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Will regulation of rideshare apps leave passengers stranded?

In New York City, an influx of vehicles using rideshare apps like Uber has caused the value of the city's taxi medallions to plummet, along with drivers' wages. This month, New York became the first U.S. city to regulate rideshare apps, with a year-long cap on new licenses, amid a conversation about the role city regulation should play in that industry. NewsHour Weekend's Hari Sreenivasan reports.

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  • HARI SREENIVASAN:

    With the touch of a button, ridesharing apps like Uber and Lyft connect drivers with those looking for a ride…

  • ANDY GONZALEZ:

    I've arrived.

  • HARI SREENIVASAN:

    Andy Gonzalez — who drives for both– began with Uber shortly after the company first came to New York seven years ago. He drove me and my producer Laura filming in the back seat.

  • ANDY GONZALEZ:

    In the beginning, they paid substantially much better. Not only that but the technology that they offered was groundbreaking.

  • HARI SREENIVASAN:

    But, Gonzalez said, Uber has changed how it pays drivers over the years…

  • GONZALEZ:

    They slashed the rates not only one time but two times. So just to give you a comparison, the rates that we have now are less than half of what we used to have; actually less than a third.

  • HARI SREENIVASAN:

    Despite the amount of money drivers make going down, the number of drivers themselves has gone up.

    Since 2011, the number of for-hire vehicles licensed in New York City has more than doubled from 50,000 to about 130,000 cars. All required to be licensed by the city's Taxi and Limousine Commission. The majority of the new cars are used for app services like Uber and Lyft.

    With that surge has come more congestion, making it harder to move through the city.

    But are there enough riders for all those additional cars? An independent transportation study in 2017 found that more than a third of taxi and app vehicles in Manhattan's central business district were unoccupied during daytime hours.

  • HARI SREENIVASAN:

    When you were working on Uber or Lyft, do you find that you're busy all the time or–

  • ANDY GONZALEZ:

    Not anymore. In the beginning, yes, it was busy because there was less cars. But now, if I were to do solely let's say Uber or Lyft I can go 30 minutes, 40 minutes without a passenger. And when you do get somebody you're driving you say seven minutes to get them, and the ride will only be like six dollars. So you just spend like an hour and you'd make six dollars minus your gas money and so you really like operating at a loss.

  • UBER AD:

    "Whenever you feel like driving, with Uber…"

  • HARI SREENIVASAN:

    One of Uber's recruitment taglines is "get your side hustle on." It targets potential drivers looking for a part-time gig.

  • UBER AD:

    "Sure, you might already have a great job. But this is a new way to earn. Because your car isn't just a car, it's a four-wheel money-making machine. So get your side hustle on."

  • HARI SREENIVASAN:

    But most app drivers in New York City don't fit that part-time profile. About 60 percent of New York City app drivers work full-time and 80 percent acquired a car in order to do the job, according to a recent study prepared for the Taxi and Limousine Commission.

  • ANDY GONZALEZ:

    It was never meant to be my "side hustle," as Uber likes to call it. It was never meant to be like that in New York City.

  • HARI SREENIVASAN:

    Before the apps, 13,000 yellow taxi cabs were the primary for-hire vehicles in the city. In 2012, they had on average 487,000 per day. But their ridership has declined steadily since the apps were introduced, so taxi drivers, too, began to make less money.

  • RICHARD CHOW:

    We are making less and less and less. We have to drive sometime 12 hours.

  • HARI SREENIVASAN:

    Richard Chow immigrated to the U.S. from Myanmar, formerly known as Burma. He owns one of the 13,000 taxi medallions that allows the legal operation of a yellow cab in New York City. Because their number was strictly controlled, taxi medallions were long an expensive item for anyone wanting to enter the business. But the assumption was that you could make your money back and more. And the price of medallions kept rising.

  • RICHARD CHOW:

    13 years ago I paid $400,000. Three years earlier than my brother and I was very lucky.

  • HARI SREENIVASAN:

    Chow's brother Kenny, also a yellow taxi driver, took out a loan to buy his own medallion in 2010.

  • RICHARD CHOW:

    $700,000 he paid for the medallion from New York City. In the beginning, he thought it was a good investment. Medallion prices are climbing up.

  • HARI SREENIVASAN:

    Your brother thought the value would keep going up?

  • RICHARD CHOW:

    The value of medallions keep going up, so…

  • HARI SREENIVASAN:

    But when Uber and Lyft and their 75-thousand more cars entered the market, the taxi medallions plunged in value to less than $200,000 this year.

  • RICHARD CHOW:

    This is my investment, also. My retirement, also. We don't retirement, no health insurance, life insurance. So we got nothing left.

  • HARI SREENIVASAN:

    After years making less income with so many more drivers to compete with, Chow's brother Kenny began to miss loan payments on his medallion and took out a lien on his home. He also had a daughter in college and a wife with stage 4 colon cancer. In May, Kenny's family reported him missing.

  • RICHARD CHOW:

    And that's why he took his own life, so he committed suicide.

  • HARI SREENIVASAN:

    Since November, Kenny Chow and five other drivers have died by suicide. Most of them had documented significant financial problems.

    The New York Taxi Workers Alliance, a group of 21,000 drivers, attribute the drivers' suicides to "financial despair."

  • BHAIRAVI DESAI:

    We are standing here together today, united.

  • HARI SREENIVASAN:

    Bhairavi Desai is the executive director.

  • BHAIRAVI DESAI, NEW YORK TAXI WORKERS ALLIANCE:

    We saw bankruptcies, foreclosures, evictions. Drivers talking about hunger after 12 hour shifts. There's been a serious crisis of poverty for this workforce in this city. The drivers paid a heavy cost for it.

  • HARI SREENIVASAN:

    The New York Taxi Workers Alliance — and other driver advocacy groups — held public protests and lobbied the city council for months to take action and put a cap on the number of licensed app vehicles.

  • BHAIRAVI DESAI AND GROUP:

    CAP! NOW! CAP! NOW!

  • UBER AD:

    "Millions of New Yorkers rely on apps like Uber to get a ride 24/7 in all five boros.

  • HARI SREENIVASAN:

    In July, Uber released a TV spot opposing the city's proposed cap.

  • UBER AD:

    But if the New York City Council gets its way, this could all disappear."

  • BHAIRAVI DESAI:

    I think Uber and Lyft really exaggerated in their narrative that there's going to be a lack of service here. Uber and Lyft have not had a supply problem. It's been an efficiency problem.

  • HARI SREENIVASAN:

    Last week, the City Council passed a temporary "cap" for one year while the Taxi and Limousine Commission studies the cars on the road. That means New York will not issue any new licenses for app vehicles, with the exception of those for wheelchair accessible vehicles.

    Corey Johnson is the City Council speaker.

  • COREY JOHNSON:

    We are trying to come up with a data driven sound public policy package that still allows consumers and customers to get what they need while at the same time balancing the other issues that are being affected because of the explosive growth. The government deserves some blame on this because we created the medallion system which had its own problems with not meeting the needs of many customers around the city where you had this disruptive technology, which met that need, devalued the government set up system. And over the last many years we didn't create a regulatory framework to figure out parity or fairness in the industry which has caused this dramatic upheaval.

  • HARI SREENIVASAN:

    Driver advocate Desai says the other big lesson here for cities is keeping local control.

  • BHAIRAVI DESAI:

    What's been happening is that in 40 states around the country Uber and Lyft have you know lobbied heavily to explicitly exempt themselves from those existing taxi laws and regulations and that's why at the local level, the city regulators were not allowed to step in. That's got to be overturned. That has to be changed. There needs to be local regulation of what has been a local industry.

  • HARI SREENIVASAN:

    Uber and Lyft argue that the temporary cap will ultimately hurt the new yorkers who rely upon their services.

    Joseph Okpaku is VP of public policy for Lyft.

    He said the City Council's plan will disproportionately affect people living in traditionally underserved areas of New York — in particular, people of color.

  • JOSEPH OKPAKU, VP, PUBLIC POLICY FOR LYFT:

    We are really concerned it will have a detrimental impact not only on our driver community but also on our passenger community. Especially in the outer borough areas and in communities of color.

  • HARI SREENIVASAN:

    Considering there are so many for-hire vehicles on the road in New York, why does a pause lead to decreased access as you say?

  • JOSEPH OKPAKU:

    A pause is not exactly just a pause. On a regular basis, drivers tend to cycle on and off rideshare platform at a rate of about 25% of the driver base per year.

  • HARI SREENIVASAN:

    Is there a way moving forward over these next 12 months to figure out how to increase the efficiency of the services to make sure that drivers are picking up more passengers?

  • JOSEPH OKPAKU:

    Well, as a starting point, we disagree a little bit with the numbers that the city was relying on for that part of the study, but we're always trying to make sure that our driver base is being utilized as efficiently as possible. And our shared option, which, in the cities where it operates we have around one-third of our rides being shared rides where two strangers or more are actually carrying one car to a similar destination. So issues like that we think weren't taken fully into account.

  • HARI SREENIVASAN:

    Okpaku worries that the "cap" — even if temporary– could be creating a controlled system similar to that of the taxi medallions.

  • JOSEPH OKAPKU:

    No one wants another medallion-type system and having caps of this nature are only going to result in that type of result.

  • HARI SREENIVASAN:

    Uber did not respond to our repeated interview requests… but the company issued a statement to the New York Times, which said in part, "A 12-month pause on new for-hire vehicle licenses will leave New Yorkers stranded while doing nothing to prevent congestion, fix the subways and help struggling taxi medallion owners."

  • HARI SREENIVASAN:

    New York's been through this road, now you've come to these conclusions. If I'm Las Vegas if I'm Cleveland if I have Ubers and Lyfts, what should I do?

  • COREY JOHNSON:

    Good luck. It's complicated it's difficult. We hope that the data that we're going to be able to glean and gain over the next 12 months we'll be able to inform other municipalities in the United States and around the world of what to look at for public policy solutions.

  • HARI SREENIVASAN:

    As for Andy Gonzalez, he doesn't see himself leaving professional driving anytime soon.

  • ANDY GONZALEZ:

    I love this at the beginning I tried it. It's a lifestyle. It's very hard to explain –the places you go, the people you meet, the vital part you are of the city you know. So I honestly want to keep my TLC plates for the rest of my life.

  • HARI SREENIVASAN:

    Really?

  • ANDY GONZALEZ:

    Maybe I will not drive myself for the rest of my life. But I want to keep them.

  • HARI SREENIVASAN:

    So what does that mean you'd lease them out?

  • ANDY GONZALEZ:

    Well just — it'll be my side hustle.

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