December 16, 2016
Truthout, December 16, 2016
Ride-hailing companies like Uber and Lyft have grown increasingly popular in the last few years. During this time, both companies have faced numerous challenges to their business models, including lawsuits involving passenger safety and the misclassification of their drivers as independent contractors, as well as accusations that both drivers and passengers discriminate based on race and other factors.
Despite these problems, ride-hailing companies are being further enmeshed with social life. Uber and Lyft are often preferred transportation partners for events and businesses, and cities are even integrating the companies into their transportation systems — some via privatization. Services that use ride-hailing companies for social purposes have also developed. My Ride to Vote provided promo codes for no-cost Uber and Lyft rides to and from polling places in the recent presidential election.
As this process happens, it’s important to point out who is being left behind: mainly, those who cannot use these services, or who can only use them via intermediaries (which are sometimes predatory). For example, in the United States, both Uber and Lyft generally require a smartphone and a credit card to use the service. This leaves out people who don’t have, or cannot obtain, a smartphone and a credit card, as well as those who don’t want to use either for their transportation. (These services have a record of their passengers’ trips.) While the My Ride to Vote service was probably well-intentioned, it likely didn’t target people who actually needed to use the services to cast their vote, i.e., poorer people who are the least likely to vote. The problem? It used promo codes, which meant that passengers needed a smartphone and an active Uber account tied to a credit card to make use of the service. And as Helaine Olen points out at Slate, it also made the companies involved some money.
People without smartphones and credit cards are not insignificant portions of the population. According to the Pew Research Center, over a third of the population did not own a smartphone in 2015; lower-income and older people are the least likely to own one. (There is also a significant number of people who own a smartphone but experience interruptions in service due to data caps or financial constraints.) Similarly, 33.5 percent of households did not have a credit card in 2015 based on a survey from the Federal Deposit Insurance Corporation (FDIC). The FDIC also found that those households that rely on bank credit only — which is disproportionately credit via credit cards — tend to be more affluent and educated, and they are more likely to be white or Asian. Those without credit cards — households with no credit, or who use non-bank credit only — are more likely to be poor, less educated, and Black, Latino or categorized as of “other” race/ethnicity. Those with disabilities or who have income that varies from month to month are also overrepresented in these groups.
These data suggest that those less likely to be able to take an Uber because they lack a smartphone and/or credit card tend to be poorer, older, less educated, and African American or Latino. In the absence of regulation that requires Uber and Lyft to accept cash or serve these demographics in other ways, the void is being filled by other start-ups. On the surface, this might seem like an unambiguously good thing. GoGoGrandparent, a new start-up, allows the elderly to call a hotline to order an Uber. Uber itself has begun experimenting by partnering with prepaid debit card companies in other countries. If these options gain a foothold in the United States, the poor and elderly would at least be able have ride hailing services as a transportation option.
But they don’t come without costs. GoGoGrandparent charges 19 cents per minute of the ride — on top of Uber’s costs — to serve as an intermediary. Prepaid debit card companies make their money off of fees, which are sometimes exploitative. RushCard, a popular prepaid debit card company in the United States, has fees that can add significant costs to typical monthly usage, for example. These extra fees, whether they be for a service like GoGoGrandparent or for a payment option like prepaid debit cards, are especially burdensome for users who are poor or on fixed incomes.
This seems to echo the concerns of potential users of the service, like Mike, a retiree in Connecticut who uses taxis but has concerns about both GoGoGrandparent and Uber. “I live in a neighborhood that Uber drivers don’t like to drive in, so I can’t count on them to drive me to my job,” he said. “GoGoGrandparent wouldn’t change that reality, nor would I be comfortable paying a higher fare just because I don’t have a smartphone. I have a standing request for a cab to pick me up, and they’re very reliable and professional.”
The emergence of services like GoGoGrandparent should also give pause for a different reason. The service helps expand the ecosystem of services that are aimed at passengers and built on the assumption that the predominant ride-hailing business model is sustainable and desirable. Using this assumption, Uber and Lyft are courting transit agencies, threatening existing public, demand-responsive transport that often serves the elderly. For example, Washington, D.C., is considering offering Uber and Lyft as an alternative to its MetroAccess paratransit service, and it has recently contracted with Uber to provide discounted service to and from Metro stations. Many other cities are considering using ride-hailing services in similar ways, and a growing number have already contracted with ride-hailing companies. Public “Dial-A-Ride” services for seniors could easily follow the same route, devolving into a government-supported private service, rather than a public service operated by either the government or a private contractor — and they may include GoGoGrandparent as a costly intermediary.
Indeed, this argument is being legitimized by mainstream places like The Brookings Institution, which published a curious report in March arguing that cash-strapped transit agencies could find outsourcing to start-ups appealing. While ignoring that traditional taxi services have complemented public demand-responsive transport for years, the report made the case that switching much of demand-responsive transport to companies like Uber and Lyft would be beneficial for transit agencies. Puzzlingly, the report acknowledges that ride-hailing companies face intractable problems, including unknown but likely high costs per ride (ride-hailing companies are often unwilling to release information about these costs). The Amalgamated Transit Union (ATU), a union representing transit and allied workers, published a scathing critique of this report, questioning if transit agencies would actually save money at all using ride-hailing services, and pointing out that agencies are tasked not with reducing costs but rather with providing high quality, equitable service. Ride-hailing companies’ repeated failures to serve people with disabilities is a good indicator that they are not a good fit for replacing public demand-responsive transport, says the ATU.
This promotion of ride-hailing companies is especially troubling given that services like Uber, and by extension GoGoGrandparent, have not yet proven their long-term viability. A recent series in Naked Capitalism points out the problems with Uber’s valuation and claims of innovation, efficiency and strength of its business model. In essence, Uber is heavily subsidizing its operations with venture capital money (it is not profitable) and is counting on obtaining market dominance and using anticompetitive practices to obtain profitability — a strategy that it has bolstered with extensive and misleading public relations campaigns.
It’s also important to note that ride-hailing services as public-demand-responsive transport have all the downsides as using those services generally. This includes things like increased traffic and traffic collisions (Uber is being sued under distracted driving laws, for example) and also safety concerns involving rape and assault. It’s hard to compare the relative safety of passengers using taxis versus those using ride-hailing services using data as opposed to anecdotal evidence, but drivers of traditional taxis are required to undergo extensive background checks, whereas Uber and Lyft have resisted efforts to impose similar requirements. This is all on top of the fact that cities should be moving away from private vehicle use in general, because a reliance on cars makes cities less desirable places to live and more inequitable.
As jurisdictions decide how to respond to the emergence of ride-hailing companies, it should be clear that making vulnerable groups pay more for the same service is not a desirable outcome. In absence of regulations that require ride-hailing companies to serve the poor and elderly better, governments should provide (or continue to provide) alternatives that are more accessible to these groups.