Ride-hailing services like Uber and Lyft have been Silicon Valley’s big disruptive success story of the last five years. They upended the market, beat the policymakers, won over consumers, and saved democracy. Or at least that’s the story Uber and Lyft are selling, especially as they pivot to the next big thing: self-driving cars.
But the ride-hail industry is still at loggerheads with state governments across the US over a number of sticky issues. After winning a series of legislative victories from 2012 to 2015, ride-hailing companies encountered pushback in five of the six largest states that considered legislation to regulate these services, according to a new report from transportation policy expert Bruce Schaller.
Bills to legalize and regulate ride-sharing failed to pass in Texas, Florida, New York, New Jersey, and Pennsylvania. Meanwhile, Massachusetts passed a bill for statewide regulation, but ultimately kicked most of the controversial issues down the road.
Schaller, who worked for New York City’s Department of Transportation and now runs his own consulting firm, says there are five main issues on which Uber and Lyft won’t budge, which is preventing them from reacher broader compromises with state regulators. “Across the board in big states, it’s the same issues again and again,” Schaller told The Verge.
So what issues are we talking about?
Level playing field
For years, the traditional taxi industry has complained that Uber and Lyft don’t have to comply with the same rules as yellow cabs, creating an uneven playing field. Since they first launched, ride-hailing apps have swooped in and snagged a huge share of the market in many cities, while running roughshod over regulators. Taxi companies cry foul, and state and local lawmakers are still struggling with how best to respond.
“Should regulations on taxis be relaxed?” Schaller asks. “Should some of the regulations that apply to cabs be extended to [transportation network companies]?” Aside from a handful of cities, there are wide disparities in regulations for taxis and ride-hailing apps in most major jurisdictions.
On this issue, Uber and Lyft have drawn a line in the sand. It’s what prompted both companies to withdraw from Austin, Texas, earlier this year. They argue that requiring drivers to be fingerprinted as part of criminal background checks would hamper their on-boarding process, which they need to maintain at a brisk pace because turnover is so high.
Schaller says that Uber and Lyft will need to drop their opposition to fingerprinting eventually, as it is the best way to identify drivers with criminal records. He suggests using digital fingerprinting services like LiveScan to address issues around delays and accuracy. Threatening to withdraw from cities that are considering fingerprinting isn’t a long-term strategy, he said, pointing to Austin as an example of a city that’s doing relatively fine without Uber and Lyft.
Uber and Lyft have pushed back against requirements that a certain percentage of its fleet be accessible to riders in wheelchairs, arguing that majority of their drivers are using their personal cars. “They say, ‘We don’t have a fleet,’” Schaller said. “And they get stuck in these points.”
Accessibility advocates have proven to be ride-hailing apps’ loudest critics. In New York, they took credit for blocking a bill that would legalize ride-hailing in upstate and Long Island. But Uber and Lyft continue to resist their efforts, apparently not seeing any downside to appearing unsympathetic to wheelchair advocates.
As progenitors of the gig economy, Uber and Lyft bear a lot of the blame for redefining the nature of employment in a way that many people believe disadvantages workers. Uber is currently negotiating a major class action lawsuit that is seeking to reclassify drivers as employees rather than independent contractors.
Schaller says regulators and lawmakers need to make sure drivers have certain civil protections and ensure “meaningful channels of negotiations between drivers and companies.” Collective bargaining rights, however, is probably not realistic, he says.
State or local enforcement
Who should oversee the apps? Local taxi commissions? State regulators? California is right now shifting regulatory authority from the cities to the state, a situation Schaller says other states should take note of. All oversight should be under one roof, he argues. But in big cities, the agency on the ground with appropriate local expertise is the best bet.
Tackling these issues hasn’t been easy for states, Schaller says, pointing to the major legislative failures over the last year. And as Uber and Lyft continue to expand their reach into new services like carpooling, “microtransit,” and self-driving cars, the challenge facing regulators to create a more equitable and effective system will only grow more urgent.