Why Triad Strategies is Wrong on Ride Sharing

Our recent blog on 'the Non-Sharing Economy' prompted a response from Roy Wells at Triad Strategies. Triad is the Harrisburg lobbying and public relations firm secured by Lyft to make the case that its services should not be subject to the same rules that govern cabs. We appreciate Roy's weighing in and giving us the opportunity for a deeper back-and-forth.

The core issue, as Mark Price explained, is that Lyft and Uber compete head-to-head with cabs. If, however, they are subject to a different and less costly set of regulations that will put downward pressure on cab driver wages (which are already pretty low). Dean Baker of the Center for Economic and Policy Research (CEPR) makes a similar argument in a blog published last month. Dean also suggested that it may be appropriate in some cities to modernize regulations governing both cabs and so-called ride-sharing services. Given unhappiness with Yellow Cab, Pittsburgh may be one of those cities.

Dean and KRC are not saying that we should stop Lyft or Uber from entering the market. We are saying that we need a level playing field. Or as Mark Price explained in his earlier blog: "There is no reason that Lyft, Uber and traditional taxi cabs can’t compete with one another to the benefit of riders. All we need is a common set of rules for traditional cabs and Lyft and Uber..."

Given the need for common rules, the Pittsburgh Post Gazette is off base in its call for "different rules" for taxicabs and ride-share services. There's no ambiguity regarding whether taxicabs and ride-share services compete in different markets: the services pitch themselves as a cheaper, more customer friendly version of taxicabs.

The idea that reducing regulation within a transportation market can lead to a race to the bottom in wages and benefits isn't just theory. This is what happened in parts of the U.S. trucking industry after it was deregulated in the late 1970s. Shipments of a truck full of goods from point A to point B became a game of how little per mile drivers would accept. Many of the drivers ("owner-operators") participating in this downward spiral owned their own vehicles. Some effectively worked for close to the minimum wage once you take into account capital, maintenance, and operating costs for their vehicles -- and would then drive unsafe numbers of hours to try to maintain a decent income. See Mike Belzer's Oxford University Press book Sweatshops on Wheels for all the details. (A March NLRB settlement points to the possibility of owner-operators in trucking being able to unionize, potentially ending what a recent Huffington Post story calls "30 years of ruthless exploitation.")

Are we setting up a downward spiral in compensation (after costs) in the taxi-cab industry and within the new ride-share sector itself? (The price wars between Uber and Lyft make this more likely.)

Will "owner-operators" find themselves working for close to the minimum wage?

What mechanism is in place to prevent that?

Spend a few minutes reading employee ratings of Lyft on "glassdoor" (a website at which employees can rate their employer), and you will see that the danger of this downward spiral is already plain to some Lyft drivers. It is also clear that some employees think the company is great.

How about crafting regulations that would make positive views that many employees now have of their jobs the dominant one after these companies grow much bigger in Pitttsburgh or elsewhere? For example, we could set a driver minimum wage (like Australia's "safety wage" in trucking, set high enough the drivers don't have to work unsafe numbers of hours to earn a decent living); or how about a regional union that includes taxicab drivers and ride-share drivers and that negotiates wage rates and reimbursement for use of your own rate at the IRS rate (currently 50 cents a mile)? Maybe these regulatory approaches would allow the positive innovations of ride-share apps to flourish while creating more full-time middle-class jobs and flex jobs that still pay decent wages.

Not interested...? Because, as Dean Baker would say, that sounds "complicated"? Or because Lyft is interested in making money and favors PUC regulations and state legislation that open the door to that without addressing job quality issues, directly or indirectly...?

Thought so.

The broader challenge posed by the ride-share debate is to figure out how to embrace new technology and the efficiencies and new services it promises, but in a way that sustains the American Dream of opportunity. In the economy as a whole as in the local ride services industry we haven't figured that one out yet.


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