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Five Ways Uber Changes the City

Ride-sharing apps are transforming urban economies beyond the taxi industry.
Uber town car

For all the commentary about Uber’s disruptive effect on the taxi business, it has has other remarkable consequences. It is opening up American cities by solving one of the biggest problems for residents: finding cheap, easy, and reliable transportation in out of the way places. Expensive, rare, and undependable taxis are being supplanted by easy, fast, reliable Uber cars coming into lightly trafficked suburbs and even into high crime ghettos. A caller knows immediately how far away his ride is located. No more calling back to taxi companies asking where the taxi is and when it will finally arrive.

In Washington, D.C., the consequences are tremendous. Already, apartment buildings that used to have waiting lists for parking spaces now have empty spaces. Many downtown buildings in Washington have some 20 percent less income from parking than before Uber and convenient short-term car rentals came about.

The system works with one’s smartphone, showing immediately how far away a car is and how many minutes it will take to arrive. Then one can track the approaching car on an electronic map on the phone’s screen. There is a permanent digital record of which driver is coming and which member has called from what location. Drivers don’t carry any cash and all the cost, tipping is included, is billed to the member’s monthly credit card statement. Driver and passenger calls to find each other are computer scrambled so that neither can later find and call the person involved except through the company. Primarily this protects passengers from any driver later possessing their private telephone numbers. Passengers are asked to rate their driver after each trip, and drivers likewise rate passengers. The process gradually eliminates obnoxious or incompetent drivers and passengers. Uber cars cost some 75 percent as much as taxis and don’t charge for extra passengers.

The negatives with Uber are concerns for safety (see below) and the proper screening of drivers. Most customers use UberX which consists of private car owners. They depend almost entirely on GPS navigation and often don’t know the best city routes. I would question sending young children alone with them. They should really be compared to chauffeurs to whom one must explain the best routes to take. The higher-class Uber Black car has more professional, knowledgeable drivers, but costs nearly twice as much.

The Many Consequences

First of all, the abundance of young millennials and empty nesters moving into the city do not even need to own a car. The savings in parking, insurance, and car payments is hundreds of dollars, say about $700 a month after tax earnings. A detailed study in Los Angeles came up with exact numbers for car ownership compared to Uber. For weekends convenient car rentals are also available by the hour or by the day from companies such as Zipcar and Car2Go. Uber’s main competitor is the much small company, Lyft, which offers similar service.

Secondly and most significantly, whole new areas which were once semi-slums or far away from offices and downtowns have been opened up to “urban homesteaders” and “gentrification.” Uber is accelerating the return of middle classes to city life. Low-cost housing is being gobbled up all over the city in out of the way places which Uber cars are able to service and locate, thanks to their satellite navigation systems.

Thirdly, popular inner-city restaurants and bars are now within easy access for suburbanites, which makes for more abundance, variation, and sales tax collection, benefitting full-time residents. Several persons can share a car (without taxi like surcharges) into the city with no worries or costs associated with finding parking spaces. They can then be assured of finding a car late at night to take them home. And they have no worries about one extra drink or fear of police dragnets looking for DUI’s, when a single such arrest can cost thousands of dollars in fines or lawyers or higher insurance rates or even damage their careers for the rest of their lives.

Fourthly, parents can arrange for late-night rides for their teenagers from parties without a fear of their drinking and driving. More parents are using the service to deliver and pick up young children from after-school activities. Likewise, aged parents can be driven to homes and doctors’ appointments. It’s all about low cost, reliability, and tracking the drivers. Parents can even see on their smartphone map screens where the car is located as it drives.

Fifthly, residents of poor sections of town (providing they have a credit card) can call for cars in parts of cities with scarce public transportation or almost non-existent taxi service. Sharing cuts the cost of commutes to work. Drivers need not carry any cash and so are much less subject to being robbed.

Uber drivers use their own cars, which are required to be late models, clean, and with air conditioning running in hot weather. They don’t talk on their phones when carrying passengers. They earn 80 percent of the fares. Drivers I’ve spoken to tell me they earn a hundred dollars and then quit for the day. Drivers can work part- or full-time, day or night as they wish. Rates are adjusted automatically (called surge pricing) when there is heavy demand or bad weather, indeed they can double or triple, but that means that rides are always available at a price. If the member does not want to pay the higher price he or she can simply wait out the situation and then call back. There is no extra charge for additional passengers, so passengers can easily share costs which brings down the price considerably for a group of commuters, for example.

Uber also offers a limousine service called Black Cars, at about double the price. They are larger, more luxurious models, often stocked with the daily newspaper and bottles of water, and usually can take more passengers. Uber must also reduce traffic congestion in big cities as fewer residents must drive around looking for parking spaces or use their cars for short distances.

Safety is the big issue for Uber and its detractors. Search for Uber and crime to find links. The company’s website explains its procedures in recruiting drivers, however its fast growth has raised questions about the security checks. Some cities plan to impose their own requirements, but the suspicion is that they might try to shut down the service instead. There have been many charges and some arrests after complaints. Some of the accusations are true, while others are exaggerated by its enemies or competitors trying to have the service shut down. Municipal background checks on drivers, various tightening up measures, and all sorts of ideas to guarantee safety are being debated and sometimes incorporated into the system. With millions of potential customers there will always be some crime issues. However, the tracking possibilities of modern technology will make crimes harder to commit and easier to trace when they do occur. There does seem sufficient security because more and more parents are using the service to deliver and pick up their children from after-school activities. The company carries liability insurance on all its drivers.

Uber may be just a forerunner of other sharing services that will break the power of big city protected monopolies. Taxis are the most affected, and already the price of taxi medallions in New York City have declined by some 20 percent from their preposterous values of nearly a million dollars each. The cozy collusion of City Hall politicians and taxi owners to maintain scarcity is under attack all over America. Smart phones and Uber-type services are bringing mobility and lower costs to millions of Americans who previously could not find or afford such transportation.

Jon Basil Utley is publisher of The American Conservative.

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