Uber/Lyft Destroy NYC Taxi Cartel In Under 5 Years; Drivers Still Losing

in #news3 years ago (edited)

Uber 0.jpg

$1.3M for this?

It's hard to believe less than a mere 5 years ago, a vicious scramble at the "Taxi Medallion Auction" would result in a market clearing price of $1,300,000 simply for the right to drive a yellow car around an overpopulated island in the hope of clearing something close to $20 an hour after expenses.

Now it's more like $185,000, and likely heading down further.

One of the advantages of running a near-slave-labor operation is your business is very competitive - so competitive, that it will likely run all other competitors out of town at record-breaking speed - even if that requires subjecting all your employees to deliberately understated risk and coercing them into violating Federal and State regulations as a matter of normal routine business operation.

As I've covered on this blog previously, the pay for Uber and Lyft is a lot lower than most of the drivers think it is. They simply fail to account for all the costs and risks that have been foisted on them in the contractual arrangement that they don't understand.

The reality of (almost) every single Uber (and Lyft, etc.) driver is they are all driving illegally. Why? They do not maintain commercial insurance. They do not pay for the "ridesharing endorsement" on their policy, which means they are not covered for any activity that is commercial.

Uber 4.png

It's actually not much better if the customer is in the car, either. Often worse.

(Almost) All of these ride-sharing drivers are underinsured, potentially illegally operating, their vehicles are all subject to impounding and their licenses are all subject to suspension for driving without the correct insurance for much the same reasons you and I can't simply hop in a semi-truck and legally operate it. Uber and Lyft's insurance ($2500 deductible or more) is pathetic and meets neither legal nor practical requirements. These drivers are all one accident away from a legal judgment that will render them a destitute drifter, and they don't even know it.

In other words, Lyft and Uber knowingly run a business model that depends greatly on foisting off liability to individual drivers while lying to them about the risks - all while carefully concealing how terrible the pay actually is after the cost and risks involved in operating an illegally unlicensed taxi service.

Uber 2.jpg

Now you know how they crushed a 90 year old industry so quickly.

If you think this is progress...I don't know what to tell you. The only thing its progress toward is Mussolini's definition of fascism: "The seamless merging of State and Corporate Interest."

But if you're a driver...you better run those numbers again, with liability added back in.

Uber 3.jpg

This chart ignored accident risk/deductible costs, vehicle depreciation, recall expenses, and lots more.

Uber/Lyft should be picking up the tab for either the insurance endorsements to make their drivers legal, or at bare minimum, an educational campaign which clearly delineates the risks of driving in a commercial enterprise without proper insurance.

The last thing we need is a "Wal-Mart" in the transportation industry, running everyone out with anti-competitive practices only to turn around and jack up rates ("surge pricing", ahem) once they have wiped out everyone else.

Note: This is not a defense or endorsement of the NYC Taxi Cartel, in case my use of the word "cartel" did not make that clear enough. I don't have to like either side, goshdarnit.

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If you aren't a regular cabbie taker in NYC, then here are a few things the readers should know.

  1. A yellow cab is driven into the ground. The car must operate 24 hours a day to be profitable in most cases. Most yellow cab drivers rent the cab for a 5 or 7 day period (weekend rates are much higher), which if i remember correctly, was anywhere from $200 to $300 a day after you calculate all expenses. Which means you have to take a weekday rate, and you bust, you can't make your money back because you have to return the car.

  2. If you ever try to leave the borough of manhattan and you tell them you're going to brooklyn, they'll either speed off, or give you a bit of a run around, yes even though it is illegal, this still happens. With the ride share setup, they don't know where you are going until they confirm pickup. But the driver can set general zones that they are willing to drive to.

  3. Taxi's perform a shift change at 5PM, extremely inconvenient since there is a surge of people trying to use them at that time. I don't know why they do this, but it sucks to get a cab at that time.

  4. Atleast in NYC, all uber/lyft drivers are required to carry a TLC tag, hence carry the same insurance as any other professional driver service. This is uncommon in nearly everywhere else in the country though.

  5. The price difference between lyft, uber and yellow cab really isn't as great as one would think in NYC. My typical commute home when I use a car service is $55 Uber $43 Lyft, and $50 yellow cab. In NYC we also have green cab service, which do not operate with a medallion, and cannot pick up passengers inside the borough of manhattan. They often cross their services with Uber or Lyft. The pricing has varied in the past few years, but generally speaking the price is the same.

  6. Every cabbie i've spoken to have said that driving yellow cabs suck because the car is in terrible shape, and the rental fees are extremely high.

  7. The most common money flow issue for uber/lyft is if they use the tolled roads, they dont get the money back immediately since they have to wait for their pay check to come in, otherwise, it comes out of their own pocket.

  8. Generally speaking, if I had to put a number on it, my average cab ride is about 30 minutes, and over 90% of the drivers i've spoken to prefer driving for Lyft, then uber, and avoid yellow cab.

At the end of the day, unless you own your own medallion, it's a crap shot for the driver. For the consumer on the other hand, nothing has changed in terms of $ spent, but the service for ride share is significantly better.

My biggest gripe is that I don't get why Uber needs to earn so much money for literally nothing. All they do is connect the driver and passenger.

Again, this is for NYC, the overwhelming vast majority of the US operates without TLC licenses or insurance. The markets outside of NYC also have far less passengers eager to get home.

Interesting perspective.

Thanks for the info

Its good information provided. Thanks for sharing the blog.

It would appear both situations suck pretty hard .
You either accept the scam upfront and shell out 1.3M or opt for Scam as you go option with Uber !!

I was just having this conversation with my aunt who is an UBER driver. When you calculate all of the expenses that the driver assumes you're basically working for less than minimum wage.

-Car Insurance
-Oil Changes, Tire Rotations
-Daily Maintenance/Car Washes

Basically UBER started out by paying drivers high commissions to suck them in. An over the years as the company grew they started to raise the fees on the drivers. Now after dealing a massive blow to the YELLOW TAXI CAB industry and squeezing their drivers. They're testing driver less cars in certain states which will eventually lead to them no longer needing human drivers.

While I'm a huge proponent of free markets and technology, you can't escape the fact that technology does make life easier but at a cost. And that cost is the loss of jobs for many low skilled workers.

I'm assuming there are at least some insurance companies that are bringing in/have brought in new policies to cover rideshares etc.? I know this happened in Australia. There's at least one company I can think of that offers 'uber insurance'. Also, since uber's end game is to operate a fleet of driverless vehicles, I assume this problem will go away at some point (although yes, it's shit for the drivers involved in the meantime).

Unfortunately many who enlist themselves and their cars to promote the uber/lyft brand are unaware of the risks they pose to themselves. The reason they have been so successful in the industry is making the use of uber cool and also a quick way to make money for the drivers with no responsibility to the parent company should any problems arise.

They bring in a model that prey's on laziness to seek information and foolishness of people. Then they use this strategy to kill of an already established industry.
....................seems like they are pretty much conforming to the modern way of doing things. By cheating and lying. I would have enjoyed the stupidity of the situation if it wasn't just so sad.

Indeed, you can't fault their innovation.

We didn't do anything about Wal-Mart, nor Amazon, so I doubt this trend will reverse.

offers for medallion sales below $300,00 at this time

All you need to know

I like this article. eye opener for me. I upvote & resteem.

When the cat is away the mice will play. The West has had no political authority for some time, the mercantile parasites having corrupted virtually every political institutions with their money. The technical innovation merely allows for transfer of mercantile fiefdom from one perception to another. Gone are the days of Pres. Theodore Roosevelt who smashed monopolies because they wielded too much power; now the West has merchant parasites in the highest political offices. Summa sedes non capit duos. Something the decadent West forgot.

London Uber drivers won their legal case against Uber, the Uber final court appeal is late Sept 2018 they will lose again and have to pay $20,000+ to each London driver for hols pay, backpay 8% interest etc.

Uber lost their London licence several months ago but still operate as another appeal to Transport For London heard soon.

Judge in London said UK Uber former manager Jo Betram "methinks you protest to much".

Other Judges calling Uber liars, crooks.... Uber execs pull an IT switch in Holland when the authorities want to inspect their records after rape and criminal allegations against Uber drivers.

Uber crashing all over London and causing passengers and the public life changing injuries.

Ex UK Prime Minister David Cameron and Conservative ex Chancellor George Osborne allegedely under investigation for treating Uber "favorably".

40,000+ Uber Toyota Prius car now clogging up the streets of London causing huge pollution and traffic jams, 7 miles per hour is now the average speed in central London.

Blockchain and Steemit will soon be used to destroy Uber and new blockchain companies run on Steemit etc will shortly be owned by the drivers and passengers.

Great reply, Was going to say the same thing!
London has become ridiculous, whilst at the same time small taxi firms are losing out! (Not bothered about black cabs)
Currently in Quito Ecuador, Uber has only been here for two months, and the yellow cabs are suffering already. Once they go, the Uber price will soar.

This information is right

The point you are trying to convey here is moot. Eventually, within the next 5-10 years, Uber/Lyft will have all self-driving cars to transport passengers around. None of what you mentioned will matter and they will completely dominate the taxi market as company's with human drivers will not be able to compete on prices.

CCritical analysis @lexiconical
Always enjoy reading your blog

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Capitalism and optimization at its best.

When systems are free to evolve they do. And generally for the better.

When things get locked into place and become tradition, the system stagnates and dies.

Life is fluid and adaptive.

Sometimes some facts are bitter but it is reality.

thanks for information @lexiconical

In China, we also have such a problem. China has its own "drip". It is the same as "Uber". It is even worse than "Uber." It not only monopolizes the market, but also squeezes the living space of taxis. The driver who registered it is also exploited. This is not a healthy thing. Once there is a competitor, it will go and acquire it. The behavior is bad, Xie, a newcomer from China @chinsesman...

Excelent sir

Always love your informative, no-holds-barred information about topics most people simply don't consider because they don't know they are important. Keep it up.

thank you @lexiconical
for information 😍

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excellent information, whether the market price will drop again, and what about the other driver

Nice post. There are rules in everything. Therefore, driving the divers must follow the rules. Otherwise, there may be many bad situations in the country.

I think UBER

There should be laws disallowing this. Progress and tech advancements are good, but they should at least be to the benefit of the majority.

thank you for this information

thank you for this information

Its good information progided😊

Care to do a guest post? I'd love to have you expand on this topic. Let me know https://www.ridester.com/contact-us/

There must be some good reason why they're doing it. I hope :)

Woah this is crazy

Your post is very good!

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its a better way to journey instead of taxi. uber facilitate people and making a better way to journey...i really appreciate uber thank u...

This is perfect example how "world market" really works. WE cannot even think is it fair or not.


dear agree but these are must for out siders..

Great writing! The only problem that I find is that I feel (again) like we are doomed and maybe the feeling isn't even wrong...

this is something i’ve been wondering about for awhile since uber and lyft etc. sheesh

nice post @lexiconical

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nice life thank you @lexiconical
for information.

Its really sad
They have to think for those who lose their jobs and provide a solution

Is it really any worse than driving for pizza hut or domino's though?

Not fair at all. ...they should be considrate...

I have talked to a lot of drivers and most of them say that the pay is better through Lyft but I do agree a lot of them aren't really able to calculate all the expense they are taking on by driving like that. A lot of them do it as a temporary thing so they might not realize the wear an tear on their vehicle until on down the road.

I don't have a problem with it and additional insurance and all that is a scam in itself so I guess the way I look at it is for instance my buddy in So Cal drives fro Lyft and he likes it and always talks positive about it and the money he is making at this point. So if the numbers seemed like it wasn't worth it to him he would stop doing it but he keeps going with it.

Look awesome 🔥❤️

I use Uber many times a week.

Every single problem named in the Uber model and the medallion model is the result of regulatory interference in free market Dynamics.
Tight regulation stifles markets and creates monopolies like the yellow cabs and onerous medallion system.
Let the market provide modern services, things rarely transition seamlessly so have patience.
The old model is dead.

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Disruption will be disrupted...

It's sad but many university graduates over here have resorted to driving for Uber and their local competitor because they can't find decent jobs. Once there's a gap on the resume with no transferable skill, it's a tough hole to crawl out of.

i think uber and other compnies can heire regular taxi drivers who drive yellow car.

The same problem is present in every country where Uber is working. But the problem is that users always look for the more cheap service without thinking in the other advantage or your own security.

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@lexiconical Well those medallions have kept a effective near monopoly on taxis in New York for a very long time. The price of the medallion is a barrier to entry into the market for the common person. How many people do you know that can afford to buy one? I would be willing to bet that there arent many, leaving most of them to to the bigger already established companies. It is a money making racket that helps only those that can actually afford the medallions and the politicians they pay. Is the Uber rideshare contract ripping off drivers? Most likely, as they can afford good lawyers to create a one sided boilerplate contract that favors the company and most people cant even afford a lawyer to look the contract over before before they sign. That is on the ridesharing providers. But the idiots are still signing them of their own violition.

Should the drivers pay for tge extra inaurance? Yes. That it the right thing to do, both for themselves, and for their passengers. I would also be willing to bet that these insurance packages have gone up rather steeply in recent years... along with many other regulated costs related to this type of business.

It is the major taxi companies paying off politicians to write laws in their favor. This is cronyism at its finest...

The ones you've posted are a lot better than we would expect from you to post a better post

@lexiconical the same what you said in this article,

Uber/Lyft should be picking up the tab for either the insurance endorsements to make their drivers legal or at a bare minimum, an educational campaign which clearly delineates the risks of driving in a commercial enterprise without proper insurance.

Insurance is very important in life. They should have this and must be provided by the company as per the law. Insurance is a very big help to all worker. UBER must provide insurance...

I really like your post and I get your point. I do believe that you would have allot of drivers who would tell the police they were driving for uber even thoughit would not be a wise choice.

The foundation of what your talking about is true though most drivers do not have commercial insurance. Thats a huge liability to the drivers and the passengers.

When I worked as a driver for Uber, it was almost 2 years before I ever spoke to a human being who worked for the company. They look at drivers as current overhead that they are trying to eliminate by driver-less cars and trucks. All corporations should be required to pay a Living Wage. If they can't afford that they should reconsider their business plan.

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Taxi Medallions are the antithesis of a free market system. It's an overpriced regulatory measure that attempts to place large barriers to entry into a market to squeeze our competition, artificially keep supply down while demand remains up, and to funnel money towards those who own said medallions. Drivers lose. Passengers lose. The city's transportation network as a whole loses.

The very same people, politicians, and corporations that are the ones touting "smaller government" and "less regulations" along with a "free and open market" are the very same ones who are in support of a system that stands in stark contrast to what they say.

Similar thing happening with london black cabs

Kinda. I've used Uber before when my car was down. And it is true that the fare is really really reasonably cheap compared to regular taxis. Glad to say that no accident happened while i was using Uber. At that time I find it to be of good service.

Taxi cabs are gross.

Only for one this price? wao... i didn't know... but, now the risk with the personal security in the streets.

osam bro you are great i am with you keep with me

Uber is a scam that takes advantage of people who are bad at math.

Excellent information! Your altruistic sense must be recognized. Thanks for sharing your thoughts.

Very good information!

On one hand this ride sharing stuff is just a way to get around worker protection and benefits for drivers, but on the other I've never had an Uber drive right past me and not stop.

This is correct...Uber and Lyfte consider themselves Transportation Network Companies that attempt to hold themselves harmless from any liability. As a facilitator they hold at least some vicarious liability since they are being enriched in the chain of the transaction.

Initially, TNC's offered no coverage whatsoever, then finally accepted that excess and Uninsured/Underinsured Motorist coverage was necessary. An excess policy is secondary to any primary coverage that the vehicle owner or operator may have in effect.

From what I have read, these companies informed independent contractor drivers that their policies covered "ride sharing," for which their operation does not meet the description. As the facilitator of the transaction, Uber and Lyft should be held responsible for verifying that drivers have the proper coverage in the same manner that they verify other information.

Independent contractor drivers should have a policy that includes business use or a commercial policy. The standard personal auto policy excludes livery service. I believe that when push comes to shove, Uber/Lyft will ultimately be responsible for a non-covered driver. The question is whether the non-covered driver will be afforded protection under that policy, which is dependant on whether the driver is named on the release.

As far as customers go, they should be covered under their own policy for Personal Injury Protection, Medical Payments and Uninsured/Underinsured Motorist.

On a personal level...I have found Uber to be a far better service provider than a traditional taxi company.

Good article and interesting comments.
I agree that driving for Uber/Lyft is not paid well, I drove for a couple of months for both, averaged about $12/hr before any expenses, worked only during the day from 8am- 2pm. I'm retired and I did it just to see how it works and I do enjoy driving. You can write off your working miles at .55 cents per mile, I used an app called Stride to track and help with filing. After a while it does get stressful and the low pay kills the incentive.
On the other hand I like using the service since the taxi services here are about 40% more, most of the cabs are old and dirty and the cabbies don't look so fresh. I have used it in Greece, South Africa and Holland. They were a lot cheaper in Greece, and in SA the taxi cabs were matching the Uber prices, Holland does not have Uber anymore. Also Bulgaria and Germany do not offer such services. I like the idea that you can get the service quick and know what you will pay before you hail the car. It is a great plus when travelling foreign places.
I guess the cabbies have to reinvent themselves in the near future of driverless cars.

In my country Uber was bought by Grab

con uber y ese estilo de empresas pasa lo mismo que una empresa piramidal, simplemente bajan los costes para aumentar las ganancias, sabiendo que en un caso fatal no tienen como responder al cliente, los que le importa es el volumen, y como tiene participación individual están en lo que llamamos al margen de la ley o se agarran de los fallos de la misma.

nice life thank you.

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is this end of the yellow cabs? :O I hope not!

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