By Steven Glathe
As transport apps like Uber and Lyft continue to grow in popularity, they have been giving relentless competition to taxi companies and local taxi drivers have been feeling the pinch.
“We’ve lost 90 percent of our coastal business,” said Henry Hester, a long time driver for Long Beach Yellow Cab. “The magnitude of this competition has become so severe that I’ve recently had to change my location of operation just to stay in business. Uber has outnumbered and unfairly outplayed us.”
Uber is active in 45 countries and 108 cities worldwide. The service was nonexistent five years ago but today totals at over $18 billion in profit. By offering a cheaper and more instantaneous service than taxis, this new dynamic in ridesharing is changing what it looks like to get a ride across town.
“Uber is one of a new generation of dematerializing, demonetizing and democratizing technologies that are disrupting the status quo,” said Peter Diamindis, the Executive Chairman of Singularity University, a graduate-level Silicon Valley institution that studies exponentially growing technologies and their ability to transform industries. “Simply put, Uber is a product adored by passengers and Uber drivers alike. It uses technology to dramatically improve a broken system. It solves a pain point.”
City taxis use a more traditional business model while Uber provides a more cost-efficient service by using technology as the infrastructure to their business.
Uber’s ambition to provide a highly accessible, tech-based service contributes to the divergence of taker home pay for its drivers. Full-time Uber drivers in Long Beach are pulling in around $39K per year, according driver Jason Marcil.
In contrast, the salary for taxi drivers in Long Beach is about $36K, according to Wyatt Cody, a Long Beach Yellow Cab employee.
Although the differences in income don’t contribute to a substantial contrast, the costs of being a taxi driver however, are far more burdensome than those of an Uber driver.
Taxi drivers are classified as independent contractors and pay for their own gas, insurance, taxi medallion and license, cars and dispatch, according to Joseph Ali, a Long Beach Yellow Cab employee.
“I have to pay $200 per week for the car, as well as pay for my own gas, so when considering those factors, its really hard for me to generate a prosperous amount of revenue,” Ali said.
Uber employees are also independent contractors. “I use my own car so I am responsible for all gas and wear and tear damage costs,” Riley Smith, a driver for the company stated. “However, the most significant difference with Uber is that there is no registration fee, and when I’m on the clock, Uber covers my insurance.”
Taxi drivers nationally have come together to dispute the Uber service by highlighting the fact that much of the company’s runaway success comes from bypassing continuous commercial insurance coverage, background and safety checks for drivers and vehicles, and basic taxi regulations.
“Uber is working through a loophole, they’re working in an area that’s never been tested. Uber is able to bypass because they’re not inspected or regulated by any cities,” Phil Seaese, a driver for Long Beach Yellow Cab stated. Seaese also mentioned, “ It’s a challenging scenario because no one is big enough to stand up to them, the company’s tremendous capital makes them invulnerable.”
“Ridesharing apps have definitely challenged the traditional taxi service and have left taxi drivers wishing they had thought of the idea first,” said Justin Arthur Leon, a Long Beach City Cab driver. “Uber drivers are poachers. They come out from 10-1 on weekend nights and steal a majority of my once thriving business. I’m very bitter about it, but I’m going to keep going.”
Uber’s thriving popularity has become powerfully distinct amongst teens and young adults.
Lauren Eades, a fifth year student at Cal State Long Beach stated, “I prefer Uber because it’s cheaper and more convenient and I believe that younger adults will indefinitely continue to choose the more convenient option. If a tech-based alternative is available it will quickly be consolidated to the status quo.”
Uber and app-based services have also redefined the cost of private transportation.
“In Los Angeles, Uber and UberX (Uber’s luxury service) charge an 80-cent base fare, plus $1.10 per mile or $0.21 per minute, with a minimum fee of $4,” said Sara Silverstein in an article on Business Insider. “Los Angeles’ 2,361 licensed cabs charge one rate: $2.85 when a ride begins, and $2.70 for each subsequent mile.”
The two services also differ from each other in tipping.
“It’s also important to note that you don’t have to tip your Uber driver,” Silverman said “Most people do tip their taxi driver. If you add a tip of 20 percent to the cab fares, Uber looks like an even better deal and beats out taxis in every city we’ve analyzed.”
The profitability of driving for an app rather than the taxi industry has resulted in many drivers switching sides.
“A lot of our taxi drivers who went to Uber are saying, ‘If the taxi industry is fixed, we’ll come back to the taxi industry,’” said Sarah Saez, an organizer for United Taxi Workers. “I’ve had more than a handful of drivers who are like, ‘My heart is in the taxi industry but this is a better opportunity for me right now.’”
Brian Logan, a long time driver for Long Beach Yellow Cab, echoed this sentiment.
“Out of 11 guys, eight have switched to Uber,” he said. “We used to be the Uber of Long Beach but the switchover has caused us to be the last resort. Personal transportation will always exist, however, the dynamic will improve as innovations continue to challenge the norm.”