Taxis were originally as cheap as ubers used to be (think rickshaws in developing countries). Absent regulation, the price goes down to the cost of fuel, because this is a class of workers with barely any bargaining power. Uber originally claimed their innovation was logistical efficiencies ("traveling salesman") which would lower prices, but I don't think that matters as much as avoiding the regulation and removing bargaining power from drivers.
It's a cycle: rickshaws > regulation > new rickshaws ("innovation") > regulation.
This will hurt the people who take ubers for convenience e.g. don't feel like walking or squeamish about public transit. But won't affect people who need to get A > B directly. IMO this is a good thing -- more people on public transit will improve public transit.
This absolutely hurts people who need to go to A->B in suburban areas where public transit is abysmal (due to everyone driving, not using Uber). e.g. a family member of mine frequently helps with picking my kid up at school (by using Uber as she can't drive).
Public transit is so slow (an hour vs. 10 minutes driving) that it isn't possible to use it schedule-wise - we'll just be taking the pricing hit. Others might be less able to absorb the pricing hit and will just suffer (it's either pay more or lose job).
Yes, if you really need to get from A > B, your "willingness to pay" can afford the price hike. Sure, you'd rather pay less money for what you buy, but that goes for everything in life. Point is you still buy it.
If you didn't really need that uber, you get back to walking, biking, or busing. Or decide not to take the trip.
Well, yes, but the question is whether it is good or bad for society to add regulations that lead to driving up the cost of "taxi" services and people potentially being unable to get places.
You might be helping the small segment of low income drivers, but hurting plenty of other low income users who may have difficulty paying higher prices. I have no idea what the net effect is, but what worries me is the state (as far as I'm aware) didn't run such an analysis before passing such far reaching laws.
I usually just didn't go whereever I am going now - like to a social outing which involves drinking, because I don't want DUI, getting there by public transit sucks and finding a cab while drunk sucks too. Or paid through the nose, if it's a necessary trip, or driven full hour super-tired after a 10 hour flight (not illegal, unlike DUI, but almost as dangerous, sigh). As every quality of life improvement, Uber is not strictly necessary - people lived millenia without it, right? It just... well, improves the quality of life.
I know people who use rideshares to get to the job, and wouldn't have a job without that possibility. They'd probably had another one - but probably worse one due to restricted choices.
How does it hurt them? Instead of a seeing a fixed price, they'll now see a range, and decide if the upper amount of that range is something they're willing to pay.
For the 10-minute ride in your example, the upper and lower ranges aren't going to be very far apart.
Uber has been subsidizing the rates with VC money for years, which is why they've never been profitable, while being able to destroy competition that does have as deep a war chest.
They'll now get to raise rates and move to profitability while using employee protection laws as air cover.
Uber has been profitable on a unit economics basis, they've used the VC money to expand into new markets and test new models (Uber Eats, self-driving).
> Here is the thing about Uber and Lyft (and much of the “sharing economy”).
> They don’t pay the cost of their capital.
> The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.
> These business models are ways of draining capital from the economy and putting them into the hands of a few investors and executives. They prey on desperate people who need money now, even if the money is insufficient to pay their total costs. Drivers are draining their own reserves to get cash now, but, hey, they gotta eat and pay the bills.
> The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.
That isn't at all the same thing as being unsustainable, because people typically have cars whether or not they drive for Uber. Depreciation comes from both miles and vehicle age, but in general more of it comes from vehicle age. It doesn't matter if the rates can cover the portion of the depreciation attributable to vehicle age because it's not an avoidable cost; you pay it either way.
Critics also like to do these calculations using "average" vehicles and so on, but people aren't stupid. If you're making a living from driving then you buy a car that gets above average mileage and below average maintenance costs. The fact that you can't make a living doing it in a pickup truck is pretty irrelevant when the people doing it are driving hybrid sedans.
The average numbers also get brought down by the people doing it on the side. Some people drive to work every morning and will take a couple of passengers who are going in the same direction. Those people have close to zero incremental costs; they don't have to recover anything. Meanwhile the people doing it full time aren't taking whatever rides they can get at whatever rates they can get along their existing commute, they're working in the places and times that give the best rates, so they need to make more than the part timer but they also do make more.
The whole thing is in balance. If people aren't making enough money to sustain themselves then sooner or later they figure that out and they quit, which makes the price go up because there is less competition. If the price is high enough to be attractive to people then more people start driving and it comes down some. You reach an equilibrium.
I don't know what your models are doing, but if you look at e.g. a ten year old Ford Focus, the original price was somewhere around $17,000. With only one mile on it the bluebook is now around $3800, with 120,000 miles it's around $1800. Which implies that being ten years old accounts for something north of $13,000 of deprecation and adding 120,000 miles accounts for only $2000 more.
That may be different for cars bought after they've already suffered most of the age-related depreciation they ever will, but in that case there is only modest depreciation in either event because the car can't lose much value to depreciation if it was already not worth very much when you bought it.
A ten year old Ford Focus with one mile on the odometer isn’t realistic. Download real data from cars.com by scraping the HTML and build a linear regression.
Who should we trust to make the calculation on whether it is a fair price for a "human" ?
- 1 blogger with potentially an axe to grind
- miilions of people who vokuntarily drive their cars and make money in the process
Uber from my house to the airport has been a little over half of what taxi was (~$60 with tips vs. $100-120+). If it goes back to double that, I won't go bankrupt but I can't say I am rich enough that spending extra $100 on every trip is nothing to me. And yes, there's no public transit worth mentioning around here.
"Taxi prices" are the way they are because taxi companies aren't propped up by a Japanese billionaire and his coterie of Gulf oil barons and VC pals whose stated goal is to monopolize the market.
Uber's a public company now, it has to price its services to make a profit, or to at least reduce the billions it loses each year because its prices aren't in line with market forces.
> "Taxi prices" are the way they are because taxi companies aren't propped up by a Japanese billionaire and his coterie of Gulf oil barons and VC pals whose stated goal is to monopolize the market.
That can't be the whole story. Surely the artificial restriction of supply (taxi medallions, etc) must contribute to a higher cost.
Taxi prices in most jurisdictions are regulated by a public transit regulator (there are some exceptions - Sweden deregulated taxis and every taxi can set its own price, you have to check the price sticker in the window before getting into make sure you're not going to get ripped off), as a tradeoff between affordability and taxi drivers being able to make a living. Medallions are there to keep the number of taxis down so that the taxis that do have medallions have enough riders to keep busy enough to make a living. Adding more medallions wouldn't lower the price, changing the regulated price would.
Taxis were originally as cheap as ubers used to be (think rickshaws in developing countries). Absent regulation, the price goes down to the cost of fuel, because this is a class of workers with barely any bargaining power. Uber originally claimed their innovation was logistical efficiencies ("traveling salesman") which would lower prices, but I don't think that matters as much as avoiding the regulation and removing bargaining power from drivers.
It's a cycle: rickshaws > regulation > new rickshaws ("innovation") > regulation.
This will hurt the people who take ubers for convenience e.g. don't feel like walking or squeamish about public transit. But won't affect people who need to get A > B directly. IMO this is a good thing -- more people on public transit will improve public transit.