Uber emailed its NYC TLC drivers, ahead of March 2024 utilization rate (UR) data, implying it will be forced to "lockout" drivers if it's subject to industrywide UR vs. standalone UR. We explain.
I think the Utilization Rate is a good thing for this industry since it literally gives insight into how busy the drivers are on the platform.
What the TLC needs to do is to control the number of TLC licenses they issue out. Those should be based on projected demand or calculations from the Utilization Rate.
Also TLC needs to do more to stop illegal taxis, there so many of them all over the city. This is impacting legal TLC earnings.
While controlling vehicle supply sounds like a solution, it also creates other problems. It's true driver's income will go up but so also will the cost of operation especially for those that are renting vehicles.
Controlling the vehicle supply will essentially turn the TLC plate into a medallion which is not a good idea based on the yellow cab experience to the point medallions were going for a million dollars.
Even regular FHV TLC plates were being sold under LLC at 35K cash (no payment plan or financing) I wonder how many Uber/Lyft drivers have $35K cash sitting in the bank accounts for no reason.
Think there are multiple ways to protect against your very legitimate points about problems that can and will arise from vehicle supply caps. For example, lease caps. Lease caps were already implemented in the medallion system. Another regulation is stringent control over leverage levels when someone buys a medallion or FHV corporation (just like banking system). For example, no one should be able to buy a taxi medallion with 90% debt. Ensuring leverage levels aren't out of whack will also decrease likelihood of valuation bubbles forming.
UR is an academically good idea, but it's overkill if one already controls vehicle supply and/or TLC driver license issuance. If you didn't have those mechanisms then the argument for UR is stronger.
The core question that many people have to ask themselves is should there be no cost to enter the NYC TLC industry? If a driver owns a medallion they have equity upside in a franchise, so they invest in the industry and their hard work has a return beyond their annual income. If you strip away that equity upside, driving a taxi becomes less exciting, we think at least. In terms of the TLC Plates having value, a driver can benefit from that if they invest the money into buying an LLC. If they believe everything should be free, America is not the correct country to live in. Again, it all comes down to mentality and vision for the industry.
Should there be *no* cost of entry into the world's most valuable for-hire transportation / taxi market? Our opinion is there should be a cost and it will also give drivers and investors, with a long term investor mindset, equity upside. Otherwise, Uber and Lyft shareholders ("the demand") will accrue all the value of the industry. The "demand" will effectively own the market and the supply will have no power / disposable in many ways (i.e., easy to replace one driver with another one).
I'm a college student I only do uber/lyft part time and I received the ev lotto when they issued the 600 plates. I'm pretty much only left with the tesla's maintenance costs (insurance, loan, etc) and some pocket money.
How will this impact me since I mostly drive weekends and it's finals right now I won't be driving for 2 weeks.
Do I have to worry? My base is uber (as in when I got my tlc license process I got my base letter from uber not sure if this is relevant). My worry is they lock me out and put me on a waitlist and I'm stuck with bills with no income.
Here's the good news. You have a TLC plate in your name, it's an EV so might get more leniency because Uber/Lyft needs to meet TLC Green Rides Initiative mandates to electrify fleet (& make the fleet more accessible) and it's already affiliated with Uber's NYC base.
You might need to worry though because you're doing this part time. Just to clarify you currently have access to Uber/Lyft in NYC? How many hours per week / trips per week are you doing? When do you usually work? Weekends?
Yes I have access to both. Primarily Fri/Sat/Sun (sometimes only 2/3 days). About 24-30 hours a week. Each day is 10-12 hours which comes to about 10-15 trips (upwards of 17-20). I'm going off of just the data on my uber app.
On the bright side after finals, its summer break and I will be able to work during the week but after a couple months I'm back to the same weekend schedule.
Okay, so you're part-time on weekend, but you're still logging a fair amount of hours. Given the weekend is when Uber and Lyft are busiest and you have an EV you might actually be fine, but it really depends on how Uber structures its Planner this time around (you could even book weekend time slots if came to it). If you said you worked less than 15-20 hours per week, would probably be more worried. If and when this launches, let us know what happens! Will be interesting to hear from your experience.
Uber NYC TLC actually had a "Planner" in late 2019, up until early March 2020. The UR-based TLC min pay rules were suspended when the pandemic began. That's why the original Uber NYC Planner went away. However, because the supply of TLC-plated vehicles dropped significantly the Planner didn't immediately comeback (driver supply / trip demand was in good balance). However, the TLC has allowed the supply to build up again and trip demand is not growing as fast . Also Green Rides mandate can complicate things too
Uber and Lyft have to pay drivers more if they can't meet the utilization rate. The TLC has to answer to higher-ups who have Uber or Lyft stock. The TLC is not working for the drivers.
Do they have that money is the question? Their business model wouldn't work if they have to pay all drivers on their platform $40 per hour and anyone could join.
Exactly, and that's applicable to any professional industry . We don't need 10,000,000 doctors or lawyers (or people who work in government) so we have barriers to entry to balance supply in a market driven way or no doctor or lawyer (government employee) will make money (also bad actors will offer "cheap" services when it's not the same, child labor can arise etc). Uber / Lyft can do a lot better on many things, but they cannot be held to this standard that it must (a) allow whoever wants to join the, join them *and* (b) all those people deserve to get paid $40 per hour no matter what. World doesn't work that way, think free money era of COVID warped peoples sense of reality more on this issue
👏👏👏. That's the crazy part, if they didn't add so many plates / cars all of a sudden. the UR might have worked! Protected driver wages. This was a major own goal by the TLC. You understand the complexities of this, but many drivers (and don't blame them) are always shocked when this happens. In October it was "screw those predatory leasing companies" and in this publication this was predicted. People can't see more than 1-2 months ahead and then they are constantly shocked or confused...and here we are facing lockouts again. All exactly predicted and all very easily predictable.
100%, they can prevent lockouts by lowering the UR threshold to a range or based on seasonality. However, you must remember why they want to keep UR high is to ensure drivers are kept busy and paid well. Honestly, the UR is such a complex way to achieve this, so this is why they should just get rid of UR and make sure there aren't too many FHVs (and/or also cap driver licenses). If they can control the FHV supply better / enforce those FHV limits, they'll be able to protect driver wages (this is how the industry functioned for decades). While people complained about the cost of medallion, it also was valuable because, as you know firsthand, gave access to a good wage. They will need an emergency session on this probably.
This is why they should get rid of UR and just ensure a more basic way to protect driver wages (track trip demand to vehicle supply). Non-Uber/Lyft bases btw are not subject to any of these rules.
No I dont mean lower UR, actually I believe TLC should have kept it at 58%. I meant why cant the TLC say you can not manipulate the UR to avoid paying drivers more ( UR formula )
If they kept it at 58%, agree drivers would get paid more, but there are too many drivers / vehicles right now to achieve that UR-equivalent wage for *every driver*. This is why Uber/ Lyft would have to kick a lot of drivers off to ensure a 53%+ UR wage is being earned by app drivers and ensure lockouts don't occur. It all comes back to supply and demand.
If there are $X wages to go around and you're trying to get everyone paid $40 per hour, then you can only pay Y amount of drivers that wage. This is origin of lockouts and why they occur, as you might know. It just comes down to supply and demand. They release 10,000 new FHVs (supply +10%) and if trips are flat +2% (demand +2%), the average driver wage is going to go down, just on the supply / demand math. The wage increases every year by inflation too, so that impacts their ability to keep enough drivers busy to earn that wage. We're repeating history, but the TLC is trying to re-invent the wheel.. This is literally the leadup to the creation of the taxi medallion system (too many drivers, chasing too few trips). If they can control supply, they will protect wages.
I think the Utilization Rate is a good thing for this industry since it literally gives insight into how busy the drivers are on the platform.
What the TLC needs to do is to control the number of TLC licenses they issue out. Those should be based on projected demand or calculations from the Utilization Rate.
Also TLC needs to do more to stop illegal taxis, there so many of them all over the city. This is impacting legal TLC earnings.
While controlling vehicle supply sounds like a solution, it also creates other problems. It's true driver's income will go up but so also will the cost of operation especially for those that are renting vehicles.
Controlling the vehicle supply will essentially turn the TLC plate into a medallion which is not a good idea based on the yellow cab experience to the point medallions were going for a million dollars.
Even regular FHV TLC plates were being sold under LLC at 35K cash (no payment plan or financing) I wonder how many Uber/Lyft drivers have $35K cash sitting in the bank accounts for no reason.
Great commentary.
Think there are multiple ways to protect against your very legitimate points about problems that can and will arise from vehicle supply caps. For example, lease caps. Lease caps were already implemented in the medallion system. Another regulation is stringent control over leverage levels when someone buys a medallion or FHV corporation (just like banking system). For example, no one should be able to buy a taxi medallion with 90% debt. Ensuring leverage levels aren't out of whack will also decrease likelihood of valuation bubbles forming.
UR is an academically good idea, but it's overkill if one already controls vehicle supply and/or TLC driver license issuance. If you didn't have those mechanisms then the argument for UR is stronger.
The core question that many people have to ask themselves is should there be no cost to enter the NYC TLC industry? If a driver owns a medallion they have equity upside in a franchise, so they invest in the industry and their hard work has a return beyond their annual income. If you strip away that equity upside, driving a taxi becomes less exciting, we think at least. In terms of the TLC Plates having value, a driver can benefit from that if they invest the money into buying an LLC. If they believe everything should be free, America is not the correct country to live in. Again, it all comes down to mentality and vision for the industry.
Should there be *no* cost of entry into the world's most valuable for-hire transportation / taxi market? Our opinion is there should be a cost and it will also give drivers and investors, with a long term investor mindset, equity upside. Otherwise, Uber and Lyft shareholders ("the demand") will accrue all the value of the industry. The "demand" will effectively own the market and the supply will have no power / disposable in many ways (i.e., easy to replace one driver with another one).
I'm a college student I only do uber/lyft part time and I received the ev lotto when they issued the 600 plates. I'm pretty much only left with the tesla's maintenance costs (insurance, loan, etc) and some pocket money.
How will this impact me since I mostly drive weekends and it's finals right now I won't be driving for 2 weeks.
Do I have to worry? My base is uber (as in when I got my tlc license process I got my base letter from uber not sure if this is relevant). My worry is they lock me out and put me on a waitlist and I'm stuck with bills with no income.
Here's the good news. You have a TLC plate in your name, it's an EV so might get more leniency because Uber/Lyft needs to meet TLC Green Rides Initiative mandates to electrify fleet (& make the fleet more accessible) and it's already affiliated with Uber's NYC base.
You might need to worry though because you're doing this part time. Just to clarify you currently have access to Uber/Lyft in NYC? How many hours per week / trips per week are you doing? When do you usually work? Weekends?
Yes I have access to both. Primarily Fri/Sat/Sun (sometimes only 2/3 days). About 24-30 hours a week. Each day is 10-12 hours which comes to about 10-15 trips (upwards of 17-20). I'm going off of just the data on my uber app.
On the bright side after finals, its summer break and I will be able to work during the week but after a couple months I'm back to the same weekend schedule.
Okay, so you're part-time on weekend, but you're still logging a fair amount of hours. Given the weekend is when Uber and Lyft are busiest and you have an EV you might actually be fine, but it really depends on how Uber structures its Planner this time around (you could even book weekend time slots if came to it). If you said you worked less than 15-20 hours per week, would probably be more worried. If and when this launches, let us know what happens! Will be interesting to hear from your experience.
Oh no, it's gonna be like the uber eats reserve time planners?!
Uber NYC TLC actually had a "Planner" in late 2019, up until early March 2020. The UR-based TLC min pay rules were suspended when the pandemic began. That's why the original Uber NYC Planner went away. However, because the supply of TLC-plated vehicles dropped significantly the Planner didn't immediately comeback (driver supply / trip demand was in good balance). However, the TLC has allowed the supply to build up again and trip demand is not growing as fast . Also Green Rides mandate can complicate things too
What I want to know is why can’t the TLC prohibit lock outs given that this is a method to manipulate the UR?
Uber and Lyft have to pay drivers more if they can't meet the utilization rate. The TLC has to answer to higher-ups who have Uber or Lyft stock. The TLC is not working for the drivers.
Do they have that money is the question? Their business model wouldn't work if they have to pay all drivers on their platform $40 per hour and anyone could join.
Then that leads to the question, how many drivers does this industry truly need?
Exactly, and that's applicable to any professional industry . We don't need 10,000,000 doctors or lawyers (or people who work in government) so we have barriers to entry to balance supply in a market driven way or no doctor or lawyer (government employee) will make money (also bad actors will offer "cheap" services when it's not the same, child labor can arise etc). Uber / Lyft can do a lot better on many things, but they cannot be held to this standard that it must (a) allow whoever wants to join the, join them *and* (b) all those people deserve to get paid $40 per hour no matter what. World doesn't work that way, think free money era of COVID warped peoples sense of reality more on this issue
And wasn’t this the punishment from the TLC? Creating the UR formula knowing they wouldn’t be able to keep us all busy.
It was TLCs doing to punish uber/lyft for onboarding so many drivers but ironic because it was TLC who issued all the plates
👏👏👏. That's the crazy part, if they didn't add so many plates / cars all of a sudden. the UR might have worked! Protected driver wages. This was a major own goal by the TLC. You understand the complexities of this, but many drivers (and don't blame them) are always shocked when this happens. In October it was "screw those predatory leasing companies" and in this publication this was predicted. People can't see more than 1-2 months ahead and then they are constantly shocked or confused...and here we are facing lockouts again. All exactly predicted and all very easily predictable.
100%, they can prevent lockouts by lowering the UR threshold to a range or based on seasonality. However, you must remember why they want to keep UR high is to ensure drivers are kept busy and paid well. Honestly, the UR is such a complex way to achieve this, so this is why they should just get rid of UR and make sure there aren't too many FHVs (and/or also cap driver licenses). If they can control the FHV supply better / enforce those FHV limits, they'll be able to protect driver wages (this is how the industry functioned for decades). While people complained about the cost of medallion, it also was valuable because, as you know firsthand, gave access to a good wage. They will need an emergency session on this probably.
the problem is the UR is not helping earnings, our earnings went down sigificantly during the last lockouts.
This is why they should get rid of UR and just ensure a more basic way to protect driver wages (track trip demand to vehicle supply). Non-Uber/Lyft bases btw are not subject to any of these rules.
I agree, the same way the taxi medallion protected taxi earnings once apon a time.
No I dont mean lower UR, actually I believe TLC should have kept it at 58%. I meant why cant the TLC say you can not manipulate the UR to avoid paying drivers more ( UR formula )
If they kept it at 58%, agree drivers would get paid more, but there are too many drivers / vehicles right now to achieve that UR-equivalent wage for *every driver*. This is why Uber/ Lyft would have to kick a lot of drivers off to ensure a 53%+ UR wage is being earned by app drivers and ensure lockouts don't occur. It all comes back to supply and demand.
If there are $X wages to go around and you're trying to get everyone paid $40 per hour, then you can only pay Y amount of drivers that wage. This is origin of lockouts and why they occur, as you might know. It just comes down to supply and demand. They release 10,000 new FHVs (supply +10%) and if trips are flat +2% (demand +2%), the average driver wage is going to go down, just on the supply / demand math. The wage increases every year by inflation too, so that impacts their ability to keep enough drivers busy to earn that wage. We're repeating history, but the TLC is trying to re-invent the wheel.. This is literally the leadup to the creation of the taxi medallion system (too many drivers, chasing too few trips). If they can control supply, they will protect wages.