In keeping with the traditional tendency of large cities run by Democrats to continually make life more complicated and expensive, the New York City Council has just passed new regulations governing ridesharing services within the city. The new rules will make it more difficult to hail Uber and Lyft rides. It will also become more expensive when you can find a ride.
The new rules attack the ridesharing services from two different angles. First, they impose a year-long cap on new licenses for ridesharing vehicles while the Taxi and Limousine Commission conducts study of the effects of rideshare apps on the city. Second, the rules impose a minimum wage for rideshare drivers.
Both of the new rules will have the effect of driving up prices for transportation. Restricting the number of hirable vehicles introduces an artificial scarcity into the marketplace. As supply of vehicles for hire dwindles, the price for available vehicles will increase. Raising the wages for rideshare drivers increases a cost that companies will pass along to consumers. In both cases, the bottom line is that rides will be more expensive and people with less disposable income will be forced out of the marketplace. People who used to take Uber and Lyft will now be forced to take the subway or walk.
The new rules do have some exceptions. Wheelchair-accessible vehicles are exempt from the cap. New vehicles serving areas that demonstrate a need, but showing that they will not increase congestion can also be licensed.
The city says that the new rules are needed to combat congestion on New York’s streets.
“Our city is directly confronting a crisis that is driving working New Yorkers into poverty and our streets into gridlock," New York Mayor Bill de Blasio said on CNBC. "The unchecked growth of app-based for-hire vehicle companies has demanded action – and now we have it.”
Currently rideshare services account for 80,000 vehicles in New York and provide 1.7 million rides per month. Rideshare apps have benefitted from construction on the city’s subway system in what Gov. Andrew Cuomo called a “summer of hell” for commuters.
There is also the possibility that the new regulations are partly due to rent-seeking by the city’s taxi companies. Cab companies fought the legalization of Uber in the city and the competition from rideshares has hit cabbies hard.
I can say from personal experience that Uber rides in New York may not always be cheaper than taxis, but, without fail, the Uber experience is always better with nicer and more comfortable vehicles, courteous drivers and a map that shows exactly where you are going and what the fare will be. Rideshare companies also serve communities where taxis are scarce. Uber simply has a better product than the traditional taxi companies.
The New York Times reported that both taxi and Uber drivers hope that the rules will lead to increased wages. As with other minimum wage increases, the increased wages for drivers will likely be offset by the fact that there will be fewer riders. Increased costs lead to decreased demand.
Congestion is a legitimate issue in New York, but centralized restrictions on the growth of rideshare companies won’t reduce the number of people in the city who need to travel to work, school or the store. What the restrictions will do is impact the poor of the community who will be forced to choose between paying a larger share of their income for rides and using the antiquated and inconvenient subways.