Tuesday September 26, 2017

Uber and Out: New Player on Local Taxi Cab Scene

Transportation service extending its footprint to Port City
By Randy Pellis


    When a $60 billion game-changing transportation behemoth wants something badly enough, there's a good chance it will get it.

     

    And after four years and a $3.3 million lobbying campaign, the taxi upstart Uber finally got its way. Since recent state legislative approval, Uber is open for business throughout New York.

     

    New York City has been an island of Uberism since May 2011. That hard-won license resulted in strict conditions on Uber's methods of operation, though it hasn't prevented an almost endless string of incriminating allegations against the company, including privacy invasion, character assassination, sabotage against competitors, price gouging and sexual harassment.

     

    Uber plays serious hardball. Its ability to track frequent customer's travels and habits through their smartphone app has lead to allegations of potential blackmail. They have made threats against unflattering journalists and their families.

     

    In 2014, competitor Lyft accused Uber of ordering 5,000 rides and canceling them at the last minute, tying up 5,000 Lyft drivers. During Super Storm Sandy, Uber notoriously hiked its prices. In January, Uber continued to operate in the face of a taxi driver strike against President Trump’s refugee ban, resulting in a #DeleteUber hashtag boycott by outraged Twitter users.

     

    When New York's mayor Bill de Blasio proposed capping the number of Uber drivers allowed in the city, much as the number of standard taxi drivers are capped at 13,587, Uber launched a $1 million ad campaign against him. De Blasio backed down, and there are now more Uber cabs in New York City than Yellow Cabs.

     

    The New York Times recently reported that many Yellow Cab drivers, who paid as much as $1.3 million for the medallion that gives them the right to operate in the city, are being driven out of business by Uber competition and are being forced to auction off their medallions at fire sale prices, unable to repay the loans they took out to buy them. Uber drivers pay nothing for the right to work in the city.

     

    Uber drivers are considered independent contractors. Uber drivers are not entitled to unemployment insurance, disability or, until now, workers’ compensation. But Uber does provide its drivers with on-the-job car insurance and pays for criminal background checks. Though Uber drivers give up benefits, they retain a substantial financial advantage over standard cab drivers.

     

    That's where Oswego's cab drivers draw the line between themselves and Uber and fault the deal that allows Uber to operate here. All three of Oswego's state representatives, assemblymen William Barclay (R-Pulaski), Robert Oaks (R-Macedon), and state senator Patty Richie (R-Oswegoatchie) voted in favor of that deal.

     

    Bob Mills has been driving cab in the city of Oswego for 36 years, the last 12 of those as the owner of Lone Wolf Taxi. He pays over $4,000 a year in commercial taxi insurance and pays the city $200 a year in fees. Uber drivers don't have either of those costs.

     

    "The state's wrong on the fees," he said. “If they’re not going to make Uber drivers have the insurance that I do, they should have at least passed a law that Uber pays the fees all other cab drivers pay to the city. Every city is losing those fees.”

     

    Scott Robertson of Scott's Taxi pays $42 a month for insurance on his personal car, but pays $345 a month to insure his cab. He pays the city fee of $200 that includes the cost of fingerprinting. Uber drivers are not required to be fingerprinted, a difference that was a serious bone of contention in the state legislature, as was the amount of insurance that would be required of Uber on their drivers' cars. The resultant $75,000 bodily injury and $25,000 property damage policy Uber is required to carry is "low," said Robertson, "given the value of vehicles out on the road today."

     

    None of the Oswego cab drivers interviewed including Paul Murphy of Murph's Taxi, John Gibson of NY Transportation, or Lee Walker, owner of the D Bus, harbor any resentment toward Uber drivers, though they wonder whether Uber drivers can make a living in Oswego.

     

    "They’ll struggle but they’ll survive," said Murphy.

    "They’re not going to make a lot of money here," said Mills. "We're just too small. I don’t see it working for them during the day," he continued. "If it works at all, it’ll be at night."

     

    Competition: Not so fast — Gibson said of new cab companies, “They come and they’ve gone. They think they can just open up and make millions.”

     

    Walker doesn't mind the competition. None of the drivers interviewed seemed worried about that. But, "it's not as easy as they think it is," he said.

     

    Comparing price, in every case, Oswego standard taxi drivers are less expensive than Uber. The D Bus takes students from the SUNY Oswego campus to downtown for $2. The standard cabs will take you anywhere in the city for $5 or $6, and some give senior citizen discounts. Uber's minimum fare is $7.35, and all fares are subject to what Uber calls "surge" pricing, a price increase at times of high demand that can multiply the price by 1.5, 2, or even 3 times the base price. Riders are alerted to the price of their ride, including any surge, before they confirm their request to be picked up.

     

    A number of drivers stressed that their customers make their decisions based on familiarity and trust. Mills said he's been driving some of his customers for 20 to 30 years. "I don't even call them customers anymore," he said. "They're like family to me."

     

    Catherine Sugar of Oswego can attest to that. She has been a customer of Mills for about five years. “He’s the most caring driver. He goes above and beyond,” Sugar said.

     

    Her husband uses a walker, and she noted that Mills assists them to and from doctor’s visits. “Nobody does that,” she said.

     

    “You call him and he says he’s going to be there at a certain time, and he’s there,” she added.

     

    Oswego's Mayor William “Billy” Barlow sees the cab business as a "changing industry," and he welcomes Uber to the community. "I think Uber's an economic driver for cities like Oswego," he said. "Uber will strengthen market competition and enhance the available options for Oswegonians. Ultimately the city wins, and that's our No. 1 priority at this time.

     

    "I don’t think cab drivers here will be negatively affected. I see Uber rides as being taken by a younger, college clientele, late at night. They're two different markets," Barlow said. "There's room for Uber and for the cab companies we have here in the city."

     

    Regarding fees, Barlow said, "Uber just got started here. It's a bit premature to impose fees or taxes on them. I'd like to see how much they grow and their impact here overall." Personally, he said, he's used Uber in other cities and "I hear positive things from their drivers."

     

    That is certainly true of one local Uber driver interviewed for this story. She is quite satisfied with her earnings and with the company. She also likes the work and the freedom it gives her.

     

    She works about 10 hours a week on average. Most of her customers are college students. "They tell me there are never enough cabs available on weekend nights," she said, requesting anonymity. She estimates there are between five and 10 Uber drivers now in Oswego. While a good portion of her fares are short, local rides, she receives numerous requests for longer drives, mostly from college students. Drivers keep 75 percent of a ride's fare.

     

    Several battles — After years of back and forth, the New York State Legislature finally came to agreement on driver restrictions and requirements, insurance, and taxation. Uber won on some issues; the state won on others.

     

    On driver restrictions and requirements, there was really only one contested issue and that was fingerprinting. Many legislators were for it. Uber is vehemently against it, and though it gave in on its opposition to it in New York City, they pulled out of Austin, Texas, when residents there voted in favor of making fingerprinting mandatory.

     

    Austin remains the largest un-Ubered city in America. The final New York state verdict? No fingerprinting required of Uber drivers. Oswego's standard taxi drivers are required to be fingerprinted.

     

    Other restrictions and requirements include: yearly criminal background checks, no convictions for driving under the influence of drugs or alcohol, no appearance on the state or federal sex offender registry, and no accepting street hails or cash payments.

     

    The real battles in the legislature were the money issues: insurance and taxation. The insurance industry wanted the lowest possible insurance requirements. The Trial Lawyers Association wanted the highest. Low insurance requirements limit the insurance companies' liability and risk. High insurance requirements mean trial lawyers get a more lucrative cut of higher-dollar lawsuits. The resulting law compromised, though the $25,000 requirement for property damage is a clear win for insurers.

     

    On taxes, the state and drivers won, while cities lost. There will be a 4 percent state tax plus a 2.5 percent workers' compensation tax on all Uber fares, making New York the first state to enact the possibility of workers' compensation for Uber's independent contractor drivers. The entire 4 percent tax goes to the state. Cities get none of it and are forbidden to impose any other fees on Uber drivers.

Oswego County Business Magazine
Issue 152

Issue 152
October/November 2017

Cover Story

Profiles

Kathryn J. Connell

On The Job

“Do you encourage your employees to get additional training?”

Success Stories

Chase Enterprises

My Turn

Jobs of Yesteryear Not Coming Back

Economic Trends

The Shift in Manufacturing Jobs

Last Page

Ronald Woodward Sr.