New York City Council Slams The Brakes, Places One-Year Cap On Ride-Share Companies

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On Wednesday, the New York City Council voted 39-6 to place a year-long freeze on the granting of licenses to new ride-share vehicles. During this period, the Taxi and Limousine Commission will study "the impact vehicles for hire have on the city of New York."

The council also voted 42-3 to examine the pay-scale of various ride-share companies, and decide if drivers should receive "minimum rates of fare."

The legislation regarding the licensing freeze reads in part:

The taxi and limousine commission shall not issue new for-hire vehicle licenses for twelve months after the effective date of this local law, during which period the commission shall submit a report to the council every three months on the impact of this section on vehicle ridership throughout the city.

...the taxi and limousine commission shall continue to issue new for-hire vehicle licenses for wheelchair accessible vehicles.

...the taxi and limousine commission may issue any number of new for-hire vehicle licenses upon a determination by the commission that issuing such number of new for-hire vehicle licenses would increase the availability of for-hire services in different geographic areas of the city where such services are needed, and where such licenses would not substantially contribute to traffic congestion.

The text of the minimum pay legislation reads in part:

The commission shall by rule establish a method for determining the minimum payment that must be made to a for-hire vehicle driver for a trip dispatched by a high-volume for-hire service to such driver. In establishing such method, the commission shall, at a minimum, consider the duration and distance of the trip, the expenses of operation to the driver, any applicable vehicle utilization standard, rates of fare and the adequacy of for-hire vehicle driver income considered in relation to for-hire vehicle driver expenses.

...Following completion of the study required by section 19-550, the commission shall determine whether the establishment of minimum rates of fare to be charged by vehicles licensed by the commission would substantially alleviate any of the problems identified in such study. If the commission determines that such minimum rates of fare would have such an effect, the commission is authorized to establish by rule such minimum rates of fare.

In a series of tweets on Wednesday, New York City Mayor Bill de Blasio congratulated the council:

On Thursday, de Blasio spoke publicly about the new legislation:

Three years ago we took a stand against corporate greed, but corporate greed won the day then. Well, this time the people won; this time the drivers won. It didn't matter [that we were] up against a huge multinational corporation, it proved once again power resides in the people.

...40% of app-based cars drive around empty today at any given moment – 40% empty. Horrendous for the drivers; horrendous for our environment; a horrible element of congestion all because of a corporate and greedy strategy. For the taxi drivers, for the for-hire vehicle drivers, it has meant their livelihoods are being steadily destroyed. 85% of for-hire vehicle drivers living on poverty wages now because of what these companies did to them...

New licenses capped for a year with the obvious exception of accessible vehicles – and we need more of those. And by October, a new minimum compensation rule – the thing we've needed for so long. [Let's] guarantee that drivers get a decent income. And this is a big step toward the goal of these four years ahead, to make this the fairest, the fairest big city in America.

In response to the new legislation, Joseph Okpaku, VP of Public Policy for Lyft, released a statement:

These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of color and in the outer boroughs. We will never stop working to ensure New Yorkers have access to reliable and affordable transportation in every borough.

Via, a smaller ride-sharing company, told The Daily Wire:

We are deeply disappointed with the Council's decision to rush through this counterproductive cap. Forcing pooled services like Via to provide shared rides in the low-capacity sedans that dominate the for-hire vehicle fleet in New York is inefficient and runs counter to the city's goals. Looking forward, we hope the TLC will use the discretion it was afforded by the Council to recognize the benefits of ride-pooling in high-capacity vehicles and exempt these vehicles, which reduce congestion and lead to the highest driver earnings, from the cap.

Regarding the effectiveness of the legislation, The New York Times reports that according to a multi-million dollar study, ride-share companies aren’t necessarily the "primary factors" making an impact on city congestion:

From 2009 (before ride hailing) through 2015, the study finds that reductions in vehicular speeds began long before ride hailing hit the stage, and the pattern did not change after ride hailing. The primary factors of reductions in vehicular speed, according to the study, are increased freight movement, construction activity and tourism, population and job growth.

The New York Times also notes that "from 2009 to 2015, pedestrian growth in Manhattan’s central business district grew by about 18 to 24 percent," meaning that human traffic might also have an impact on vehicular congestion and slow-down in the city. Another study shows that traffic in the central business district slowed significantly more in the years prior to the ride-sharing explosion than after.

Now that New York City has significantly tightened the leash on ride-sharing companies, will other major cities follow suit? How will this legislation impact drivers and passengers? Over the course of this experiment, if NYC officials don’t notice any significant changes, will they course correct, or simply double down on their blaming of ride-sharing companies, regulating them even further?

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