride services, drivers with multiple existing licenses will rush to capitalize on their new value by using their cars more frequently. Uber plans to contact such drivers to encourage this, a company spokesperson said.

Lyft and Uber also argue that the cap would diminish their ability to serve areas outside Manhattan. Studies have shown that app-based ride-hailing reaches neighborhoods underserved by traditional taxis and transit in New York and other cities. More than one councilmember raised the concern that these communities could suffer as a result of the new regulations at the vote on Wednesday.

“The City’s 12-month pause on new vehicle licenses will threaten one of the few reliable transportation options while doing nothing to fix the subways or ease congestion,” Alix Anfang, an Uber spokesperson, said in a statement.

“City Council’s proposals would bring us back to an era of struggling to get a ride, particularly for those in communities of color and outer boroughs,” said Campbell Matthews, a Lyft spokesperson.

Politically, it will not bode well for city officials if the response to these regulations by Lyft and Uber is to pull service away from those areas. “I don’t think they’ll do it, but you could imagine a sort of Machiavellian dynamic there,” Schaller said in an interview on Wednesday. The Taxi and Limousine Commission's task will be to balance these considerations as it establishes the new license scheme, he said.

Instead of the council’s proposed regulations, both Uber and Lyft support universal congestion pricing—that is, a fee on both personally owned cars and for-hire vehicles that enter busy streets at peak hours. That would disincentivize single-occupancy vehicle trips and encourage carpooling—the key to reducing congestion long-term, both companies say. It would also be in line with their business strategies.

Uber, which is valued at $48 billion, has staked its place as the world’s largest ride-hailing service through years of relentless flouting of local regulators and in some cases dodging legal enforcement. It and Lyft have lobbied successfully in dozens of state legislatures to preempt various forms of local regulation. While many cities have succeeded in taxing ride-hailing trips, no city has set a vehicle cap. De Blasio begged off on his last attempt to do so in 2015, after Uber and Lyft waged an extended in-app campaign urging riders to reject the cap.

But things have changed. Three years ago, the effects of the new and largely unregulated industry had been minimally studied. Since then, researchers in New York City, Los Angeles, Chicago, Boston, and the Bay Area have devoted themselves—often deploying a range of clever workarounds to proprietary data barriers—to understanding the impacts and have found consistent results: While ride-hailing has been a boon for some urban transportation gaps (for example, as an alternative to paratransit and emergency response service and a transportation resource for far-flung neighborhoods), it also appears to be strangling traffic, pulling riders off of transit, and adding to carbon emissions.

Historic regulations in New York City could send a signal to cities big and small struggling to rein in TNCs. While a vehicle cap may not be appropriate everywhere, closer attention to what is and isn’t working might be. Cities are sitting up. The biggest change that he’s noticed since 2015, Schaller said, is how visible these services and the baggage they carry has become. “People are seeing with their own eyes what’s happening on the streets,” he said.

What happens next? Watch and wait.  

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