Chicago still isn’t giving Uber a fair shake
Uber, Lyft and other ride-hailing services will be permitted to pick up passengers at Chicago’s O’Hare and Midway airports under a plan approved by the City Council in a 39-11 vote.
The decision marks a step in the right direction for the city, which has come a long way from the prohibitionist approach it was still taking to the emerging industry just a year ago. Chicago did not start licensing ride-booking drivers until February of this year, but the industry is now expected to contribute $30 million in annual fees to the city.
But contrary to the claims of Chicago cabbies—who in recent weeks attempted to stage strikes at the airports and citywide in protest of the plan; filed suit seeking to revoke the licenses of ride-hailing service drivers, and disrupted recent City Council Transportation Committee hearings with chants of “same service, same rules”—the problems with the new regime are not that they fail to extend regulations to Uber and Lyft but that they explicitly tax the upstarts to prop up their incumbent competitors.
Under the new rules, ride-booking service users will be forced to pay a 30-cents-a-trip fee to the city of Chicago. Those fees will be used, in part, to offset the costs of fingerprinting, background checks, drug testing, driver-training classes and chauffeur license fees, which are expected to drop from $15 to $5.
Moreover, where taxis must pay a 50-cents-a-trip fee for airport pickups, the fee on ride-hailing pickups at the airport will be 52 cents per trip. Where taxis will continue to pay a $4 fee for access to the airports, ride-booking companies will now pay $5 for access to airport pickups, as well as for dropoffs or pickups either at McCormick Place or Navy Pier. The fees alone can be more than the typical ride.
What was that business about the “same rules,” again?
Taxis already have many built-in advantages over ride-booking services. Most important is monopoly access to accept fares hailed on city streets. Beyond that, there are cabstands set aside on city-owned property throughout Chicago where only taxis are permitted to solicit business.
Taxi fleets also can earn money by accepting advertising, something that’s significantly more difficult to pull off in the private cars that work with Uber and Lyft. And finally, there’s the fact that taxis—unlike ride-hailing services—still conduct a significant portion of their business in cash, which has the convenient property of being harder to track by agencies like the IRS.
Given those structural advantages, services like Uber and Lyft never should have stood a chance. That they have grown so rapidly and are so popular is a testament to just how inadequate the existing transportation-for-hire options truly were. Continuing to insulate the industry from this competition, including explicitly robbing Peter to pay Paul, serves no one well in the long run.
Chicago should be commended for liberalizing its regulatory framework and being open and welcoming to new ideas and business models. It is, in that respect, ahead of some of its peers, most notably New York.
Both Chicago and the state government in Springfield also have done important work in setting down consistent standards to address some of the reasonable public health and safety issues that ride-hailing presents, such as minimum insurance requirements and basic background checks.
But tearing down the sclerotic legal and regulatory structures that stand in the way of innovation will require much more work. Only when that task is complete will Chicago’s consumers and its entrepreneurs enjoy the kind of dynamic competitive market that they deserve.
