By Steven Hill, American Prospect, March 27, 2018
How Uber and Lyft tend to widen disparities of race and class in urban transportation systems
Many working people rely on public transportation to get to their jobs. Mass transit choices have often been entangled with racial politics as well. So not surprisingly, issues of race and class are reflected in the Uber-ization of our city streets.
Even in American cities with subways, public transportation has been poorly funded and provided sketchy service, compared with the efficient and highly functional mass transit systems in most major European or Japanese cities. Taxi service also has been deficient, with a medallion system in major cities that has constrained the supply of taxis and made it difficult to keep up with demand or provide quality service. Not surprisingly, the U.S. rate of private ownership of vehicles is one of the highest in the world. Cheap gas and relatively ample parking contribute to this tilt.
When Lyft, followed by Uber, provided an alternative, ridesharing quickly zoomed in popularity. The 15 percent to 20 percent of Americans who report using ride-hailing services are disproportionately urban. The impact has been mixed. Certainly, some people have gained a useful transportation option, but it comes with a high societal price. Ridesharing has contributed to increases in traffic congestion and carbon emissions, and has undermined mass public transportation. Its use reinforces and in some ways exacerbates existing racially discriminatory patterns in our transportation systems.
The legacy of these companies amounts to a warning to the public and policymakers: If you do not provide people with good transportation options, they will take bad ones. In a time of an environmentally retrograde White House and Congress, when cities are supposed to be leaders in the effort to reduce carbon emissions and reduce the use of automobiles in general, ridesharing is taking us backward.
Ridesharing’s War Against Public Transportation
Uber’s business model is to subsidize fares and flood streets with taxi-like cars in order to grab market share and eventually market pricing power. Most customers who love Uber don’t realize that the company actually subsidizes about 50 percent of the cost of every ride. So every time a passenger gets into the car, they are only paying half of the actual cost. The other half is paid by Uber’s wealthy venture capital funders.
As a result of these subsidies, the unprofitable Uber is bleeding money—its annual losses surged 61 percent in 2017 to $4.5 billion (after losing nearly $3 billion in 2016). In the ultimate irony, the more passengers use Uber, the more money it loses. Why would it do that? Because Uber is using its deep pockets to mount a predatory pricing war and drive off the competition. And that competition happens to be not only taxis and other ridesharing companies, but public transportation.
Who uses public transportation in the United States? Governing magazine summarizes the research, which shows that “in nearly all urban areas, data indicates public transportation commuters tend to be disproportionately poorer than those driving to work.” They also tend to be disproportionately people of color. In New York City, the median earnings of public transit commuters is about $35,000 per year, and only a third of those commuters are white. In Los Angeles, the disparity is even greater. The median income of public transit commuters is only $15,000 per year, 71 percent Hispanic and only 11 percent white. Houston has a similar profile as L.A. So any new policy or technology that impacts public transportation always results in a vastly disproportionate impact on minority and working-class communities.
So it’s troubling that ridesharing appears to be delivering a body blow to public transportation. Ridership on public mass transit is down in nearly every major U.S. city, including in New York City (which recorded its first ridership dip since 2009), Los Angeles, San Francisco, Austin (a 12 percent decline), Washington, D.C. (10 percent decline), and more. But can this ridership decline be attributed to ridesharing, even in part?
Most definitely. A study from the University of California Transportation Center found that nearly half of respondents said that if a ridesharing service hadn’t been available, they would have taken a bus, train, bike, or simply walked. Another study found that, if rideshare users did not have that option, up to 61 percent of their trips either wouldn’t have been made at all or would have been done via mass transit, bike, or foot. Still another study found that ridership declined significantly on San Francisco’s new BART train line to the airport as Uber and Lyft saw their ridership to the airport rise almost six-fold. The ridership decline led to BART (Bay Area Rapid Transit, the regional mass transit system) revenue falling under budget for the year by $3.6 million. It took San Francisco a decade to secure the billions in state and federal funding to extend this line to the airport, and now its usage is being undermined by ridesharing.
A man waits for a ride-hailing service at Washington National Airport. Uber subsidizes its fares and thus competes unfairly with public transportation alternatives, ultimately jeopardizing their continued availability.
Recently I asked a pro-environment person I know in San Francisco, who was about to take an Uber, why he didn’t use public transportation. He said that the bus would cost $2.25, and Uber—which subsidizes half of every fare—would cost about $5. The difference in price was not that great, and Uber was more convenient. Then I asked him, “What if the price for the Uber was double that—what if it was more like $10?” He said that then he would take the bus. So because he was only paying 50 percent of the cost of the ride, he used Uber.
He is not alone. Many people are turning away from forms of transportation that are better for the environment, that produce less carbon, and that result in less traffic congestion, and are jumping into an automobile with low-cost, subsidized Uber fares. Public transit consultant Jarrett Walker warns that ridesharing could dramatically undermine mass transit. That’s because the economics of public transit systems depend on revenue from the busiest bus lines, which are profitable, and which then subsidize the other routes. That equation is crucial in allowing a public transit system to extend to less-populated parts of the city, for late-night service, and more.
Losing ridership to subsidized ridesharing services is just the beginning. Public transportation advocates have feared that if private companies begin offering a “micro-transit service” that sprints up and down the busiest and most profitable routes, such passenger-poaching could destroy revenue for public transportation. Uber already is attempting this with its new Uber Express Pool service, which is not point-to-point transport but instead, like a bus, requires riders to walk a little, both to meet their driver and from their drop-off point. CEO Dara Khosrowshahi recently said he wants his company to run city bus systems, squarely taking aim at this competitor. Other private, for-profit companies have stuck a toe into these waters in various U.S. cities, including Lyft Line and another called Chariot, which is backed by Ford. Chariot offers a private, plush shuttle service with Wi-Fi along preferred routes for subsidized fares as low as $3.80 per ride. Writing in CityLab, transit advocate and software developer Simon Berrebi said, “Microtransit takes away riders and revenue from transit agencies’ most popular routes.” Ridesharing is draining away the revenue that public transportation needs to sustain itself, and “as micro-transit grows,” Berrebi wrote, “it threatens to push public transportation further into decline.”
By all means, U.S. cities need micro-transport services, especially for targeted needs, but these need to be part of a comprehensive public transit system, like “The Ride,” Boston MBTA’s para-transit van service for the elderly and people with disabilities. If private ridesharing services skim revenue from the busiest lines, or even from better-off special-needs customers, the overall public transit system will suffer from funding shortfalls.
The Ridesharing Chokehold on Urban Transportation
In addition to undermining public transportation, ridesharing is a major contributor to the snarled traffic congestion. In San Francisco, there are about 1,800 taxicabs, and 45,000 Uber and Lyft cars, with 9,000 of those on the road at any one time. In New York City, there are approximately 68,000 Uber and Lyft cars, about five times as many as yellow taxis, which has caused average speeds during business hours in Manhattan’s core to drop to a crawl—about 5 to 6 miles per hour, 15 percent to 23 percent slower than in 2010, before Uber.
A study by transportation consultant Bruce Schaller, a former commissioner at the New York City Department of Transportation, found that in Manhattan from 2013 through 2017, the combined number of ridesharing and taxi vehicles increased by 59 percent, the number of trips made in a taxi or ridesharing vehicle increased by 15 percent, and vehicle miles traveled increased by 36 percent. But all of this increase is attributable to ridesharing, since taxi use actually declined during that period. Schaller also found that from 2013 to 2016, ridesharing growth added 600 million miles of travel to city streets. Meanwhile, in London, the number of private-hire vehicles like Uber has jumped 26 percent in the past few years, and is now nearly triple the number of London’s famous black cabs.
So even as the Uber or Lyft car shows up more quickly to pick up a passenger—usually within 5 to 15 minutes—more often now passengers are stuck in heavy traffic for longer time periods, especially during rush hour, due to “Uber congestion.” Even though the percentage of Americans that use ridesharing is comparatively low, the impact is nevertheless large, with non-ridesharing vehicles stuck in the clogged traffic as well. But isn’t that a contradiction?
It’s a classic case of the straw breaking the camel’s back. The effects of congestion are felt at the margins—once a city has reached capacity, it takes only a few additional vehicles to suddenly turn a tolerable situation into one of desperate overcapacity. Urban cores cannot simply add thousands of additional cars to already-crowded streets and not expect dramatic knock-on effects.
Certainly ridesharing is not the only cause of urban traffic congestion. Transportation experts like David Levinson point out that the economy has been expanding, oil prices have plunged, and in places like the Bay Area the hyperactivity of the current dot-com boom is a contributing factor. But I’ve lived in San Francisco for 20 years, and I’ve seen the city streets in both good and bad times, including through the last dot-com bubble in the late 1990s. I’m not the only long-term resident who has observed that they’ve never seen traffic as bad as it is now. Uber and Lyft cars are everywhere, swarming like bees looking for the honey.
Uber’s new leadership, as well as Lyft’s, continues to deny these negative impacts, with Khosrowshahi even insisting that Uber can help solve congestion by increasing the number of electric cars, as well as rolling out flying taxis by 2020 (which is a preposterous distraction—Uber doesn’t even have a working prototype). But the most ambitious study of ridesharing impacts yet conducted, from researchers at the University of California, Davis’s Institute of Transportation Studies, found that ridesharing has resulted in a dramatic rise in the number of trips made and vehicle miles traveled in an automobile. The study, which looked at 4,000 users in seven major metro areas (Los Angeles, New York, Boston, Chicago, the San Francisco Bay Area, Seattle, and Washington, D.C.) between 2014 and 2016, also found a disturbing reduction in the use of public transportation that CityLab has described as “cannibalizing transit.” The ITS study found that ridesharing has resulted in a 6 percent reduction in Americans using bus services and a 3 percent drop in light rail services. This is during a time when use of mass transit needs to increase, if our society is going to get serious about reducing carbon emissions. The one positive was for commuter rail services, where ridesharing has positioned itself as the “last mile” option for riders, transporting them from the train stop to their homes. That resulted in a 3 percent net increase in commuter rail services, according to the study.
Previously, ridesharing companies promised they would help people shed their expensive, carbon-belching private automobiles, but the ITS study found no evidence of that—just the opposite. The vast majority of ridesharing users (about three-quarters) still owned a car, and the small number of users who have eliminated their own vehicle (9 percent) have merely swapped it for increased ridesharing use. In short, now they use someone else’s car instead of their own. In fact, rather than cutting down on the number of autos, Uber and Lyft have prompted many customers to get rid of their memberships to car-sharing services like Zipcar or Car2Go. More than half of car-sharing users have dropped their membership, and 23 percent cite their use of ridesharing services as the top reason they have dropped car-sharing.
In fairness, some ridesharing customers, especially better-off urban dwellers, have gained a new and useful transportation option. People who work late at night, when public transportation is infrequent, have found ridesharing to be a big help. I have listened to both women and men who think ridesharing service is higher-quality, or feel more comfortable in an Uber or Lyft car than in a taxi (though that sentiment could be racially loaded—ridesharing tends to have more white and fewer immigrant drivers than taxis. More on that below.)
But what about all the working people who still have to drive to work, or take public transit? They are now stuck in all that carbon-choked, congested traffic, taking longer to get to work, dealing with that frustration, so that others can take Uber and Lyft. Is the trade-off worth it? It depends greatly on the individual and her or his circumstances.
In short, ridesharing is like shopping at Walmart or Amazon—sure, you get cheap prices, and that’s good. But you are buying into a commercial ecosystem that undermines society in other ways.
In 2016, the Pew Research Center surveyed nearly 4,800 randomly selected U.S. adults, and the study found that different races are using ridesharing in almost equal measures—14 percent of whites have used ridesharing, as have 15 percent of African Americans and 18 percent of Latinos. In sheer numbers, that would mean far more white people are using it than other racial groups. In addition, the Pew study found that a disproportionate percentage of affluent and university-educated Americans use ridesharing—26 percent of Americans who earn $75,000 or more, but only 10 percent of Americans who earn $30,000 or less. Between those two income brackets, 13 percent of Americans have used ridesharing. And 29 percent of college graduates have used it, but for those with a high school diploma or less, only 6 percent.
Younger people are using it more than older. Also, it’s mainly a city phenomenon, with 35 percent of better-off city dwellers using ridesharing services, and an additional 9 percent doing so with friends (having not installed the app themselves). The UC Davis study found that only 7 percent of suburban Americans use ridesharing to travel around their home area, with another 7 percent using it when they are traveling away from home.
Taxi service has long been accused of discriminating against passengers and certain neighborhoods based on race. But ridesharing is getting its share of criticism as well. A study from 2016 by researchers at the Massachusetts Institute of Technology, Stanford University, and the University of Washington found that Uber and Lyft can be as bad as taxis when it comes to bias against minority passengers. The findings were based on nearly 1,500 rides in Seattle and Boston using three ride-hail apps: Uber, Lyft, and a traditional taxi service, Flywheel. The researchers found that Uber drivers in Boston were more than twice as likely to cancel rides for passengers with African American–sounding names. In Seattle, black-name-sounding passengers faced noticeably longer wait times (up to a third longer) for Uber and Lyft service than white passengers.
Allegations of racial discrimination by ridesharing services had been raised before these studies. Uber and Lyft drivers were accused of racial redlining in Dallas, with complaints that service was nonexistent in certain neighborhoods. In one exchange between an Uber driver and a potential passenger, the driver stated categorically that “I don’t pick up passengers from untrusted areas. … No fucking way am I going to pick people up in a crime-ridden area.” Which is the very definition of redlining.
On the other hand, a Pew analysis found that a slight majority of those who live in minority communities say that ride-hailing companies serve neighborhoods that taxis won’t visit. But as taxi companies have suffered from competing against the heavily subsidized ridesharing competition, people living in the shunned neighborhoods are left with one less transportation option, and ridesharing has hardly made up for the gap.
Consider also the racial demographics of who drives traditional taxis versus ridesharing vehicles. According to Uber’s own internal study, 40 percent of its drivers are white, and 48 percent have college degrees. Most drive part-time, a good number of them as few as 10 hours per week to make some extra money in addition to their regular job. Lyft’s internal study found that 34 percent of its drivers do not self-identify as minority.
The driver demographics for traditional taxis are dramatically different, especially in major cities. One study of New York City taxi drivers found that the vast majority are immigrants from places like Bangladesh, India, Haiti; only 5.9 percent of yellow taxi drivers are from the United States. As one study wryly concluded, the most common New York cab driver name is Mohammed. Another study by the NYC Taxi and Limousine Commission found that 57 percent to 62 percent of drivers in the Washington, D.C., Los Angeles, San Francisco, and Chicago metro areas were foreign-born by 2000, with those percentages undoubtedly increasing in recent years.
Taxis have long been recognized as a viable entry-level employment opportunity for low-skilled, English-limited immigrants. Traditionally, taxi drivers would work long hours, and some of them eventually were able to purchase their own medallion and start their own driving business. Numerous taxi drivers have told me how they were able to put their children through college, purchase a home, and enter the middle class. But those days are over. In New York, medallions in 2014 soared to a record $1.3 million, far beyond the means of most immigrants. Then, when the price crashed to as low as $150,000, in substantial part due to the competition from ridesharing, many drivers who had gone deeply into debt to invest in a medallion found themselves ruined.
So in essence, today you have two different taxi-type services in major urban areas, one providing work largely for men of color and immigrants with limited education, the other for a larger number of better-educated white males who often drive part-time. The Eno Center for Transportation wrote a report that examined the impact of new technologies on transportation, and warned about the transit tragedy that will result from the weakening of traditional taxis and public transportation. “Lower-income travelers that do not have access to a smartphone or cannot afford the new services might be left worse off as the traditional transit services they rely upon lose market share,” concluded the report. So that leaves minority communities triply aced out by this techno-transport “disruption,” i.e., losing taxi service as it declines vis-à-vis Uber; losing a once-viable occupation for low-skilled, English-limited immigrants; and sometimes having their neighborhoods redlined by ridesharing services.
The findings in these studies contradict the image both Uber and Lyft have been cultivating for themselves as antidotes to decades of discrimination by traditional taxis. David Plouffe, Barack Obama’s campaign manager in 2008, was hired by Uber as a public relations and strategy guru at a time when the Travis Kalanick–led company was going through one scandal after another. Plouffe mounted a brilliant campaign when he used his contacts developed during the Obama years to stage a press conference in Harlem, surrounded by African American leaders, to oppose a proposal by Mayor Bill de Blasio to impose new restrictions on ridesharing, including a proposed crackdown on the number of vehicles to reduce congestion. Plouffe was able to get a host of minority leaders to speak out against the de Blasio proposals. No question, racial discrimination has existed in transportation services long before Uber and Lyft. But with ridesharing, the discrimination has become more technologically agile: Rather than pretending they don’t see the black man on the curb with his hand in the air, the driver instead can discriminate against the passenger based on whether his name sounds black, or he can turn off the app when cruising through the wrong neighborhood.
When you compile these findings together with recent evidence of racial discrimination among Airbnb hosts, a disturbing pattern emerges of a gig economy with a sizable race problem. A study in November 2016 found that black gig workers on services like TaskRabbit and Fiverr received more negative reviews, and women gig workers were more likely not to be reviewed at all. The flexibility of the online platforms has many great advantages for certain types of workers, yet it also enhances the ability of service providers to pre-select drivers, customers, and workers using an impersonal techno-racial filter.
The Future—Thinking of Our Streets as a Public Utility
It may yet be possible to incorporate ridesharing along with existing modes of transportation into the overall transit matrix. But to do that fairly and efficiently, it is necessary to think of our streets as a public utility. We only have so many roads, and cannot build many more of them in dense urban areas. So we have to learn to share them. It is becoming urgently clear that we have to find the right mix of personal autos, buses, trains, delivery trucks, taxis, bicycles, pedestrian zones, and now ridesharing vehicles. Here are five conditions that Uber and Lyft should be required to follow:
1. A limit on the number of ridesharing cars. Traditional taxis already have a limit, and for good reason—to reduce both congestion and ruinous competition. A balance must be found between having enough taxi-type vehicles to service demand but not so many that the streets are choked with traffic. Interestingly, regulators could use ridesharing’s GPS tracking technology to create congestion zones that limit vehicles and give priority to public transportation, especially during rush hours. Fix NYC, a traffic advisory panel appointed by New York Governor Andrew Cuomo, has called for all taxis, Ubers, Lyfts, and other on-demand vehicles to be outfitted with GPS technology for not only the purpose of tracking congestion but also to slap a $2 to $5 fee (depending on location, time, and day of the week) on for-hire vehicles, which would generate hundreds of millions of dollars for public transportation. Chicago, Philadelphia, and Massachusetts already have more modest versions of such fees. London and Stockholm have successfully deployed such high-tech congestion zones for a number of years.
2. Don’t allow Uber and Lyft to subsidize their fares, since that violates a basic antitrust doctrine against “predatory pricing” and hurts competition. Require that they charge at least the full cost of each ride, or charge the same as taxis. If the companies refuse, slap a “fairness fee” on their fares to bring their prices into compliance.
3. In general, ridesharing companies and their vehicles should be required to follow all of the same laws that traditional taxis must follow, especially in terms of background checks of drivers, insurance requirements, reporting data, and more. It creates too much regulatory confusion and enforcement headaches to have two sets of laws, one for ridesharing and another for traditional taxis.
4. Uber and Lyft must share their data with regulators about their drivers so that drivers can contact one another and organize collectively if they choose. Right now, drivers are a “distributed workforce,” operating in isolation from one another. The ridesharing companies use that condition to prevent organizing.
5. Regulations should ensure that Uber and Lyft treat their drivers fairly and pay them adequately. Uber CEO Dara Khosrowshahi has insisted that drivers’ wages are sufficient, but a new study from Stanford University researchers, published by MIT’s Center for Energy and Environmental Policy Research (CEEPR), thoroughly debunks that claim. It found that the median profit for Uber and Lyft drivers is no more than $10 per hour, and that many drivers actually lose money once you subtract their considerable costs for driving their own vehicle (gasoline, insurance, vehicle wear and tear, etc.). Of the 1,100 drivers interviewed, around half earn less than the minimum wage in their state. But this study only reinforces what so many current and former drivers have been saying for years. And if any drivers complained too much, Uber has cut off many from its platform—“fired by algorithm.”
Khosrowshahi also continues to repeat the old Uber falsehood that by keeping fares low, drivers will wait less time between each fare and so they will earn more money. But as several studies have shown, oftentimes the reason drivers wait so long between fares is because there are so many ridesharing drivers on the road that there is not enough work for all of them. Traditional taxis and limousines have less work, too. A study in New York City found that the number of hours during which drivers did not have a passenger rose dramatically “from virtually zero in 2013 to 36,500 by 2017,” a reflection of the proliferation of the number of drivers and empty seats.
Sadly, this deterioration in working conditions was one of the reasons mentioned by livery driver Doug Schifter, a 30-year veteran of the industry, who in February killed himself with a shotgun in front of New York City Hall. Whatever else may have been troubling him, Schifter used a lengthy Facebook post to articulately express many drivers’ desperation over trying to cope with a glut of drivers that he said forced him to work more than 100 hours a week to earn the same income he previously earned in 40 hours.
Not surprisingly, according to Uber’s own internal study, half of its drivers leave after working only a year on the platform. Other studies have found far higher driver burn rates. The creation of so many low-paying, temporary, precarious jobs is not a good foundation for a strong economy.
No question, the United States is a severely transit-challenged country. I spend a lot of time in Berlin, and a transit stop is no more than an 8- to 10-minute walk away, and you can get virtually anywhere in the city within 35 minutes (often much less). You can sit on the train or bus and relax, read a newspaper or smartphone, or catch up on work, without dealing with the insanity of traffic. It’s a system that has succeeded for working people who are traveling here and there in their daily lives. Unfortunately, the United States does not have a transportation system that comes anywhere close to that standard.
Some have pointed to electric cars and automated vehicles as the solution to carbon emissions and congestion. But the United States has more than 265 million registered passenger vehicles, and there are more than 1.2 billion vehicles in the world. The production of one billion or more electric vehicles will also have direct and collateral costs—including congestion. And the overall emissions impact of electric cars is substantially a function of the fuels that generate the electric power. Automated vehicle transportation is being positioned as another potential savior, but it seems far-fetched that one day we will all abandon our personal cars and depend on a dense transportation grid of self-driving vehicles that constantly troll the streets for passengers, as some like Travis Kalanick have envisioned. That sounds like a formula for even greater gridlock.
Mass transit is the way we must go. There is simply no replacement for boosting major investment in mass transit and in the infrastructure to support it. The United States has fallen way behind other major powers, including Europe, Japan, and China, in that regard. And mass transit does not have to be completely a public system—in Vienna, the Austrians have an efficient public-private hybrid mass transit system called Wiener Linien. But it does need to be subsidized, and it just so happens that government is the entity that usually has the financial resources and is not limited by for-profit incentives to invest in this badly needed infrastructure.
Some have argued that U.S. cities lack sufficient population density to support adequate mass transportation systems. In fact, cities like San Francisco, Boston, Chicago, Philadelphia, and Miami all have population densities similar to Stockholm and Madrid. None of these U.S. cities has mass transit systems close to their European counterparts.
The reality is, if the United States is going to cut carbon emissions and provide efficient, affordable transportation for everyday people, Americans will have to get out of their automobiles—whether their own, someone else’s, electric, or self-driving. And anything that gets in the way of Americans recognizing that, and acting on that recognition, is taking us down the wrong road.