As someone who walks around Seattle on a regular basis, it is hard not to notice that a startling share of the cars whizzing down the street share a familiar look. The ubiquity of the Toyota Prius with a glowing dash is hard to miss. While our city has been out ahead of our peers, Seattle’s first step in this initiative–the “Fare Share Plan“–falls short of the promises of decongestion and full protections for drivers that are sorely needed.
Ridehailing has a negative impact on society in a variety of obvious and hidden ways, with the evidence for these effects only recently coming into focus since Uber’s founding in 2009. Economists, engineers, and public policy experts have been able to illustrate how ridehailing is impacting social welfare through increased congestion, reduced transit usage, increased wear on roads, the proliferation of underpaid contract workers, and the increase in traffic fatalities through induced demand for car travel.
While Seattle had not seen a decline in bus ridership until 2019, it has still seen significant crowding out of bus ridership by ridehailing services. These private companies are cannibalizing demand of what is intended to be a public good. These services shift dollars from our transit agencies to shareholders in New York, San Francisco, and Tokyo.
It is estimated that for every passenger ride delivered, an Uber driver drives an additional three miles on Seattle’s congested roads. All those unnecessary miles translate to more cars on Mercer Street, Denny Way, and I-5 than ever before. That’s also more wear on those roads, ultimately leading to more costs for taxpayers to repair and maintain. Climate emissions also continue to climb in Seattle and statewide, despite ambitious goals set for carbon neutrality by 2050.
All those additional miles are also uncompensated work that drivers are left to pay for without fares to cover. An Economic Policy Institute study pinned the true hourly pay for drivers at $9.21, far below Seattle’s minimum wage of $16.39 per hour. And, because this study used a conservative estimate for vehicle expenses, it likely overestimated the true pay of drivers.
Two rides per hour amounts to roughly 16.4 miles based the data that Uber has provided to Seattle over the years and the IRS estimate the expense for that average mileage to be a whopping $9.43 per hour–far above what the study suggested. These studies generally use very conservative variable cost estimates, which are closer to $4 to $5 an hour. New York City didn’t fall into this trap and used the full $10 per hour estimate for expenses in their minimum wage law.
Uber and Lyft have been competing for market and mode-share through subsidized rides on the backs of their drivers and venture capital investors. Researchers from Oxford University and the University of Chicago were able to quantify that, “each $1 spent on UberX rides generated a “consumer surplus” of $1.60. Across America, that surplus was estimated to be $6.8 billion a year.” Uber is practically giving its services away!