6 ms·

Ensuring a Level Playing Field for Rideshare

70 points by mlthoughts2018 8y ago

dvt 8y ago
The "gig economy" bites back. For those wondering, here is a breakdown of the TLC's implementations[1]. Without a doubt, Lyft is bemoaning "Minimum Driver Pay" where "Each app company will have its own rate, which will be set by TLC and adjusted periodically, and those with lower utilization rates will have to pay their drivers more per trip than companies with higher utilization rates." While it's true that higher-utilization apps (like Uber) will have to pay their drivers less, this puts drivers in a position of power and Lyft in a position of higher driver demand. I think this is a good thing both for drivers and consumers. Drivers get to arbitrage working for either Uber or Lyft -- depending on the utilization/pay scale -- while being protected financially by the TLC's policies. Lyft can cry wolf all it wants, but it's not as "small a player" as it makes itself out to be. By the way, this also protects new players in the space. These rules only apply to businesses doing, on average, 10,000 dispatches a day. [1] https://www.chauffeurdriven.com/news-features/in-this-issue/2049-new-rules-and-regulations-taking-effect-in-nyc.html https://www.chauffeurdriven.com/news-features/in-this-issue/...
- dnautics 8y ago
  As a former driver I have to say lyfts logic is accurate. Also, why should a company with less dispatches be subjected to different rules from those that don't?? That's extremely anti-driver.
  - TylerE 8y ago
    The general logic is that larger players have more economies of scale so making regs apply to all makes it even harder on the small guys.
    - mlthoughts2018 8y ago
      Except in this case it’s the reverse. The larger players, which have it far easier in terms of utilization rate, are rewarded more than smaller players working their tails off to reach better, but not best, utilization. So it’s even worse than applying a single rate to all and tacitly advatanging larger players. It’s actively basing that advantage on largeness.
      - Buge 8y ago
        Are you saying the law advantages providers with over 10k/day and hurts providers with under 10k/day? I don't understand how that could be. The law doesn't apply to providers with under 10k/day, so they should have freedom to do whatever they find optimal.
        mlthoughts2018 8y ago
        The utilization formula part of the law advantages each operator individually according to that operator’s numeric utilization score. Imagine if utilization was like a credit rating and the TLC wants laws that ensure good credit ratings among operators. So they incentivize reaching a good credit rating. One option could be to say, hey if you get a credit rating about 700, that is good for the people, so you get a tax break or something. Instead they are saying, hey if the size of your business already makes it easier for you to build a high credit rating, then you get even more tax breaks than others do, giving you even more advantage over them. This is not about the 10k/day part at all, only about how if Uber’s position as current market leader leads Uber to already lead on raw utilization rate, then the new law automatically rewards Uber with a labor price break more than the price break Lyft would get, and more still than Via or Juno.
        Buge 8y ago
        dnautics and TylerE were talking about the 10k/day boundary. If your reply isn't about the 10k/day boundary, then I think you misunderstood them.
        8y ago
    - mathattack 8y ago
      In general larger players can better spread (amortize) fixed costs to enjoy economies of scale.
- bleriot 8y ago
  This seems specifically targeted to give Uber an advantage over Lyft especially with the 10,000 dispatches rule. I’d also keep an eye on where the TLC commissioner ends up now that she’s resigned. Given all the corruption in NY, it wouldn’t surprise me at all to see her end up at Uber in the next few years.
- mlthoughts2018 8y ago
  I don’t think Lyft is disputing some form of incentive to increase utilization. I think Lyft is asking a fair question: what’s the point of an incentive for utilization? If the goal is to better society, in this case to better NYC congestion, then wouldn’t it make sense to incentivize companies to meet a single standardized level of utilization that is related to traffic patterns and congestion analysis? In what way is a custom utilization rate based price good for the city? It would seem to build in a margin advantage to which ever company is already the volume leader, even if that company’s actual utilization in real terms is not at a level that meets society’s goals. It feels honestly very much like Uber pulled strings for regulatory capture.
  - notduncansmith 8y ago
    Interesting timing on this related article: https://angel.co/blog/why-you-should-join-a-regulated-startup https://angel.co/blog/why-you-should-join-a-regulated-startu... > In a recent talk at Columbia University, entrepreneur Steve Blank, along with Bradley Tusk, Uber's first head of policy, and Evan Burfield, author of Regulatory Hacking, discussed how some of the most exciting unicorns of the last 10 years have been launched in heavily regulated markets—and why they think that trend will only accelerate. > ... > Tusk—who'd made a career in New York politics working for Chuck Schumer and Michael Bloomberg—was experienced with these regulators. He leveraged his knowledge of NYC politics, along with Uber's massive user base, in what he gleefully described as “a vicious f$&@ing campaign” to flip the city council and halt regulation blocking Uber.
- kodablah 8y ago
  Why can't the rate requirements be consistent city-wide and still have similar effect? Or, if the concern is really a flooded supply, have an incubation period that doesn't favor incumbents? Surely it's clear that a law favoring the more popular company based on demand alone is actually worse for drivers and consumers by reducing choice for both of them.
koolba 8y ago
> Examples of this back and forth that have benefited drivers include Lyft’s pioneering in-app tipping and instant payments for drivers, features Uber has since copied. In—app tipping is the worst thing that ever happened to ride share services.
- pishpash 8y ago
  Yep, and it's entirely because of Lyft's regressive example, otherwise tips were already done for in the rideshare space, and probably on its way out in the gig economy.
- FTA 8y ago
  My recent Lyfts have had a line included in their post-ride text message that says I should tip my driver to show appreciation for the ride. I rather pay a few dollars more for my ride fare to have the tip built in than deal with this social pressuring.
- slfnflctd 8y ago
  If you have ever tried to work as a ride share driver, you would quickly discover that without tips it wouldn't be nearly as viable a source of income. Honestly, I don't mind not getting tipped by the old man or single mother going home with a few bags from the grocery store, I know they're broke. On the other hand, I appreciate it when the businesswoman headed to the airport gives me a bigger tip than I expected, I know she can afford it. Would I rather make a flat extra $7 an hour? Yeah, probably overall. But allowing tipping (in an environment where it's been a tradition for generations) costs the company nothing and results in more income for underpaid drivers. If it's that or simply make less money, well, it may not be the perfect shining ideal of How Things Should Be Done, but I'll take it.
  - mlthoughts2018 8y ago
    This can vary wildly though. Some drivers working pretty normal hours in NYC end up earning $50,000-$80,000 or more per year. I don’t see why tipping a professional in that situation is a good use of money, and if I were to do it, I’d probably give tips to school teachers or emergency workers ahead of drivers.
deleted 8y ago
[deleted]
mself 8y ago
Stop calling it “rideshare”. The driver is a not “talking a ride” and “sharing” it with you. They are a paid driver. This is a taxi service — not a carpooling service.
- gnulinux 8y ago
  You're sharing it with other passengers.
- throwaway415415 8y ago
  Aren't you sharing the ride with other passengers?
  - alkonaut 8y ago
    How many Uber rides have other random passengers in it?
    - 676339784 8y ago
      Uber pool is pretty popular
    - throwaway415415 8y ago
      Uber pool and uber express. I mostly take these, they are so much cheaper.
macawfish 8y ago
I don't trust Uber, period. The idea of Uber gaining a monopoly on "rideshare" services in NYC makes me damn near sick.
alkonaut 8y ago
Can someone explain the argument here - isn’t the point of the minimum wage that a company has to ensure the employees (drivers, contractors, whatever) make at least the minimum wage. I realize Lyft doesn’t like it - it costs them money - but what’s their argument that they shouldn’t have to pay their drivers a living wage? Something something higher Utilization Uber? I read it twice but it’s still a little muddy to me. Are they arguing that since Uber drivers have higher utilization, Uber has to pay less minimum wage padding - so they get an advantage? Isn’t that fair? Or is this more complex than I’m hoping?
- mlthoughts2018 8y ago
  It’s a much more complex issue than you are reading into it. Lyft here is not opposing a plan to ensure drivers make a minimum wage nor opposing a plan to incentivize companies to increase their utilization rate, which is a measure of how much productive traffic they add to the city instead of unproductive traffic. On the first issue, Lyft is saying that the specific implementation of a minimum wage policy is going to hurt drivers by lessening ride demand overall. Their reasoning is that the policy mandates the wagechange must apply individually to every single ride, rather than applying in aggregate to each driver over longer time spans like a week. If Lyft can compete through price changes on a ride by ride basis, yet still ensure that at an aggregate level the driver meets or exceeds the wage requirement, this gives Lyft more levers they can pull to keep prices lower for customers and/or strategically decide which types of traffic patterns ought to be paying higher prices that subsidize the wage requirement. The current policy disallows this type of “smart pricing” and instead insists that all rides must raise in price, which is likely to lead to decreased demand overall, especially for short rides that are less problematic in terms of return-trip utilization risks. This issue had little to do with Uber except maybe that Uber had greater capitalization to ride out more losses while this law kills off competitors. But Uber drivers could be just as negatively affected as any other drivers from the specific way that a wage requirement is being carried out. The other issue is very different, it is about rewards given to companies based on the company’s demonstrated utilization rate, which is in part a function of the amount of ride liquidity that company has, which is basically a proxy for market share. Lyft is asking, hey, if the goal here is to reduce unproductive traffic in line with some studies on traffic congestion, etc., then why is there an individually-calculated reward on a company by company basis that is partly calculated using a proxy for market share? How does that solve the city congestion problem? For example, let’s say that the city did some research and knows that if companies operate with utilization rate of 60% or higher, this is “good,” and they want companies to have a financial incentive to reach that. One way would be to offer a price break, freedom to pay drivers less than the new minimum wage requirement, as a reward for hitting the utilization mark. Instead of that, the law is choosing a formula not based on something like that 60% number from studies or other factors. Instead, it is saying, hey so Uber had a utilization rate of 45% (pretty bad for the city, way less than 60%), but their 45% number (partly due to their market share) is better than say Lyft’s utilization at 40% or something. In that case, Uber would get more price break than Lyft, because 45% is higher than 40%, despite neither one hitting the mark necessary at 60%. Worse yet, because Uber’s ability to engineer 45% utilization is largely just because Uber happens to have a larger volume of ride inventory, the reward had nothing to do with proactive policy on Uber’s part, but is instead literally codify the idea of “the rich get richer.” Many alternatives make more sense in terms of helping the city and preserving fair competition, for example: - basing price breaks on city-wide utilization target levels that apply to everyone. - basing price breaks on the amount utilization increases over time, so that the people making the biggest improvements get the biggest rewards.

dvt 8y ago

The "gig economy" bites back. For those wondering, here is a breakdown of the TLC's implementations[1]. Without a doubt, Lyft is bemoaning "Minimum Driver Pay" where "Each app company will have its own rate, which will be set by TLC and adjusted periodically, and those with lower utilization rates will have to pay their drivers more per trip than companies with higher utilization rates." While it's true that higher-utilization apps (like Uber) will have to pay their drivers less, this puts drivers in a position of power and Lyft in a position of higher driver demand. I think this is a good thing both for drivers and consumers. Drivers get to arbitrage working for either Uber or Lyft -- depending on the utilization/pay scale -- while being protected financially by the TLC's policies. Lyft can cry wolf all it wants, but it's not as "small a player" as it makes itself out to be. By the way, this also protects new players in the space. These rules only apply to businesses doing, on average, 10,000 dispatches a day. [1] https://www.chauffeurdriven.com/news-features/in-this-issue/2049-new-rules-and-regulations-taking-effect-in-nyc.html https://www.chauffeurdriven.com/news-features/in-this-issue/...

dnautics 8y ago
As a former driver I have to say lyfts logic is accurate. Also, why should a company with less dispatches be subjected to different rules from those that don't?? That's extremely anti-driver.
- TylerE 8y ago
  The general logic is that larger players have more economies of scale so making regs apply to all makes it even harder on the small guys.
  - mlthoughts2018 8y ago
    Except in this case it’s the reverse. The larger players, which have it far easier in terms of utilization rate, are rewarded more than smaller players working their tails off to reach better, but not best, utilization. So it’s even worse than applying a single rate to all and tacitly advatanging larger players. It’s actively basing that advantage on largeness.
    - Buge 8y ago
      Are you saying the law advantages providers with over 10k/day and hurts providers with under 10k/day? I don't understand how that could be. The law doesn't apply to providers with under 10k/day, so they should have freedom to do whatever they find optimal.
      - mlthoughts2018 8y ago
        The utilization formula part of the law advantages each operator individually according to that operator’s numeric utilization score. Imagine if utilization was like a credit rating and the TLC wants laws that ensure good credit ratings among operators. So they incentivize reaching a good credit rating. One option could be to say, hey if you get a credit rating about 700, that is good for the people, so you get a tax break or something. Instead they are saying, hey if the size of your business already makes it easier for you to build a high credit rating, then you get even more tax breaks than others do, giving you even more advantage over them. This is not about the 10k/day part at all, only about how if Uber’s position as current market leader leads Uber to already lead on raw utilization rate, then the new law automatically rewards Uber with a labor price break more than the price break Lyft would get, and more still than Via or Juno.
        Buge 8y ago
        dnautics and TylerE were talking about the 10k/day boundary. If your reply isn't about the 10k/day boundary, then I think you misunderstood them.
        8y ago
  - mathattack 8y ago
    In general larger players can better spread (amortize) fixed costs to enjoy economies of scale.
bleriot 8y ago
This seems specifically targeted to give Uber an advantage over Lyft especially with the 10,000 dispatches rule. I’d also keep an eye on where the TLC commissioner ends up now that she’s resigned. Given all the corruption in NY, it wouldn’t surprise me at all to see her end up at Uber in the next few years.
mlthoughts2018 8y ago
I don’t think Lyft is disputing some form of incentive to increase utilization. I think Lyft is asking a fair question: what’s the point of an incentive for utilization? If the goal is to better society, in this case to better NYC congestion, then wouldn’t it make sense to incentivize companies to meet a single standardized level of utilization that is related to traffic patterns and congestion analysis? In what way is a custom utilization rate based price good for the city? It would seem to build in a margin advantage to which ever company is already the volume leader, even if that company’s actual utilization in real terms is not at a level that meets society’s goals. It feels honestly very much like Uber pulled strings for regulatory capture.
- notduncansmith 8y ago
  Interesting timing on this related article: https://angel.co/blog/why-you-should-join-a-regulated-startup https://angel.co/blog/why-you-should-join-a-regulated-startu... > In a recent talk at Columbia University, entrepreneur Steve Blank, along with Bradley Tusk, Uber's first head of policy, and Evan Burfield, author of Regulatory Hacking, discussed how some of the most exciting unicorns of the last 10 years have been launched in heavily regulated markets—and why they think that trend will only accelerate. > ... > Tusk—who'd made a career in New York politics working for Chuck Schumer and Michael Bloomberg—was experienced with these regulators. He leveraged his knowledge of NYC politics, along with Uber's massive user base, in what he gleefully described as “a vicious f$&@ing campaign” to flip the city council and halt regulation blocking Uber.
kodablah 8y ago
Why can't the rate requirements be consistent city-wide and still have similar effect? Or, if the concern is really a flooded supply, have an incubation period that doesn't favor incumbents? Surely it's clear that a law favoring the more popular company based on demand alone is actually worse for drivers and consumers by reducing choice for both of them.

koolba 8y ago

> Examples of this back and forth that have benefited drivers include Lyft’s pioneering in-app tipping and instant payments for drivers, features Uber has since copied. In—app tipping is the worst thing that ever happened to ride share services.

pishpash 8y ago
Yep, and it's entirely because of Lyft's regressive example, otherwise tips were already done for in the rideshare space, and probably on its way out in the gig economy.
FTA 8y ago
My recent Lyfts have had a line included in their post-ride text message that says I should tip my driver to show appreciation for the ride. I rather pay a few dollars more for my ride fare to have the tip built in than deal with this social pressuring.
slfnflctd 8y ago
If you have ever tried to work as a ride share driver, you would quickly discover that without tips it wouldn't be nearly as viable a source of income. Honestly, I don't mind not getting tipped by the old man or single mother going home with a few bags from the grocery store, I know they're broke. On the other hand, I appreciate it when the businesswoman headed to the airport gives me a bigger tip than I expected, I know she can afford it. Would I rather make a flat extra $7 an hour? Yeah, probably overall. But allowing tipping (in an environment where it's been a tradition for generations) costs the company nothing and results in more income for underpaid drivers. If it's that or simply make less money, well, it may not be the perfect shining ideal of How Things Should Be Done, but I'll take it.
- mlthoughts2018 8y ago
  This can vary wildly though. Some drivers working pretty normal hours in NYC end up earning $50,000-$80,000 or more per year. I don’t see why tipping a professional in that situation is a good use of money, and if I were to do it, I’d probably give tips to school teachers or emergency workers ahead of drivers.

deleted 8y ago

[deleted]

mself 8y ago

Stop calling it “rideshare”. The driver is a not “talking a ride” and “sharing” it with you. They are a paid driver. This is a taxi service — not a carpooling service.

gnulinux 8y ago
You're sharing it with other passengers.
throwaway415415 8y ago
Aren't you sharing the ride with other passengers?
- alkonaut 8y ago
  How many Uber rides have other random passengers in it?
  - 676339784 8y ago
    Uber pool is pretty popular
  - throwaway415415 8y ago
    Uber pool and uber express. I mostly take these, they are so much cheaper.

macawfish 8y ago

I don't trust Uber, period. The idea of Uber gaining a monopoly on "rideshare" services in NYC makes me damn near sick.

alkonaut 8y ago

Can someone explain the argument here - isn’t the point of the minimum wage that a company has to ensure the employees (drivers, contractors, whatever) make at least the minimum wage. I realize Lyft doesn’t like it - it costs them money - but what’s their argument that they shouldn’t have to pay their drivers a living wage? Something something higher Utilization Uber? I read it twice but it’s still a little muddy to me. Are they arguing that since Uber drivers have higher utilization, Uber has to pay less minimum wage padding - so they get an advantage? Isn’t that fair? Or is this more complex than I’m hoping?

mlthoughts2018 8y ago
It’s a much more complex issue than you are reading into it. Lyft here is not opposing a plan to ensure drivers make a minimum wage nor opposing a plan to incentivize companies to increase their utilization rate, which is a measure of how much productive traffic they add to the city instead of unproductive traffic. On the first issue, Lyft is saying that the specific implementation of a minimum wage policy is going to hurt drivers by lessening ride demand overall. Their reasoning is that the policy mandates the wagechange must apply individually to every single ride, rather than applying in aggregate to each driver over longer time spans like a week. If Lyft can compete through price changes on a ride by ride basis, yet still ensure that at an aggregate level the driver meets or exceeds the wage requirement, this gives Lyft more levers they can pull to keep prices lower for customers and/or strategically decide which types of traffic patterns ought to be paying higher prices that subsidize the wage requirement. The current policy disallows this type of “smart pricing” and instead insists that all rides must raise in price, which is likely to lead to decreased demand overall, especially for short rides that are less problematic in terms of return-trip utilization risks. This issue had little to do with Uber except maybe that Uber had greater capitalization to ride out more losses while this law kills off competitors. But Uber drivers could be just as negatively affected as any other drivers from the specific way that a wage requirement is being carried out. The other issue is very different, it is about rewards given to companies based on the company’s demonstrated utilization rate, which is in part a function of the amount of ride liquidity that company has, which is basically a proxy for market share. Lyft is asking, hey, if the goal here is to reduce unproductive traffic in line with some studies on traffic congestion, etc., then why is there an individually-calculated reward on a company by company basis that is partly calculated using a proxy for market share? How does that solve the city congestion problem? For example, let’s say that the city did some research and knows that if companies operate with utilization rate of 60% or higher, this is “good,” and they want companies to have a financial incentive to reach that. One way would be to offer a price break, freedom to pay drivers less than the new minimum wage requirement, as a reward for hitting the utilization mark. Instead of that, the law is choosing a formula not based on something like that 60% number from studies or other factors. Instead, it is saying, hey so Uber had a utilization rate of 45% (pretty bad for the city, way less than 60%), but their 45% number (partly due to their market share) is better than say Lyft’s utilization at 40% or something. In that case, Uber would get more price break than Lyft, because 45% is higher than 40%, despite neither one hitting the mark necessary at 60%. Worse yet, because Uber’s ability to engineer 45% utilization is largely just because Uber happens to have a larger volume of ride inventory, the reward had nothing to do with proactive policy on Uber’s part, but is instead literally codify the idea of “the rich get richer.” Many alternatives make more sense in terms of helping the city and preserving fair competition, for example: - basing price breaks on city-wide utilization target levels that apply to everyone. - basing price breaks on the amount utilization increases over time, so that the people making the biggest improvements get the biggest rewards.