Uber/Unter

I was going to write a post critical of Uber and the other transportation network companies (TNCs), but I have so much material and don’t want to spend all the time needed to make a thorough job of it. Instead, I am going to write a short summary, listing my criticism and citing links. I do have a few positives; we’ll start with those, and move on to the negatives which, I regret to say, are many.

The overall picture is in some ways similar to that of Enron and Worldcom, firms which failed due to fraud. There is, however, some hope that the TNCs will ultimately find a sustainable business model.

The amount of money invested in the TNCs is staggering and the losses are equally staggering. In the first three quarters of 2019 Uber lost some 2.52 billion dollars. This is apparently a result of the appalling gullibility of investors and the failure of the securities regulatory system.

The Positives

·      The TNCs provide a convenient and useful service.

·      Their service is sometimes better than existing taxi companies, which are usually local oligopolies. Perhaps, though, it would be better to improve regulation of existing taxi companies.

·      During non-busy times, the service is inexpensive.

·      In many areas, they provide the only useful, moderately priced car services in the suburbs.

·      They provide work for drivers who don’t want to or can’t work a fixed schedule.

·      The reliance on GPS navigation software rather than extensively trained drivers also make it possible for people who lack detailed knowledge of a city to work as drivers.

The Negatives

·      They have taken cab driving from a job which pays a living wage to one that pays only a marginal wage.

·      They put more cars on the street, creating pollution and congestion.

·      The TNC business model exposes drivers to all the expenses and liabilities of providing the service, who are ill-equipped to handle them. One bad ride or accident can bankrupt a driver or put them out of work.

·      They are losing money hand over fist, so they will eventually either change their business model or simply go under, having destroyed many viable local businesses.

·      “Uber seems to have realized its only path forward is cannibalizing existing public transit services - metro buses, school buses, etc. Which isn’t good for anyone except a small handful of investors.” - Robert Cruikshank

·      Uber, recognizing that their business model depends ultimately on paying drivers even less, has deployed self-driving cars without adequate safety testing. So far, one death has resulted.

·      Most TNC drivers cannot safely transport children and often do not have the legally required safety devices which would allow them to do so. Drivers sometimes do so anyway, putting children at risk of injury or death, and the driver at risk of criminal charges and bankruptcy.

·      The TNCs do not provide transportation for wheelchair bound passengers, or passengers with severe disabilities and, at the same time, are cutting into the profit margins of firms which do.

·      Their service is inadequate for many disabled people. A problem has emerged with service dogs and wheelchair users. It may be that drivers are obligated under the Americans with Disabilities Act to transport both groups, but many drivers, concerned with protecting their cars, do not wish to do so.

·      The TNCs are scofflaws, committing many violations of local laws. In some cases they have gotten the laws changed to allow them to operate. In other cases they simply operate in defiance of local laws.

·      The unmarked cars and non-liveried drivers make several new sorts of crime possible; this problem is exacerbated by inadequate driver background checks.

·      Their driver and passenger ranking system automates racism and sexism.

·      Uber in particular is notorious for running a sexist and racist operation. Their original CEO, Travis Kalanik, finally had to resign because of it.

·      Their pricing model is illegal under most city taxi laws. The services raise their prices when demand is highest, and they do so without limit, resulting in a service that leaves many customers without transportation when they most need it.

Citations

The Biggest and Worst

“When compared to employment and population growth and network capacity shifts (such as for a bus or bicycle lane), TNCs accounted for approximately 50% of the change in congestion in San Francisco between 2010 and 2016, as indicated by three congestion measures: vehicle hours of delay, vehicle miles travelled, and average speeds.” – “TNCs and Congestion.” San Francisco County Transportation Authority, 2018

“Uber and Lyft drivers bear almost all of the expense of operation, from vehicle cost and depreciation to gas, oil, cleaning, and other maintenance. Numerous studies around the nation reveal that many drivers face extreme financial hardship, often earning less than the minimum wage after expenses are taken into account. Yet as the ride-hail companies woo Wall Street investors, driver trip-level data and the companies’ own financial reports reveal that both Uber and Lyft are pocketing a greater share of rider payments, while drivers are earning less.” – “Uber/Lyft take more, pay drivers less.” Joshua Welter, App-Based Drivers Association (Teamsters associated), May 2019

“Uber achieved many firsts, let's look back: (1) broke a ton of laws, (2) killed someone with an AI-powered robot, (3) executive threatened reporters, (4) can only realize its current valuation by firing all its drivers, replacing them with computers. Happy Uber IPO day!” – Tweet by Christopher Mims of the Wall Street Journal, quoted in “A brief history of Uber’s bumpy road to an IPO.” Jonathan Shieber, TechCrunch, May 2019. Tweet later deleted.

“An examination of Uber’s economics suggests that it has no hope of ever earning sustainable urban car service profits in competitive markets. Its costs are simply much higher than the market is willing to pay, as its nine years of massive losses indicate. Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business. – “Uber’s Path of Destruction.” Hubert Horan, American Affairs Journal 3, no. 2 (Summer 2019).

The Whole Megillah

App-Based Drivers Association. “New Report: Uber and Lyft Take More, Pay Drivers Less | The Stand.” Accessed June 9, 2019. http://www.thestand.org/2019/05/new-report-uber-and-lyft-take-more-pay-drivers-less/.

Cava, Marco della. “Uber HR Boss out after Charges She Ignored Complaints about Racist Behavior.” USA TODAY, July 11, 2018. http://www.usatoday.com/story/tech/2018/07/11/uber-hr-boss-out-wake-charges-she-ignored-employee-complaints-racist-behavior/774878002/.

David Gutman. “Uber Charging $25 to Leave Its Bikes Outside of Central Seattle ‘Bike Zone.’” The Seattle Times, January 3, 2019. https://www.seattletimes.com/seattle-news/transportation/uber-charging-25-to-use-its-shareable-bikes-outside-of-central-seattle-bike-zone/.

Griggs, Troy, and Daisuke Wakabayashi. “How a Self-Driving Uber Killed a Pedestrian in Arizona.” The New York Times, March 20, 2018, sec. Technology. https://www.nytimes.com/interactive/2018/03/20/us/self-driving-uber-pedestrian-killed.html, https://www.nytimes.com/interactive/2018/03/20/us/self-driving-uber-pedestrian-killed.html.

Hubert Horan. “Uber’s Path of Destruction.” American Affairs Journal 3, no. 2 (Summer 2019). https://americanaffairsjournal.org/2019/05/ubers-path-of-destruction/.

Isaac, Mike. “Uber Founder Travis Kalanick Resigns as C.E.O.” The New York Times, June 21, 2017, sec. Technology. https://www.nytimes.com/2017/06/21/technology/uber-ceo-travis-kalanick.html.

Isaac, Mike, and Kate Conger. “Uber, Losing $1.8 Billion a Year, Reveals I.P.O. Filing.” The New York Times, May 8, 2019, sec. Technology. https://www.nytimes.com/2019/04/11/technology/uber-ipo-filing.html.

JOE CASTIGLIONE, DREW COOPER, BHARGAVA SANA, DAN TISCHLER, TILLY CHANG, GREG ERHARDT, SNEHA ROY, MEI CHEN, and ALEX MUCCI. “TNCs and Congestion.” SFCTA. Accessed June 9, 2019. https://www.sfcta.org/projects/tncs-and-congestion.

Jonathan Shieber. “A Brief History of Uber’s Bumpy Road to an IPO.” TechCrunch (blog). Accessed January 14, 2020. http://social.techcrunch.com/2019/05/10/a-brief-history-of-ubers-bumpy-road-to-an-ipo/.

Joshua Welter, and May 2019. “ABDA Report - Uber & Lyft Take More, Pay Drivers Less.” Teamster TNC. Accessed January 14, 2020. https://www.abdaseattle.org/abda_report_uber_lyft_take_more_pay_drivers_less.

@mims. “Thread by @mims: ‘Uber Achieved Many Firsts, Let’s Look Back: 1. Broke a Ton of Laws 2. Killed Someone with an AI-Powered Robot 3. Executive Threatened Report […].’” Accessed June 9, 2019. https://threadreaderapp.com/thread/1126836909240659968.html.

Reuters. “Uber Sued For Alleged Racial, Gender Discrimination | Fortune.” Accessed January 14, 2020. https://fortune.com/2017/10/25/uber-sued-alleged-racial-gender-discrimination/.

Robert Cruickshank. “Robert Cruickshank on Twitter: ‘Uber Seems to Have Realized Its Only Path Forward Is Cannibalizing Existing Public Transit Services - Metro Buses, School Buses, Etc. Which Isn’t Good for Anyone except a Small Handful of Investors. Https://T.Co/O5r4Q69HHL’ / Twitter.” Twitter. Accessed June 9, 2019. https://twitter.com/cruickshank/status/1116710458310848512.

Sissi Cao. “Uber’s (Inevitable) 2019 IPO Would Make Saudi’s Crown Prince $16 Billion Richer.” Observer (blog), October 16, 2018. https://observer.com/2018/10/uber-2019-ipo-saudi-crown-prince-richer/.

Smith, Yves. “Uber Loses Another $1.2 Billion, Stock Dives Again.” Naked Capitalism (blog), November 5, 2019. https://www.nakedcapitalism.com/2019/11/uber-loses-another-1-2-billion-stock-dives-again.html.

Staff, Guardian. “Uber and the ‘Brogrammers’ Feel the Consequences of Changing the World.” The Guardian, June 25, 2017, sec. Business. https://www.theguardian.com/business/2017/jun/25/uber-and-the-brogrammers-feel-the-consequences-of-changing-the-world.