Uber and Lyft vs. Taxis

. October 10, 2018.

Since 2014 popularity of the rideshare services Uber and Lyft has exploded worldwide, and in Toledo, with dozens of drivers selling rides to Toledoans every day, and siphoning business away from local taxi services. On Friday and Saturday nights, dozens of Uber and Lyft drivers provide rides to individuals around the area.

A glaring elephant in the car is earnings— the lack of them

“Sometimes you really have to analyze it and see if you’re really making any money,” says Angel, a 35-year-old who lives near Sylvania and who has driven for both Lyft and Uber for three and a half years. “By the time you add in wear and tear and gas, you’ve (maybe) made $6 an hour. Is it even worth it? It just doesn’t pay as well as it used to, and a lot of people don’t tip,”

Gizmodo (Gizmodo.com), a science and technology news website, cites in a study that 74 percent of Uber and Lyft drivers in the U.S. are making less than minimum wage after factoring in all of the associated costs.

Fare is fair

Lyft and Uber fares, at most times during the day, are a bargain compared to taxis. A comparison of fares shown on smartphone apps during a weekday afternoon revealed that a trip from Franklin Park Mall to Manhattan’s on Adams Street in downtown Toledo would cost $11.23 with Lyft, $11.89 with Uber, while Black and White transportation charged $18.63 – $7 more.

Taxis are regulated by the City of Toledo and subject to a 2008 ordinance mandating taxi fares at $2.30 cents per mile. Taxi drivers must also obtain a City license paying a $25 yearly license and a $100 annual vehicle permit.

Driving differences

“It (the drive for hire business) has changed pretty drastically,” explains Scott Potter, co-owner of Black and White Transportation, Toledo’s largest taxi cab company, with 120 cars.

“As a company we have also changed pretty drastically, with more diverse services offered. With a thriving paratransit business (specialized transportation for people with disabilities), providing non-emergency medical transportation, and school transports.” Potter notes that his taxi drivers also receive training to provide a higher level of service. “Our drivers are required to take a defensive driving course, sensitivity training, and some are also trained in CPR and first aid.” Lyft drivers are required to complete an internet-based training session.

“There’s no real barrier of entry for Uber or Lyft,” Potter said, noting that (for City licensure) taxi drivers are fingerprinted in addition to undergoing a police background check. Drivers with Potter’s company also have company insurance provided.

Lyft and Uber are not regulated by the City, and unlike taxis their drivers do not need to secure city licenses or vehicle permits. A 2016 Ohio law which brought Lyft and Uber under the regulation of Ohio’s Public Utilities Commission (PUCO) requires Uber and Lyft to run criminal and sex offender background checks on drivers, along with other requirements.

PUCO allows Uber and Lyft to charge dynamic fees, permitting both companies to raise rates when rider demand is high – referred to as ‘surging’ fares. Prices can surge from 25 percent to more than 600 percent – making Lyft and Uber potentially a much more expensive ride option at peak busy times. Angel recalls a trip she drove for Uber during the 2016 German American Festival when the fare surged above the standard rate, which cost the passengers of $128 more than usual for a twenty-minute ride across town. Price surges in Toledo are, however, a rare exception. Uber and Lyft both provide price quotes, and stick to them, before a user of the service commits to the ride.

Technical transport

The high-tech modernization that Uber and Lyft brought into the for-hire transportation market with GPS-driven smartphone apps caused Toledo City Councilman Tom Waniewski (District 5) to press for legislative changes for taxicab meters. Cabs had been using an old-fashioned meter that connected to the transmission of the car when City Council passed a 2016 ordinance permitting taxis to use GPS-based metering.

Tim Hutchinson, a 9-year veteran Black and White driver says he still earns good money. He works about 50 hours per week and said it “wouldn’t be anything to make $1500 to $2000 a week. Gross. After gas and maintenance maybe $1200.” He doesn’t see much of a threat from Uber and Lyft. “Maybe a year or so ago it affected my business a little on nights and weekends, but I think that concern is pretty much past us.” Hutchinson says Black and White’s contract work for medical transportation keeps him busy, noting that 30 percent of Black and White’s passengers are using the B&W smartphone app.

Wear and tear costs

On a Thursday in September I drove for Lyft in the afternoon for about 3 and a half hours, driving 133 miles. I earned $67.23 which included an unexpected $10 tip. The cost of gas was $11.90, deducting that expense, I earned $55.33 — Not bad for a few hours’ work. The IRS 2018 guidelines allow rideshare drivers to deduct 54.5 cents per mile to compensate for one’s entire car cost. Deducting 54.5 cents per mile from my earnings, I actually lost $5.14. So while Uber and Lyft drivers, day to day, can earn money, over time the vehicle wear and tear takes its toll when they need to pay for new brakes, tires, or other major service.

Regulating Uber/Lyft

Councilman Waniewski doesn’t think that the City of Toledo needs to license Uber and Lyft drivers just yet. “I’m not a big fan of regulation, I love the free market system, so if someone invents a better mousetrap let’s see how the mice react to it,” he explains. Adding that he would feel more comfortable taking a Black and White Cab over Uber or Lyft. “It’s an established company, so that brings me a level of comfort. I think Uber and Lyft have filled a niche and the more regulated cab companies have had to adjust but have their own niche to fill as well. I just leave that up to the consumer.”

Mayor Wade Kapszukiewicz sees the State of Ohio, by legislating PUCO regulation of Uber and Lyft, “took this out of the cities’ hands.” “When I think of these rideshare companies the first thing I think about is safety,” the Mayor said, “There have to be protections for driver and customer… Beyond that I think this is the free market adjusting to the whims of the people. Part of letting the market work it out could be [for the City] to revisit the restrictions we’ve placed upon Black and White and other taxi companies by, perhaps, considering allowing taxi companies to charge dynamic fees like the Uber and Lyft models.”

The Mayor has yet to take a ride with Uber or Lyft. “We just went to New York City a couple weeks ago [for city business]… and while moving throughout the city my instinct was to look for a conventional taxi cab,” the Mayor said. “I think this is a generational reality. These ridesharing companies are a creation of the millennial generation.”

Full disclosure: David Fine, the author, has been working as a Lyft driver for 10 months.