New York became the first major American city on Wednesday to halt new vehicle licenses for ride-hail services, dealing a significant setback to Uber in its largest market in the United States.
The legislation passed overwhelmingly by the City Council will cap the number of for-hire vehicles for a year while the city studies the booming industry. The bills also allow New York to set a minimum pay rate for drivers.
This is being sold as a way to reduce inequality:
“More than 100,000 workers and their families will see an immediate benefit from this legislation,” Mr. de Blasio said, referring to the city’s army of for-hire drivers.
I wonder if the effect will actually be to increase inequality. There might be a small increase in income for Uber drivers. Presumably Uber itself will capture most of any increase, in the same way that taxi medallion owners capture all of the value of any taxi fare increase, with the drivers continuing to earn a (low) market-clearing wage. But if prices to consumers go up, the result will be kicking middle-class New Yorkers back to walking, waiting for the bus, being jammed into subway cars.
If, as promised, street congestion is reduced that will increase the mobility of a New Yorker wealthy enough to purchase a Bentley and hire a chauffeur. But the mobility of the non-rich, especially those who aren’t physically fit enough to walk long distances, stand for hours each day waiting for public transit, etc. will be reduced by higher prices:
Ride-hail apps have become a crucial backup option for New Yorkers swept up in the constant delays on the city’s sputtering subway, as happened on Wednesday when signal problems again snarled train lines across a large swath of the city. Ride-hail services have also grown in neighborhoods outside Manhattan where the subway does not reach.
Readers: What do you think? Is this “help the struggling Uber driver” regulation mostly going to help Uber shareholders and help the rich in New York distinguish themselves from the proletariat?
[An interesting data point from the article:
The taxi industry has also been decimated by Uber’s rise. The price of a taxi medallion, which is required to operate a taxi in New York, has plunged from more than $1 million to less than $200,000.