Big Apple’s Crackdown on Ride-Hail Vehicles Could Cause Big Problems

by Jennifer Tiedemann
August 9, 2018

Getting around the Big Apple isn’t the easiest—and it looks like the city is trying to take one popular mode of transportation out of commission.

On Wednesday, the New York City Council passed regulations to implement a one-year limit on the number of new licenses issued for ride-hail vehicles, making it the first U.S. city to impose such a cap. Additionally, the new regulations establish a minimum wage for ride-hail drivers.

Uber, Lyft, and the like allow drivers to earn some money on their own schedule, with low barriers to entry (for instance, in New York City, Uber drivers just need a Taxi and Limousine Commission license and plates, as well as commercial vehicle insurance, to get started). Compare that to driving a New York City taxi: The cost of a single taxi medallion hit a whopping $1.3 million in 2013—yes, the cost to merely get the permit to operate as a taxi. While the popularity of Uber, Lyft, and similar services has dealt a big blow the average medallion price, it’s much easier to become a ride-hail driver than a taxi driver—and to do so on one’s own terms.

And ride-hail options are something New York City customers clearly want—more and more all the time. In July 2017, Uber’s average daily ridership surpassed that of New York City’s cabs for the first time—289,000 rides per day vs. 277,000. About 80,000 ride-hail vehicles operate in New York City today, up from fewer than 13,000 just three years ago.

Why are customers embracing ride-hail services? They tend to be cheaper, and it’s just easier to request a car through an app rather than try to hail a cab, particularly on a rainy night or in a less-traveled area. The New York Times pointed out last year that Uber was showing particular growth in the outer boroughs—“in more diverse neighborhoods, including some poor and minority areas that have long been shunned by yellow taxis.”

Ride-hail services are allowing more people to get around New York—so what’s the city’s problem with them? The City Council’s rationale in passing regulations is—they argue—fewer ride-hail vehicles will lead to less traffic. But cracking down on a growing industry that people want is no way to solve a traffic issue (after all, it’s not like traffic didn’t exist in New York before the rise of ride-hail apps…). New York City cab drivers may benefit from these regulations—but that’s just because they serve to prop up cabs at the expense of more convenient, more cost-effective alternatives. Despite its claims that it’s trying to reduce congestion, what the City Council is really doing is trying to push out the sharing economy to preserve a strong existing lobby (something we at the Goldwater Institute are working hard to fight against—take a look at some of our work to protect home-sharing, for example).

The ripple effect from instituting ride-hail regulations promises to cause some major damage to both drivers and to customers, promising to make ride-hail vehicles more expensive and less accessible. The New York City Council may be trying to make the city that never sleeps into the city that can’t get a ride.

Jennifer Tiedemann is the communications manager at the Goldwater Institute.