Ever since Uber and its imitators entered New York as free-riding participants in the city’s transportation network, they have wreaked hundreds of millions of dollars’ worth of havoc on not only their competitors but the public. As taxi medallion values were driven into the financial toilet, the city’s mass transit infrastructure—sucked of passengers by Uber’s lowball prices—slowly crumbled.
Topping off one of the greatest feats of self-aggrandizement—the tech giant has accumulated a market value of more than $60 billion—is the $20 billion annual economic cost to the metro area of traffic congestion, which e-hail companies have exacerbated.
All of this was accomplished without paying for the privilege of entering the system and expanding its business model on the streets of some of the most expensive real estate in America.
Meanwhile, medallions were selling for upward of $1 million and the city was requiring a full environmental review for adding even a single cab to city streets. In addition, taxi passengers pay 50 cents per ride to the transit system while just a tiny fraction of e-hailers’ sales taxes benefits subways and buses.
Fast forward four years and we now have more than 100,000 ride-share vehicles on our roadways who paid around $252 each for essentially the same rights that medallion owners paid so dearly for. All of this havoc without one environmental impact statement in what is supposed to be one of the most environmentally conscious cities.
Municipalities all around the country are finally beginning to catch on to this scam. The New York Times explained:
“As ride-hailing services become a dominant force across the country, they have increased congestion, threatened taxi industries and posed political and legal challenges for cities and states struggling to regulate the high-tech newcomers. But they are also proving to be an unexpected boon for municipalities that are increasingly latching onto their success—and being rewarded with millions in revenue to pay not only for transportation and infrastructure needs, but also a host of programs and services that have nothing to do with the ride-hailing apps.”
The question is no longer whether Uber and its imitators should pay but how much.
Even Uber-friendly Gov. Andrew Cuomo has seen the light. His newly proposed congestion-relief plan recognizes Uber’s role in congestion, and comes with a ride-share fee on the giant disrupter. Unfortunately, that nascent plan has a number of obvious flaws as it is currently being conceived.
The initial idea is to charge ride shares like Uber a fee for passing into the designated congestion zone. This is inherently unfair and ineffective at the same time. As Felix Salmon wrote on Wired.com: “While charging them to drive into a crowded zone can certainly raise tax revenues, it’s not going to reduce congestion. … They are the alternative to driving into town—only instead of driving in and then parking, taking themselves off the roadway, they drive in and then just continue driving, for hours and hours, making congestion even worse even as they effectively amortize the cost of any congestion fee.”
The real congestion issue devolves from the cruising of the central business district, a right that the city had granted exclusively to taxis—and, as they say in New York, “not for nothing.” The Uber charge, then, must correlate with not only the ride-share impact on congestion, but its free-riding usurpation of the cruising rights for which the city charged taxi medallion owners billions over the years.
The only issue, then, is how much to charge these interlopers. When Uber arrived and medallions were selling for as much as $1.4 million, the city had been granted permission by the state to sell an additional 2,000 medallions. But only 350 were sold, while 1,650 were left on the shelf as their value fell because of the Uber disruption. This effectively deprived the city of close to $2 billion.
The only appropriate response is to charge Uber and friends a hefty licensing fee if they want to do business in Midtown. If all Uber, Lyft, Via and Juno licensees paid $15,000, it would yield $1.95 billion for mass transit.
It is, however, fairly predictable, that such an annual charge would thin the herd of 130,000 licensees. How great a diminution is not predictable, but the result would be a classic win-win:significant funds for mass transit, reduced congestion for choked city streets. (…)
Given the extreme nature of the financial and environmental damages Uber and company have inflicted on the city, extreme responses are not only needed, they are commensurate with those damages. A newly found appetite for tackling the corporate predator is a breath of fresh air.
Carolyn Protz and Gloria Guerra are medallion owners and members of Taxi Medallion Owner Driver Association.
- Uber needs to pay more than just a congestion fee in New York City.