For Uber drivers, one license is good enough
The state’s continued economic improvement reflects the prospects that ride-sharing companies like Uber or Lyft offer drivers and consumers.
These transportation network companies, or TNCs, allow individuals to summon cars with their smart phones, creating new job opportunities for independent drivers who use the app to connect with potential customers.
Often, the prices of TNC rides are considerably less than taxis. They provide a growing number of drivers the autonomy to use their own cars and the flexibility to set their own schedules, driving when it is convenient for them.
The rise of TNCs has been an excellent opportunity for a growing fleet of new drivers who have turned their personal cars into successful enterprises.
Unfortunately, a couple of overzealous Michigan lawmakers are trying to create barriers that could stall out this new industry.
Citing concerns that ride-sharing is “out of control,” state Sens. Rick Jones, R-Grand Ledge, and Dale Zorn, R-Ida, have introduced legislation that would require TNC drivers to jump through a number of new regulatory hurdles in order to be active drivers, including a requirement to receive and maintain a Michigan chauffeur’s license.
Currently in order to become a driver for TNCs such as Uber or Lyft, one must possess a valid drivers’ license, pass a background check and have appropriate auto insurance.
A recent Cato study actually found that the requirements to join Uber or Lyft “are often more strict than those imposed on taxi drivers in some of America’s most populous cities.”
In addition to these standards, customers routinely rate drivers. If a driver falls beneath a ratings threshold, they are no longer eligible to provide rides. The continuous feedback instills more consumer confidence than relying on taxi companies to review their drivers. With the incentive of good ratings, many drivers serve water, candy and even let the passenger control the music selection, all while driving their passenger safely to his or her destination.
As long as you have a valid driver’s license, pass a background check and have a safe driving record, there is no reason why further special licensing should be required. The senators’ proposal to require a chauffeur’s license is another example of burdensome occupational licensing that stifle entrepreneurs from bringing their sought-after skills to market. If someone is legally eligible to drive their car in Michigan, why should they be required to get additional permission to drive someone else in their car?
A recent Brookings Institution study examines how the rate of occupational licensing has increased dramatically over the last several years. Currently, 30 percent of the U.S. workforce is subjected to occupational licensing. While some licensing in certain highly specialized vocations might make sense, the exponential growth in occupational licensing has been used to keep out competitors and inflate the costs of services to consumers, stifling innovation and suppressing economic opportunity.
It is true that ridesharing presents legitimate questions about auto insurance. However, a number of states already have passed careful legislation and private companies are finding the right balance to address those concerns without eliminating an emerging market. Moreover, the ride-sharing and insurance industries increasingly are finding common ground on these questions.
Instead of implementing regulations that erect yet more impediments to entrepreneurs, lawmakers should be looking for ways to break down bureaucratic barriers for the entire workforce.
Michigan’s economy will only continue to grow if elected officials take their foot off the brakes, ending unneeded licensing requirements and looking for new ways to spur opportunity for all.