Uber and the Ridesharing Economy

Editor’s note: This article was initially published in The Daily Gazette, Swarthmore’s online, daily newspaper founded in Fall 1996. As of Fall 2018, the DG has merged with The Phoenix. See the about page to read more about the DG.

This Tuesday, the Swarthmore Conservative Society, in conjunction with the Political Science and Economics Departments, brought in guest speaker Jared Meyer to talk about the politics and economics of regulating Uber, a popular, San Francisco based ridesharing company.

Meyer is a fellow at the Manhattan Institute for Policy research and is co-author with Diana Furchtgott-Roth ’79 of Disinherited: How Washington is Betraying America’s Youth. He also writes frequently on Uber and the sharing economy.

Uber, established in March of 2009, is a company that connects passengers with independently contracted drivers via a smartphone app. As a passenger, all you need to do is log on to the Uber app, drop a pin to your location on the app’s map function, and wait for a nearby Uber car to pick you up and drive you to your destination. The wait time and cost are calculated by algorithms that take into consideration the demand for and availability of cars in the area, and after the ride, the transaction is billed to the passenger’s credit card information stored on the app.

After an introduction by Patrick Holland ’17 and a brief explanation of the company, Meyer began his talk by discussing the legal classification of Uber in regard to regulations. Uber, Myer said, is a tech company, not a taxi company. Uber itself does not own any cars and “functions more like Craigslist or Ebay,” in that it connects people and takes a cut of the profits.

According to Meyer, credit unions that own taxi companies are pushing governments to regulate the expansion of ridesharing companies. In a recent article he wrote about Uber regulation in New York City, Meyer said, “Mayor de Blasio, [who received] $550,000 from the taxi industry for his election campaign, argues that it is necessary to artificially limit the impressive growth of ridesharing while the city evaluates the industry’s effect on the city.”

Meyer sees the increase in regulation as harmful for a number of reasons. Uber, he claims, helps to increase transportation availability for lower income residents in NYC. According to a study Meyer conducted earlier this month: “Only 6% of yellow-taxi pickups were outside Manhattan or city airports — compared with 22% for UberX, [the standard Uber ride].” The study continues: “60% [of these rides] were in zip codes with median household income below the noncore Manhattan median.” After citing these statistics, Meyer said to the audience: “When regulations are called for in regard to the sharing economy, we need to ask the question: ‘who is being protected, the public or entrenched companies who don’t want to lose their profits?’”

Later during the talk, a member of the audience asked a question about the employee classification of Uber drivers — a contentious issue in discussions about the ridesharing economy. According to a New York Times article published in June, “The California Labor Commissioner’s Office said that a driver for the ride-hailing service Uber should be classified as an employee, not an independent contractor.” In response to the question and the ruling in California, Meyer said that a large portion of Uber drivers are young and only drive part-time, making mandates to grant drivers employee status constraining and unnecessary. He then said, “Furthermore, almost all taxi drivers are independently contracted anyway. So I don’t see why this should apply strictly to Uber.”

Meyer presented Uber as having many comparative advantages to taxis. In a recent Townhall article written by Meyer, “Ubers are Safer than Taxis,” Myer argues that because taxi drivers tend to carry around $100 of cash on them, “the homicide rate for taxi drivers is about 20 times greater than the U.S. occupational average.” This problem is solved by ridesharing, he continues, because “safety is reinforced by a feedback system where rides and drivers can leave post-ride, public ratings for each other. Additionally, no cash ever changes hands since all payments are taken care of electronically, whereas only 55% of taxi trips are paid for with credit cards.”

Meyer concluded, “The solution, then, is to make taxis more like Uber rather than making Uber more like taxis.”

Featured image courtesy of cdn1.politicaloutcast.com.

Keton Kakkar ’20

Keton entered Swarthmore with the class of 2019 and graduated with the class of 2020. He double majored in English literature and computer science and was awarded Honors at commencement. A former editor of this newspaper, he was responsible for merging The Daily Gazette with The Phoenix, among other initiatives. He grew up in Sands Point, New York, completed the last two years of his secondary schooling at Phillips Academy in Andover Massachusetts, and is a member of the class of 2025 at the NYU School of Law.

1 Comment

  1. I must admit that I, as a passenger, feel much safer riding in an Uber than with cash in a taxi. I like knowing that everything about my ride is being tracked (as scary as that sounds). You hail a cab on the street and there is no record of it happening. At least with Uber, my request and the driver’s acceptance is logged as well as GPS of the trip. Its cheaper and safer without the “cash” element. Either way, you are getting into a car with a stranger.

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