Ride-share: The Good, The Bad, & The Possibilities
I’ll just come out and say it: Ride-sharing, through the likes of Uber and Lyft, is going to radically upend urban life as we know it. Like the smart city movement, ride-sharing has generated a lot of media buzz, but little attention has been paid to how it will affect urban planning and life in the coming decades.
This is what ride-sharing will do: it will make owning a car a superfluous and unwise investment (a car is not an asset my friends, but a yearly expense), it will lower the transportation related expenses of cities (one of their largest expenses) and it will create new real estate for cities (more on that later), and it will drastically increase the mobility of city residents and reduce their environmental footprint.
But before we can get these possibilities, we need to do our due diligence. What’s the good? What’s the bad?
THE GOOD
I have five reasons why ride-hailing services like Uber and Lyft are good. I base much of this initial analysis on my own personal experience, but I’ll make use of data when appropriate.
- First, Uber and Lyft are convenient. I pull out my phone, I click the app, I request a ride. While waiting on the car, I input where I want to go. Once I arrive at my destination, I can quickly jump out of the car without having to go through the hustle of paying with cash and getting my change (who has cash these days?). Easy stuff.
- Second, ride-sharing services are cheaper than taxis. Watch this cheesy video from Business Insider to get the point, but do know: Uber is almost always cheaper than a taxi in most cities across the USA, and when it isn’t cheaper or when it’s on par with a taxi’s standard cost, it could arguably be more convenient. The only time ride-hailing companies might be more expensive is with surge pricing, but if you are like me, you use alternative means of transit to avoid those prices.
3. Uber and Lyft provide better service than taxis, especially with how their in-app GPS’s automatically select the best route. I remember how pissed I would get in Las Vegas or Washington D.C. when taxi drivers would knowingly take the more traffic-ridden routes so that the fare would spike. Not knowing that I was familiar with the best routes, I would tell them so and they would offer some lame excuse. GPS’s, like Google Maps, don’t lie: they see where traffic is, and they automatically reroute you to the quickest route.
4. Ride-sharing and ride-hailing services democratizes the cab industry — one of the most corrupt, sleazy, in-bed-with-the-bureaucrats businesses currently in existence. Take it from Edward Gleaser, famed economist at Harvard who studies cities:
“THE GLOBE’S searing series on the ugly side of taxis in Boston reminds us that excessive regulation can turn entire industries into shadowy, corrupt spheres. The purpose of taxi regulation is simply to protect passengers against being fleeced by unscrupulous cabbies, and to keep passengers, bystanders, and the environment safe. Yet the system instead has evolved mainly to enrich the holders of government-issued taxi medallions, even as taxi drivers struggle to earn a living and passengers pay some of the highest rates in the country.”
Ouch. It’s true, and you know it. And it’s no accident that one reason governments around the world, whether in the USA or abroad, are cracking down on Uber is because these taxi companies, which are losing market share, are walking through back doors into bureaucrats’ and politicians’ offices, and telling them to stump all over the competition.
5. And because ride-sharing and ride-hailing has been democratized, people can pick up side-jobs, thereby turning their car into a “semi-asset.” In my experience well over half of my Uber and Lyft drivers have other jobs. Full-time workers, contractors, business-owners, university students — many of them have primary commitments elsewhere, and they simply drive for Uber and Lyft as a way to make a little extra. One of the wisest drivers I met picked up someone on his way to work, and likewise picked up someone on his way home. Working in downtown Austin, he picked me up one day as he headed north to Round Rock, dropping me off at the Domain. A $25 ride that took 30 minutes (rush hour and traffic and rain slowed us down), he did fairly well while driving towards home anyways. That’s smart.
6. Uber has brought transit options to neighborhoods that don’t have much transit — i.e., UberX is serving poorer, minority neighborhoods that taxis downright refuse to serve. Surely we’ve heard the personal stories from minorities who share how futile it is to try and hail a taxi in NYC. Why? Because if there’s anyplace where the stereotypes of peoples and cultures fester and grow, it’s in the minds of taxi drivers. As this Manhattan Institute Report shows, UberX is actually bringing the ride-hailing business to communities that NYC regulators have struggled to get taxis into. Now I’m not one to unabashedly hail the power of the “free market,” because I think we should always recognize its failures. But sometimes we need to get off our rocking horse and be reasonable. This is a clear example of the market doing some good in the world.
Some countries don’t like the good that Uber and the likes are doing. Why? Well, largely because these new ride-hailing services are too competitive. Thus, France passed a law saying that Uber drivers could not pick up their customers on time so as to be fair to the traditional taxi companies. I.e., they were told to be late. Leave it to France to pass the most assinine regulation one could possibly imagine. “Your business model is too good. You need to suck more.” It’s like the US government telling craft breweries to put compost in their beer so they don’t out-compete Coors. Since passing that first law, France has downright outlawed UberPop, and is currently trying to charge two of its executives in France with felonies. Way to go France!
THE BAD
We’ve seen the headlines about labor lawsuits. We’ve heard our politically-correct and Marxist-savvy friends. We may have even asked our Uber driver what he or she thought about the pay structure. While I have personally heard positive comments from many of ride-share drivers about their [part-time, side] jobs, the Labor-Protection Police of Facebook (LPPF) have made sure that we all know the truth: Uber and the likes are exploitative. Uber is the epitomé, they say, of the rich (those Silicon Valleyers and Wall Streeters) screwing over the little guys (the drivers). This is the BAD.
To be fair to this critique, it is worthwhile taking it seriously. So, are ride-share drivers of Uber and Lyft being exploited?
It’s hard to say. You will find plenty of drivers who say, “I do incredibly well driving for Lyft and Uber,” and many of them do it on the side, not as a full-time job. You’ll also find drivers who claim that they are being exploited and just making minimum-wage, if even that. I’ll let you scroll through Quora entry where drivers share their experiences. And again, you’ll see drivers proudly claiming that they know how to work the system right and easily make $1,000+ a week, and you’ll come across those complaining that they aren’t getting their fair share of Uber’s (and Lyft’s) big pie.
To be fair, Uber and Lyft have not been entirely fair to their drivers, who they say are contractors and not employees. Both companies have abruptly reduced fares, sending drivers text messages or emails to share their plans — i.e., no input from the drivers. Also, Uber has experimented with raising its commission from the rides, from 20% to 30%, and like Lyft has introduced a tiered cut-rate dependent on how many hours you drive a week. Again, these decisions were made from the top and passed on down to the drivers like a good ole’ authoritarian. “We’re cutting your pay,” says Uber. “Keep driving.”
But I must say, I side with Uber and Lyft on the contractor-employee debate. The fact is that the majority of drivers are part-time, driving simply as a side-gig while they work another job. As Stephan Gandel shares in his Fortune article,
“SherpaShare estimates only about 20% of Uber’s drivers work more than 40 hours a week.”
That means that 80% are not working 40 hours a week. Indeed, Sherpashare reports that the average driving time is 24 hours/week. Another source puts that number at 80% working less than 35 hours a week, with 50% working less than 15 hours a week. Again, the point is clear: most drivers do this as a side gig. That same Techcrunch article reports that only 8% of Uber drivers were unemployed when they first signed up. Furthermore, Fastfeed writer Sarah Kessler somewhat corroborates the study cited by Techcrunch by analyzing the average fare/trip in the biggest ride-sharing markets in the USA. Getting 70%-80% of that fare, with the average being about $14/trip in Austin and a whopping $29/trip in NYC, it is easy to say that as contractors, drivers do well for Uber and Lyft, especially given that almost all of them do it as a side-job.
As the Fortune article explains, it would be very expensive for Uber to treat all its drivers as employees. Gandel estimates that it would cost about an extra $4 Billion/year — a lot of money for a company that is currently losing money. That is, it would kill a business model that is good for consumers, good for drivers, and good for cities (to be explored below). Traditional taxi companies have hardly been good for any of these.
And besides, there is an incredibly easy, quick fix to “the BAD” if you actually think it is a problem:
TIP THE DRIVER, PEOPLE!
So many of the LPPF love to preach on the Book of Face, but when it comes down to it, I wonder how many of them turn their political rhetoric into economic action. Even tipping your driver $1 would be a HUGE % increase in their earnings for one trip. While the evidence suggests that Uber and Lyft drivers already make more than taxi divers per trip, if you find yourself concerned about the expenses they must fork over to maintain their car or if you think they shouldn’t be contractors but employees, then by all means, pay the fare that you think is most appropriate by adding a tip. Problem solved.
THE POSSIBILITIES
Uber and Lyft are already GOOD. And we have, at least for now, addressed the BAD. But this isn’t necessarily what excites me; instead, I’m excited about where Uber, Lyft, and other ride-share companies are taking us. As I said in the beginning, ride-sharing companies, powered by that smart phone in your pocket (which has more computational power than the computers used my NASA to put astronauts on the friggin’ moon, by the way) and other ICT technologies, are radically going to upend urban life as we know it. I have 6 visions to share with you, and I think they will all happen much sooner and than later.
#1
If you live in a somewhat dense, urban environment, you no longer need to own a car. Come on and join me with my fellow Millennials, and recite the pledge of allegiance to true freedom and mobility: “CARS SUCKS.” They do. They cost a lot of money, you have to maintain them, they depreciate incredibly fast (again, they are NOT assets, but expenses), they pollute the environment, they can get you in trouble, they weigh you down, and they can kill you and innocent bystanders. See? They suck.
According to AAA, the average cost to operate a car this year hovers around $8,698, which includes interest payments on loans, gasoline, depreciation costs, maintenance, parking fees and toll roads, insurance, etc. That amount is actually a decrease from year’s past largely because of oil’s and gasoline’s current prices.
$8,698 is nothing to sneeze at when you remember that the median household in the United States makes $53,046 per year (US Census 2013, QuickFacts). Also, that’s the cost for one car. While your second car’s annual cost might be a tad lower because of insurance and maintenance discounts, it is still a significant expenditure for households and individuals. And don’t forget, of the 145 million commuters in the USA, almost 110 million of them own 2 or more cars (US Census 2014, B08141).
Knowing that good ole’ fashioned American consumerism is a waste of time, Millennials have quickly caught on to the superfluity of owning a “thing,” like a car,” and much rather spend their hard-earned (but meager) money on experiences. This is old news, of course, but in my [scant] experience, IT IS MOST DEFINITELY TRUE.
#2
Ride-sharing companies will result in a drastic reduction of waste in two ways: First, because owning a car is now superfluous and unnecessary, there will be a huge reduction in the amount of cars produced in the world. It will become a niche service solely for ride-hailing companies and more rural and suburban communities where the ride-sharing model is not viable; second, because a good portion of a city’s “landprint” is committed to asphalt, a reduction in cars will allow much of that space to be reclaimed by people. That reclaimed space will become promenades, parks, bicycle lanes and sidewalks, and the sites of new urban developments as urban residential population continues to grow.
Let’s talk more about the waste of cars, or rather the practice of each and every individual or household owning a car (in America, multiple cars). When you purchase a personal automobile, you pay on average $8,698 per annum to have the right to use it at all times throughout the year. The only problem is that you do not use it all the time throughout the year. According to author Matt Rogers, of McKinsey & Company, and co-author Stefan Heck of the 2014 book Resource Revolution (an excerpt of which you can find here), the average automobile owner only uses his or her car 4% of the time. That is, you car sits still 96% of the time! So we are digging up all these precious resources around the world and pumping all this carbon in the air and setting off millions of road-rage tempers and decreasing the quality of life of urban and suburban communities and wasting almost $10,000/item a year just to accommodate the occasional use of the personal automobile? Way to be super smart, humanity. That makes a whole lot of sense.
WHAT A WASTE!!!
To make matters worse, we have had to build an equally wasteful network of roads to accommodate that occasional use of the personal automobile. Richard Register, of EcoCity Builders, has catalogued just how destructive this has been to our urban fabric. In general, you can probably safely assume that 50% of every major urban area in the United States is dedicated to servicing the car, especially your quintessentially “American” cities like L.A., Phoenix, Houston, and Atlanta. That is an aggregate of all the roads and right-of-ways, parking lots, driveways and garages, and car maintenance facilities consumed on behalf of the glorious automobile. A blogger a few years ago did a simple GIS sampling of various cities to calculate particular percentages, and what he found was shocking. For example, parking and streets take up almost 65% of Houston’s land area. It’s a city for cars, not people.
Building that car infrastructure is also incredibly expensive, and is largely subsidized. Which leads me to my third point.
#3
Local, state, and federal governments spend a whole lot of money on roads, let me tell you. And it is simply impossible to build “enough” roads to decrease traffic. It doesn’t work.
Or at least it doesn’t work in the current model, where every household owns multiple cars. Begin putting points #1 and #2 together, and what do we begin to see? Cars are not being efficiently used; one is compelled financially to ditch the personal automobile and perhaps use ride-sharing services (coupled with alternative transit) instead; and, to cite a point made earlier, ride-sharing companies’ use of ICT allows that car (a scarce resource) to be allocated as efficiently as possible — i.e., pick up other riders on the way to your (and their) destinations, which makes the car even more efficient and your fare cheaper. Uber and Lyft have already explored these carpooling models, by the way, and I think they’ll become increasingly popular as the technology improves.
So, where do we end up for cities? From a city’s perspective, we are going to see significant decline in the number of cars it must service. They might not see a decline in the number of trips, but they will see a significant decline in the number of cars (resources) accomplishing all those trips. Because of a more efficient allocation, one car (via the ride-sharing driver), can increase a car’s use from 4% to, say, 50% percent. Whereas your personal automobile sat in a garage or in a parking lot while not in use, now that car will zip around the city to relay other commuters to their destinations.
Thus, cities will need less road capacity. Whereas 4 lanes might have been needed previously when every individual had 1 or more cars, now cities can make do with two lanes (and a turning lane).
If ride-sharing companies figure out how to decrease the number of trips by encouraging people to share their rides, and if cities take advantage of the reduction of car-capacity on roads by doing road diets like the one above which increases alternative transit behavior, then we can assume that CITIES WILL SAVE MONEY. Both accessibility and mobility will increase without expenditures rising. The flexibility of ride-sharing can access the ends of any street and the increased transportation options makes one more mobile. Level of service for roads will increase; maintenance costs for governments will decrease; your and my quality of life will sky-rocket, which leads me to my next point.
#4
Now imagine that everyone buys into this idea of ride-sharing, and we actually drastically decrease the number of cars on the road and the number of automobile trips. For many roads, even after the road diet, the governments who own those roads will find that there is still excess space. That excess space suddenly becomes an asset. Rights-of-way can be returned or resold to business owners; large boulevards could become shaded promenades with storefronts and cafes and terraces; row-houses could take up 3 lanes of a previous 6-lane highway, while the other 3 lanes accommodate the efficient ride-share traffic and provide safe infrastructure for pedestrians and bicyclists.
Or imagine quaint neighborhoods, where the “street” becomes what you see to the left: grass and enough concrete to accommodate emergency personnel and logistics companies (moving vans, FedEx, etc.). The rest of the “street” is grass or native vegetation where kids could play without having to look for cars every 10 seconds (as if children do that).
In short, there will be a massive real estate boom in urban environments that finally brings the amenities so integral to a higher quality of life: less auto traffic, parks and grass and trees for children and families and mid-day walks to alleviate the occasional stress of life; sidewalks and bicycle lanes for alternative transit, which is practically free, by the way, and good for our health; and small businesses that cater to local communities, like grocery stores, restaurants, recreational businesses — “experience economies” that Millennials care so much about. That is, ride-sharing is going to make our neighborhoods and cities more walkable and more bikable. Indeed, its market will both thrive on people’s willingness to engage in these behaviors and, vice versa, it will encourage these behaviors because of cities’ newfound opportunity to reclaim roads for people and businesses.
#5
All of this thus far is to say that ride-sharing will not only improve the quality of life in urban areas, but will also go a long ways in improving the environment, both locally and globally. Locally, instituting a massive road diet across the city (with all the behavioral and landscape changes that come along with it) will increase air quality, encourage healthy behavior, and potentially increases the amount of park space in cities. Numerous psychological studies have recently showcased just how integral being in the out-of-doors is to mental health, especially to the development of children’s cognitive functions.
Globally, transportation accounts for at least 25% of worldwide CO2 emissions (IEA), with cars and trucks accounting for 75% of that initial figure. But that % is only derived from operating transportation vehicles. What if we also include the industrial CO2 emissions associated with producing a car, which accounts for a significant portion of its life-cycle impact? What if we include the CO2 emissions associated with building all the roads necessary to accommodate humanity’s insatiable demand for more and more personal automobiles?
Ride-hailing companies and a culture of ride-sharing rids us of all of that. Millennials’ obsessive pursuit of lowering their Carbon Footprints just got a whole lot easier.
#6
And here comes the punch-line:
SELF-DRIVING CARS WILL MAKE ALL THE ABOVE REALITY.
Furthermore, self-driving cars addresses any concerns we might have about “THE BAD,” as explored in this article. If you find yourself concerned about Uber’s human labor practices, I suggest tipping more until it is no longer an issue, which, again, will happen much sooner than later. Why? Because it is no secret that Uber has invested LOTS of $$$ in autonomous vehicle technology. Like other facets of the smart city movement, the investments are off the charts.
And it’s not stopping. Uber recently stole a team of researchers from Carnegie Mellon’s National Robotics Engineering Center to work on robotic cars. Furtermore, as CNBC reports, “Uber CEO Travis Kalanick said last year that self-driving cars will one day replace all of the drivers they’re now utilizing. He said at last year’s Code Conference, ‘Look, this is the way the world is going. If Uber doesn’t go there, it’s not going to exist either way,’ he said, explaining that there would not be a company to employ drivers anyway.”
Recall the statistic about how little we use our cars. According to Heck and Roger’s Resource Revolution, the average American car sits still 96% of the time. For it to sit still, cities must build massive hell-like fields of black asphalt or tall, expensive auto-cribs. Recall, too, the statistic that automobile-related infrastructure consumes around 50%, give or take, of a city’s landprint. To contextualize that, imagine that half of your apartment or home were devoted to your powder room. Like using our cars, we might only spend 4% of our time there (if even that). But nevertheless, it takes up half of our home’s floor space. DUMB.
So now cars — owned almost entirely by ride-hailing companies like Lyft and Uber and many other locally oriented pop-up companies — will practically be used all the time. Of course, late at night or early in the morning, when most of us are sleeping, these cars will be parked somewhere. Uber will probably build huge, automated parking garages on the outer rings of our cities or beneath the surface in urban cores. As commuters wake up and open their ride-sharing apps, the cars will begin to head towards the Central Business Districts and other job cores, picking up multiple drivers along the way. If you can afford it, you might select a private car. Uber might even sell subscriptions to certain “classes” of cars. Do you always want to ride in a BMW? Uber can take care of that. Do you simply want the cheapest ride possible? Uber will put you in a Ford Focus. It’s a win-win for everyone. The service will be fully customizable, resource efficient, cheap for you, a gold mine for Uber, and an amazing opportunity for cities to redesign and repurpose their urban cores and wasteful roadways.
CONCLUSION
That’s the future y’all, and it’s on its merry way. Question is: will city planners and businesses be prepared for it? Will we seize it as an opportunity to redesign and repurpose the expensive, inefficient road infrastructure that has gobbled up so much of our cities? Will we embrace not only this smart city model, but also (and perhaps more importantly) see it as an opportunity to build green, human-scaled, vibrant communities that increase our quality of life? Will we look past the doomsday-naysayers of Facebook, the LPPF, who will inevitably bemoan all the lost jobs because of those darn self-driving cars, and instead see the saved capital as an opportunity to expand the experience economy — the one that Millennials actually care about?
In short, will we actually begin to plan and build cities that rightfully reflect the very best of the human experience on Earth, and will we see ride-hailing businesses and other smart city initiatives as the means to get there?
ONE CAN HOPE SO.
Patrick Russell has a Masters in Environmental Theory from the Literature & Environment program at the University of Nevada, Reno. Currently, he is pursuing a Masters in Community and Regional Planning at the University of Texas, Austin where his research focuses on the emergence of smart cities, the wisdom of ecological cities, and how the two might coevolve together. He is presenting on his smart city research at the upcoming EcoCity World Summit. His other essays about the smart city can be found at City Smarts on Medium.com. He can be reached at patrickrssll at gmail.com.
