Lyft, Sidecar, and uberX Are Operating Illegally

There. I said it. By any reasonable reading of the municipal code, Lyft, Sidecar, and uberX drivers are operating illegally in the City of Seattle. They are are unlawful. They are illegal. They are against the law. And this basic statement of fact is absolutely crucial to understanding that, rather than crushing innovation in the service of protecting the status quo, what the city council is really in the process of doing is legalizing an industry that has thus far operated in brazen violation of the law.

Whooh. I can’t tell you what a relief it is to get that off my chest.*

There is likely no issue on which I more broadly pissed off Stranger readers, than my coverage of the proposed taxi and “ride-share” regulations. Capitol Hill hipsters apparently love booking rides on their smartphones almost as much as they love to hate on traditional taxis, and so the coverage they wanted and expected was one that would unflinchingly embrace this disruptive new technology, while telling the decrepit old regulated taxi industry to go fuck itself. And I totally agree, based on my own anecdotal experience, that these new “transportation network companies” or “TNCs” (as they are referred to in the proposed ordinance) generally provide a far superior user experience than Yellow Cab and its cohorts.

But having plunged into this issue with no predispositions, and having ultimately wrapped my mind around an exceedingly complex policy debate, that is not the coverage I could provide. More nuanced critics accused me of being “anti-urbanist;” the less nuanced attempted to dismiss me as being in the pocket of the taxi industry (as if there’s any money in that). But the truth is that the taxi industry provides essential transportation services to a customer base that the TNCs cannot or will not serve. And the truth is—and this at the heart of the issue the council is addressing—the TNCs are operating illegally.

“No matter how sexy these services are,” council member Bruce Harrell proclaimed before voting to cap the number of TNC drivers, “they are unlawful in the City of Seattle.” And Harrell, an attorney, did not choose his words carelessly. It is a criminal offense in the City of Seattle to pick up paying passengers without a for-hire license, punishable by up to 90 days in jail and a $1,000 fine. The Seattle City Attorney’s Office determined last year that TNCs “are subject to for-hire vehicle licensing and regulation requirements.” While the city has yet to enforce these regulations on TNC drivers, it might not take more than a handful of prosecutions to chill the industry.

So whatever limitations the council might impose on the TNCs in the ordinance it is expected to pass next week, above all what the council is doing is legalizing an industry that has heretofore operated without licensing, without inspection, without training, without guarantees of adequate insurance, and in blatant violation of the rule of law. So it’s not like the TNCs aren’t getting anything in return.

The TNCs angrily denounce proposed caps, accusing the council of limiting competition in order to protect the taxi industry. And they are right. That has always been part of the challenge facing the council: how to legitimize the popular TNC services without undermining the still indispensable taxi industry. Not everybody has a smartphone and a credit card. A recent study found that taxis, which accept cash and scrip, serve a disproportionately older and poorer customer base, as well as our crucial tourism industry. Taxis operate accessible vehicles, and provide discounted fares through Hopelink and other social service contracts. They also provide a livelihood to their traditionally immigrant drivers and owners.

However superior uberX might be at getting you home after a night of heavy drinking, it is in the public interest to maintain a healthy taxi industry as well.

How do we sustain the taxi industry in the face of all this new competition? Seattle disastrously experimented with taxi deregulation in the 1980s, removing all caps and price controls only to see prices rise, service deteriorate, and incomes fall in the face of a Malthusian collapse—so there is understandably little support on the council to repeat that experiment in the interest of accommodating the TNCs. And “if we are regulating one half of the market,” argues council member Nick Licata, “we can’t ignore the open-source half” without creating an unlevel playing field.

That is the delicate balance the council is attempting to strike: a regulatory structure that allows the TNCs to legally enter the market while giving the taxi industry the breathing space necessary to adapt to a new reality. Apps like TaxiMagic and particularly Flywheel are already close to providing the same slick user experience TNC customers have come to expect; Yellow Cab, by far the city’s largest taxi association, is in the process of upgrading its dispatch system with plans to release its own competitive app later this year. There’s no question that the innovative TNCs are forcing the the taxi industry to improve its service. There’s also no question that the council will need to revisit taxi and TNC regulations in the years to come.

Maybe the proposed TNC cap is too low. Maybe it is too high. Maybe, ultimately, caps will prove unnecessary at all. But the goal is to transition into a market where both the TNCs and the taxis can peacefully and profitably coexist. And the first step is legalizing the TNCs currently unlawful operations.

* Because neither the TNCs nor their drivers have been convicted of violating the law, my editors at The Stranger had prevented me from using such blunt and forceful (and accurate) language. But since truth is the best defense against prosecution for libel, and because I lack both assets and libel insurance, a TNC would have nothing to gain from suing me but a whole lot of bad publicity and an anti-SLAPP suit in return. Write fearlessly, or don’t bother writing at all.

Comments

  1. 1

    Aleks spews:

    There’s no question that you’re right about the illegality of the TNCs.

    Based on my own experience, however, I think you’re giving way too much credit to Flywheel and Taxi Magic.

    Don’t get me wrong — I think they’re great ideas, and I hope they succeed. Anything we can do to make it easier for people to get around without a car is a good thing.

    The last time I used Taxi Magic, it routed requests through the taxi companies’ legacy dispatch systems. You were lucky if a taxi even arrived. (Perhaps they’ve fixed that problem.)

    The bigger issue with Taxi Magic is that fare payment through the app is optional. I’ve talked to a number of Uber drivers (Black Car, not X) who used to be Yellow Cab drivers, and which service they preferred driving for. Of course, everyone preferred Uber. But the reasons surprised me. When driving a cab, the driver expected to be stiffed about 10-20% of the time, and never expected to receive a tip. They would probably never see you again, and vice versa. So they have no incentive to provide you with anything more than the absolute minimum quality of service.

    With Uber, the driver knows that they will never, ever be stiffed. And having a good rating is really important for staying in the system. Therefore, drivers go out of their way to provide really good customer service.

    I’m not saying that every cab driver has to open doors for their passengers. But it’s nice not to get the death stare when I try to pay using something other than cash.

    I would like ride-sharing to be legalized, but in the meantime, I have no problem riding Uber Black. It’s actually no more expensive than taxis, when you factor in a 25-30% tip for the taxi (Uber bans tips). And it’s just an infinitely better experience in every way.

    Oh, and by the way: I’ve probably ridden Uber (both Black and X) over a hundred times, and I’ve never had a white driver. I know that most of them are recent immigrants, because they told me so explicitly. The idea that UberX is making it harder for immigrants to succeed in Seattle is just wrong, and it makes me think that the people complaining about it have never actually used UberX. (Lyft and Sidecar are another story.)

  2. 2

    SJ spews:

    So Goldy,

    What are you?

    A Devout Socialist (DS) who believes the Taxi business should be controlled so as to keep drivers well enough paid and owners very well paid?

    If so, why not push for a municipal taxi system (aka one payer cabs) that could compete with the private sector.

    Why, if you are a DS, should the city subsidize the owners?

    Seems to me that the City Council’s main job is to figure out a fair licensing system that:

    1. only applies to owner operators.
    2. requires an appropriate –”for hire”- endorsement from the4 insurance company.
    3. requires that the vehicle pass a stricter inspection than non commercial vehicles pass.
    4. requires that all for hire vehicles carry a certified GPS and a cell phone.

  3. 3

    Aleks spews:

    SJ: Um, I think Goldy has been pretty clear about what he believes. He believes that the existing system works fairly well; that UberX/Lyft/Sidecar are causing excessive harm to current taxi owners and operators; that the TNCs are operating illegally within the City of Seattle (which has nothing to do with whether they provide a useful service); and that the taxi owners and operators deserve at least a short reprieve to adjust to the kind of changes that the TNCs are bringing.

    Extreme positions are not the only positions. There are a lot of choices in between “the people should own/regulate everything” and “no regulation at all”. Asserting that someone must hold an untenable position, simply because they disagree with you, is not a productive way to advance the conversation.

  4. 4

    seattlestew spews:

    Everything in this post is correct. My purportedly progressive (monied, tech savvy, youngish) Seattlite friends tout Uber, Lyft, et al. and deride taxi service, and ignore all of the reasonable, legitimate policy arguments laid out above. Particularly galling is that they ignore that, as Goldy properly asserts, Taxis serve EVERYONE, because that is the very purpose of regulation and licensing. The TNCs are primarily for the (relatively) privileged. The Council is doing what it should be doing in allowing some competition/innovation, but not allowing prices to spiral out of control.

  5. 5

    Sue spews:

    Reading about this over the past several months, I’ve wondered how Vanpools fit into all this. How are they regulated? Or does Boeing pay off the powers that be to make them happen?

  6. 6

    Sally Ride spews:

    Goldy, it’s good to see you unmuzzled and no longer trying to fit among the timid forest creatures at The Stranger.

    Someday, those kids are going to look back on these years and regret that their writing wasn’t completely honest, real and fearless.

    Be bold with the truth, not measured.

  7. 7

    EvergreenRailfan spews:

    5)I believe that they are run by the local transit agencies, and I am not sure, but this might be a transit mode that at least covers the cost through fares.

    A few years ago, I was in Bremerton right at shift change at the Bremerton Shipyard. A few minutes after the whistle blew, I saw Kitsap Transit’s up to 40ft vanpools go through the Bremerton Transportation Center’s outer bus loop(one way street), the Worker/Driver bus.
    http://www.kitsaptransit.com/s.....iver-buses

  8. 8

    robby spews:

    I’ll be honest, I don’t really care all that much that they’ve been operating illegally. I mean, they have, but something being illegal doesn’t necessarily mean that it should be (see, marijuana).

    It is important to keep something like traditional taxis on the road. If you don’t have a smart phone or need/want to pay cash, UberX and the rest aren’t going to work that well for you. But it is also important to recognize the failings of the current system. There are too few taxis and they do a fairly poor job adjusting to peak demand scenarios. Lyft and UberX exist because there is space for them to exist. If the taxi system had sufficient supply, I doubt we’d even be having this discussion.

    My general feeling is that there’s a lot of knee jerking on both sides of this. Complete deregulation is not a good idea, but neither is clinging to an old system that has not adapted to new technologies. What I’d be interested to see is a study of how taxi fares have changed in the last few years with the rollout of these app-based services. I assume they’ve gone down somewhat, but I feel like the amount they’ve gone down by would be a good thing to know. Maybe that already exists somewhere and I just haven’t seen it.

  9. 9

    Keenan C spews:

    I unflinchingly embrace this disruptive new technology, and think the decrepit old regulated taxi industry can go fuck itself.

    Seriously though, the argument “it’s illegal” is pretty weak. It might be illegal now but it ought not to be. Prices are LOWER on Lyft and UberX than shitty yellow cabs, and the service experience is far better. Limiting their number would only serve to increase demand and raise prices. Finally, if you think people with a smart phone and credit card are “privileged,” you’re setting the bar for privilege pretty damn low. People too poor to afford either most definitely are too poor to be taking taxis in the first place. That’s what the bus system is for.

  10. 10

    spews:

    @9 That’s an incredibly elitist attitude regarding poor people and buses, and absolutely real-world wrong. Taxis are the poor person’s backup to a bus when one is not available. It is often their only other option.

    Second, you miss the point on legality. TNCs are currently illegal. The council is in the process of passing an ordinance that will legalize them. That is what the TNCs are getting out of this: legalization. And that’s a big deal. So let’s not continue to pretend that the council is stepping in and crushing some sort of legitimate industry here that has been playing by the rules. Because the TNCs haven’t.

  11. 11

    Keenan C spews:

    If we’re talking about the lowest cost option for the poor, taxis ain’t it. You can get a no-contract data plan from Sprint for $45 a month. Add in a pre-paid visa card and you have access to Lyft, which in my experience is around half the cost of a taxi. You’d only need to take about one ride a week to completely make up the cost of the phone in savings. Even if you don’t have a phone, taxis won’t go away and would eventually be forced to lower their prices to compete with TNCs (if the city counsel doesn’t regulate them into irrelevance). Either way consumers win.

    The only benefit to capping TNC services is to protect the shitty, shitty taxi industry. The argument that TNCs are getting some sort of gift because they’ll be “legalized” is ridiculous. The city counsel could have chosen to stay out of the issue and continue to allow them to service the overwhelming consumer demand, as many other cities have done.

  12. 12

    Baby you can drive my car spews:

    Taxi service is only useful if it is serving people. I can’t imagine poor and disabled folks are getting any better service than those of us who have chosen to take our business elsewhere after no-show cabs, payment frustration, dangerous driver cell phone use, rude treatment. Taxi companies have fought proposed changes in the past that would make their rides more appealing (clean cabs, dress/hygiene standards etc) and they have created the wide open door for TNC’s.

    Why would anyone trust government to fix the mess they helped create by deferring to the taxi/for hire lobby for years? I am not against the taxi industry continuing to exist and some non-onerous legal parameters for all industries, but the taxi industry deserves no special advantages. It’s complete BS that they are the dominant immigrant and refugee industry. I have had a white driver exactly once with a TNC. The immigrant owners exploit the immigrant drivers too, ask some of them if they aren’t too afraid to talk. Council needs to legislate wisely since rumor of a ballot initiative is on the way for TNC’s. That will be as popular as $15/now, mark my words.

  13. 13

    spews:

    @11 You obviously have no fucking idea what it is to be poor (or old, for that matter), lecturing them on how to get an inexpensive smartphone plan.

    People live differently than you. Sorry, but that’s true. And what serves your needs doesn’t necessarily serve theirs.

  14. 14

    Keenan C spews:

    @13 – I guess resorting to an ad hominem attack without even attempting to refute the point I was making means I win the argument. Thanks Goldy!

    @12 – Here Here. I would love to see a ballot initiative.

  15. 15

    Who wants to know spews:

    We don’t need a ballot initiative for everything because we’re paying pols to make these kinds of informed decisions. They do the research, talk to experts, and make a damn decision. That’s their job.

    I didn’t understand this whole issue until reading this article, so thanks for that. Both should be regulated and playing by the same rules — but that’s kind of obvious, isn’t it?

  16. 16

    Fnarf spews:

    Goldy is correct; $45 a month is well out of reach of a large portion of the population. Smartphone penetration is just over 50% nationwide, which means that 150 million people in the country can’t use Lyft or Uber, and probably a quarter of a million in Seattle; even in rich, tech-happy cities like San Francisco smartphones are used by only 61 percent of the population.

    The likelihood of poor residents to have a credit card of any kind is even lower. Many people in this city don’t even have bank accounts, and couldn’t get one if they tried.

  17. 17

    spews:

    C’mon, the TNC drivers are immigrants, too. What’s different is the management structure: the TNCs aren’t locally owned. The good news: legacy taxis are about to get the same cellphone apps as TNCs.

    I’ve got nothing against local taxi drivers EXCEPT that they gouge riders (especially tourists), and that they pretend not to know where anything is.

  18. 18

    Not Fan spews:

    Comment #13 is especially delicious considering the source. Sheesh, Goldy, it never occurred to you during your time at The Stranger that you were in with a pack of phonies who couldn’t possibly have made it clearer, in every way something can be made clear, that they have no idea what it means to be poor, and especially old?

    The Stranger hates the working poor of Seattle, and utterly despises the elderly, the infirm, and the disabled. If you’re not a 20- or 30-something with a bicycle and a job with a developer, a rich non-profit, a startup, Amazon, or some government office, you ain’t shit. The “progressives” of this city want you to crawl away and die quietly to make room for something more vibrant, world class, walkable, and urban.

    None of these people ever gave a rat’s ass about the unwashed. And Goldy, you helped. Welcome to reality. And yes, I think I will have some fries with that large Diet Coke. Have fun paying those taxes and fees you couldn’t wait to have increased.

  19. 19

    Steve spews:

    Airport to home (Ballard) via Yellow: $65 including tip plus credit card fee recovery estimate. Via Uber: $65. Other trips/distances have shown similar equivalence. (Can’t comment on Lyft, as they require a Facebook login. I will never book my face. Ever.)

    To claim that taxis serve EVERYONE is to claim that EVERYONE can afford equivalent rates, regardless of whether EVERYONE chooses a taxi or Uber. Therefore, this is a ridiculous argument.

    That TNCs are iillegal is an indication that laws — often written by benefactors — routinely fail to keep up with technology. Not that TNCs are inherently evil. Yes, I’m aware that Council is moving to address the illegality. Yay, I guess. Shouldn’t we at least be questioning such laws generally, though?

  20. 20

    Sean spews:

    for a brief time while i was living in west baltimore (and in the throws of an admittedly serious drug addiction) i operated as a “hack”. in west baltimore, it is impossible to find a taxi, and the public transportation back then was beyond awful. (this was in the late 90′s, i can’t speak to how it is now, though i can’t picture much improvement). as a hack, i would drive around the main streets, looking for people standing curbside doing a little wave with their index finger. to the uninitiated, this might look like someone was trying to poke an imaginary person in the eye. in fact, it was the sign that someone needed a hack. price was agreed on before the trip, almost always a flat $5 or $10 fare, depending on distance, and i definitely was not licensed. but for the citizens in this neighborhood, it was their only form of transportation. yes, sometimes hacks were robbed (this WAS west baltimore, remember), though I can say that never happened to me. I only operated in the morning and afternoon, during daylight hours. and another funny thing was that i am white, and i was driving a pickup truck, and west baltiomore is 90% african american. i never had a problem, though. perhaps we just need hacks in seattle?

  21. 21

    No Time for Fascists spews:

    So skimming this issue,

    Price:
    what are the taxes and regulations that the traditional taxi services have to follow that the new services currently avoid?

    Repressiveness
    Is it that the traditional taxi services have not caught up with smart phone apps?

  22. 22

    Brian spews:

    Why no discussion of the very real market value that the permits have?

    That these permits (which typically are held by businessmen, not the poor cabbies themselves) trade for hundreds of thousands of dollars is a decent measure of the monopoly rents these guys are extracting from the consumer and their drivers. It is a classic case of rent seeking.

    But of course just as with the alliance of bootleggers and baptists during Prohibition, their lobbyists hide behind a fog of arguments about individual cab drivers and consumer protection.

    For sure these upstarts are interested in profits, but at least they’re competing for them fairly and openly. These rent-seeking taxi permit holders are just working to protect “their” turf through back-room lobbying. (If the permits changed hands for only nominal value that would be a different matter.)

    Why someone with your liberal bona fides and nose for investigative journalism is taken by this smokescreen is a mysterious to me.