Taxi cabs circled City Hall last Friday, blocking streets and honking their horns to protest a spreading lawlessness in Seattle.
In the city, taxis alone are permitted to pick up people hailing rides. However, the city admits enforcement of their illegal competition is almost non-existent, whether it be for-hire drivers, private cars, or especially upstart "ride-share" companies such as Uber and Lyft. Taxis claim they’re the only ones following the rules, and it’s killing their business. Their competition says taxis are losing because other options offer better service.
The protest was timed ahead of a City Council committee meeting, originally scheduled for tomorrow, where debate on the issue was to enter its next phase. The result of a commissioned "demand study" was scheduled for presentation, which the council says will help shape new commercial vehicle regulations for the city.
The taxi industry is itching for the debate. However, they’ll have to wait a while longer, as Council President Sally Clark says the presentation will now be delayed until September. The study’s researchers need more time to compile their findings, she said.
As recently as two months ago, July 31st was named as the date new regulations would be proposed for Seattle’s commercial vehicles. Clark now says it’ll be later this year, but wouldn’t firm up a specific timeframe. “This is one of the most complicated issues I’ve worked on,” said Clark. “No one’s happy with the current situation.”
But while pointing out flaws in the system is easy, solutions are harder to come by. “This issue has so many facets,” Clark said. “It’s got consumer protection elements. It has enforcement elements, and race and social justice elements….We have to get this new world right, because we can’t go back to the old ways.”
The Disruptors
These issues have been brewing in Seattle for years, but are only now reaching a boiling point. That’s largely due to new "ride-sharing" upstarts in the market. Lyft, UberX and Sidecar have all started operations in Seattle over the last year. In other markets, such as San Francisco, their commercial aggressiveness has forced the formation of new regulations, if only to stem the anarchy.
Clark said that will soon be the case in Seattle as well. While Seattle hasn’t issued ride-share companies a cease-and-desist order like California (which they ignored), she said it was clear the status quo was due for a change.
These new services are often lumped together, having one primary similarity: the ability to hail drivers from smartphone apps, on which drivers are rated and displayed on a map. They also frequently offer cheaper rides than taxi companies.
Among the three services, only UberX presents itself as offering professional rides. An UberX driver we spoke with, for example, identified himself as a longtime veteran of the for-hire industry. Over 100 UberX drivers operate in the city, according to Uber Seattle manager Brooke Steger, and most have experience in the for-hire and limo industries. However, only about half are commercially insured.
“We offer a level of professional service unmatched by our competitors,” said Steger. “Taxis are not the best system for drivers…In our system, drivers can set their own hours and run their own businesses.”
Lyft and Sidecar are more coy about their intentions. Known for the pink moustaches strapped on their cars, Lyft drivers greet you with a fist bump. Lyft’s claim that drivers are “your friend with a car”, sharing the extra space in their vehicle, is undermined by the fact that they’re paid $18 an hour or more, according to the company. Sidecar takes a different tact, with a spokeswoman telling us “we’re doing something even more disruptive [than competing with taxis]. We're working to replace the need for car ownership.”
The companies are clearly service businesses, and speaking with both Lyft and Sidecar drivers, they readily admit they drive to make money, not to “share” their cars. But only Uber is upfront about why they’re here: because no one is stopping them.
“Seattle has been clear there’s a policy of non-enforcement [of the law],” said Nairi Hourdajian, spokeswoman for Uber’s Public Policy department. “Once that became clear to us, we launched UberX in Seattle." Steger added that Uber had met with City Council members a number of times prior to launching, and "they’ve been supportive.”
An Even Playing Field?
It’s this sanctioned illegality that’s the focus of last week’s protest. According to Dawn Gearhart of Teamsters 117 — which represents taxicab operators and helped organize the demonstration — members of the taxi industry have held five hearings with the City Council, as well as many one-on-ones with councilmembers. They feel they’re still not being taken seriously enough.
“We’re asking for the laws to be enforced, pure and simple,” said Gearhart. “Right now, there’s only one person with the job of enforcing the law on all of Seattle’s commercial vehicles. How can there be competition when one side is 100 percent regulated, and the other isn’t regulated at all?”
For more enforcement to be financed, however, the money has to come from somewhere. The first possibility Clark mentions is raising the license fees that taxi operators pay. Ironically, this could make taxis even less competitive, boosting their cost of doing business.
These license fees already pay for something Uber and Lyft largely sidestep — a regulatory structure. As it stands, ride-share companies conduct their own background checks on drivers, and are responsible for ensuring their cars are properly maintained and safe.
“That’s like a restaurant saying employees wash their hands, and they’re free of rats, but no one’s checking,” said Gearhart. “The reason we pay for health inspectors is to make sure that’s true. Anyone can put a pink moustache on the front of their car.” Ride-share opponents portray this as a public safety issue, as well as one of legal fairness.
Steps Forward
Seattle’s solution may resemble recent proposals in California, Clark said. Under new regulations to be voted on next month, ride-sharing companies will be required to get licenses from the California Public Utilities Commission, and will face heightened regulations around background checks, insurance requirements and driver-training programs. Nonetheless, California’s ride-shares will still operate in a less stringent system than cabs. The day before the proposals were released, taxi drivers in San Francisco organized large protests, calling for ride-shares to be banned from the city altogether.
Clark said these regulations “may be somewhat close to what we do” in Seattle, adding that “with the California decision coming out, I think people are ready to move on this, and have a good idea of the issues…It’s not our job to protect a segment of the economy. There’s race and social justice issues that come up, and we need to look at who’s making a living from driving, and how fair things are. But we also need to look at what consumers want.”
Many believe ride-shares are growing because they’re better than cabs, not just cheaper. Hailing a ride on your phone is simple: drivers come when they say and fares are easily paid. Clark and Gearhart agreed they were superior in many ways. Clark noted “their approach is obviously something people prefer,” and even Gearhart admitted that they were “incentivizing taxi dispatch to improve their service and convenience.”
Change is coming to the industry, but it seems no single solution will please everyone. Anything less than full regulation of ride-shares will be seen as unfair in that industry, and that’s unlikely. Ride-share companies themselves mostly want things to stay the same, with Uber preemptively attacking the council’s forthcoming “demand survey” as “poorly written, biased and poorly administered.”
And customers — who just want to safely and affordably get from point A to B — are stuck in the middle of what could be an autumn slugfest.
