By Tyler Bauer
On Wednesday, New York City Council voted to limit the number of ride-sharing vehicles in the city, specifically targeting Uber and Lyft. New York City is the largest market for Uber’s largest American market, and New York City’s cap could provide a model for capping done in other big cities in the future.
The two main aspects of what the New York City Council voted for are as follows: a one-year freeze on new for-hire vehicle licenses and a minimum wage of $17.22/hour for drivers.
Why NYC is Fighting Ride-Sharing Services
According to the New York City Council and the Mayor of New York, Bill de Blasio, claim that these measures will ease gridlock on the streets and raise wages for drivers. Each of these seem like noble causes, right? Who doesn’t want traffic to flow and drivers to earn more money? Unfortunately, there’s more to the story. I think the real reason for these measures is crony capitalism.
The New York Taxi Drivers Alliance hates ride-sharing services like Uber and Lyft. These services cut into taxi drivers’ earnings, and the regulations placed upon the taxi industry give unregulated drivers in the ride-sharing industry an advantage. Rather than deregulate the taxi industry (after all, that would increase the competition taxi drivers face, which none of them want), taxi drivers want to regulate the ride-sharing industry. Additionally, the city’s Taxi and Limousine Commission has regularly pushed for an increase in minimum wage for drivers – largely to drive ride-sharing drivers out of business. However, taxi drivers have argued that this would hurt the taxi industry as well.
Coming from a city like Fort Wayne, it’s easy for me to underestimate the political power the taxi industry holds. New York City has an abundance of taxi drivers, all of whom are protected by the city through existing regulations. In New York City, it seems like taxi drivers rule the streets.
Why this is Bad
To be fair to supporters of these measures, each of the aforementioned desired outcomes will likely be achieved. Limiting the number of ride-sharing vehicles will reduce gridlock, and requiring a certain wage will raise wages for drivers.
However, I don’t think supporters of these measures understand and appreciate the full effect of these measures. Limiting the number of ride-sharing vehicles on the road will likely reduce gridlock, but it’ll also likely mean there will be fewer cars than people in need of a ride. The government is effectively creating unnecessary scarcity, which will likely reduce productivity by making people late for work, appointments, or wherever they’re going.
Similarly, requiring a minimum hourly wage for drivers will increase drivers’ earnings, but any driver who can’t earn that minimum wage in an hour won’t be able to work. Sure, $17.22/hour would be great for drivers. But instituting a minimum wage will have the effect of reducing the number of wage-earning drivers. Due to this minimum wage, any driver who would earn less per hour won’t be able to drive. Which is better – a few drivers making $17.22/hour, or a lot of drivers making $12/hour?
Lastly, I’m a supporter of the free market. Each of the measures approved by the New York City Council violate the free market. The government should simply get out of the way and let people ride with whomever they please. If New Yorkers prefer taxis, they should be able to ride in taxis. If New Yorkers prefer Uber or Lyft, they should be able to ride with Uber or Lyft. As for gridlock, that problem will take care of itself. If drivers can’t get riders and can’t make a profit, they simply won’t drive anymore. The free market may take a while to regulate itself, but it will always find a balance in supply and demand.