D.C.'s War on Ridesharing Services
Is getting around the nation's capital about to get more expensive?
On Wednesday morning, the D.C. Taxicab Commission held a public hearing on its proposed regulations targeted at popular ridesharing companies including Uber, Lyft, and Sidecar.
These companies offer their drivers convenience and flexibility while providing consumers with lower prices and increased choice.
The commission's regulations would require background checks, insurance requirements, zero-tolerance policies on drugs and alcohol, and vehicle safety inspections. Ridesharing companies already voluntarily comply with these regulations, so they do not present a major issue.
The much more concerning proposed regulation is that rideshare drivers without taxi licenses would be limited to 20 hours a week, an arbitrary number that prevents people from earning a living. These regulations could also open the door to additional rules that would increase prices for consumers and lower opportunities for aspiring drivers.
Eleven states and the District of Columbia already require taxi drivers to obtain licenses, and the proposed regulations would effectively force rideshare drivers to get licensed as well. D.C.'s average fees associated with licensing are by far the highest in the nation at $555. In contrast, it only costs $156 to become a D.C. school or metro bus driver.
These statistics raise questions over the public safety rationale for regulating taxis and ridesharing companies. Since the occupation is not universally licensed and the difficulty of the requirements varies by state, why are there not outbreaks of rogue drivers creating safety hazards outside of D.C.? Also, why is the licensing burden lighter for bus drivers, who clearly pose a higher risk to public safety since they transport more people, including large groups of children?
I spoke with commission spokesman Neville Waters about the proposed regulations. When I asked him if there were any specific cases of public safety being threatened by ridesharing services he said, “I wouldn’t say that there are issues or that there aren’t issues.” What mattered, according to Waters, was that the commission acted in a forward-looking way to guard consumers against “rogue operations.”
It is not that regulators have bad intentions — for the most part they take their responsibilities to the public seriously. However, regulated industries spawn special interest groups which use government enforcement to protect their profits at the expense of consumers and competitors.
D.C.'s taxi market is far more open than other large metropolitan areas such as New York City. Currently, 116 taxi companies operate under DCTC authority, but there has been a moratorium on new companies over the past few years. This moratorium has strong hints of protectionism (of entrenched companies, not consumers) since existing companies are free to add cars to their fleets.
Passing one-size-fits-all, protectionist regulations is precisely what triggered problems in the taxi market and encouraged the rise of ridesharing companies. Justin Kintz, Uber’s head of public policy for the Americas, told me, “DCTC only knows one way to regulate, and that is for a 20th century business model.”
Uber and other ridesharing services do not own the cars their drivers use. What they do is provide the technological platform and support to connect drivers and riders. It is not surprising that applying the same regulatory standards to vastly different business models will be disastrous.
Proponents of the proposed regulations are clear — to protect the profits of existing taxi drivers. The commission even has a statutory responsibility to “preserve the economic viability of the District's public vehicle for hire industry.”
This is not a suitable justification to infringe on consumers' freedom to choose from a variety of options. New technology will drive a stream of new services, and ridesharing is only one example. If entrenched interests are allowed to defeat innovation, everyone else will lose.
Jared Meyer is a policy analyst at Economics21 at the Manhattan Institute for Policy Research. You can follow him on Twitter here.
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