Ride-Hailing Apps Such as Uber and Lyft – Top 3 Pros and Cons

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The Uber app tracks the driver’s approach after a ride is ordered.
Source: Nicolas Vega, “Uber Now Offers Carpooling Discounts in Outer NYC Boroughs,” nypost.com, Oct. 25, 2018
While 66% of Americans have heard of ride-hailing companies such as Uber and Lyft, just 15% say they have used the services (21% in major cities). [1][2] Before app-based ride-hailing companies came along, riders would wave down taxis on the street or call a central dispatch for taxi service. [1] Taxis are still used by more riders in suburban and rural areas, while ride-hailing dominates population-dense cities. [3] Uber officially overtook yellow cabs in New York City in July 2017, when it reported an average of 289,000 trips per day compared to 277,000 taxi rides. [4] More than 2.61 billion ride-hailing trips were taken in 2017, a 37% increase over the 1.90 billion trips in 2016. [3]

Is the rise of Uber, Lyft, and other ride-hailing services a welcome disruption of the taxi industry and a means of boosting human mobility and the economy? Or has ride-hailing produced more congestion, less passenger safety, and contributed to a gig economy that keeps workers near poverty? The pros and cons of the ride-hailing debate are detailed below.

 

 

Are Ride-Hailing Companies Such as Uber and Lyft an Overall Benefit to Society?

Pro 1

Ride-hailing apps offer a convenient, safe, and affordable transportation option that is especially useful to take drunk drivers off the road.

A full third of ride-hailing passengers who own vehicles (33%) said the main reason they use the service is to avoid drunk driving. [5] Fatal alcohol-related car accidents dropped between 10% and 11.4% after the introduction of ride-hailing services; DUIs went down as much as 9.2% in some cities. [6] Researchers estimate that if ride-hailing were fully implemented across the country, the resulting drop in DUI-related accidents could save 500 lives and $1.3 billion in American taxpayer money annually. [7]

The technology used by ride-hailing companies increases reliability and decreases wait times for consumers, and can offer a 20% to 30% discount over the cost of a taxi. [2][7]These apps have built-in safety features, such as displaying the license plate and car model to ensure that riders get into the correct vehicle, the ability to share the route with friends and family, GPS tracking, cash-free transactions, and driver ratings. [8]

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Pro 2

Ride-hailing companies create jobs and boost the economy.

There are more than two million Uber and Lyft drivers in the United States. [11] Uber reported $12.9 billion in 2017 take-home gross revenue for its US drivers. [12] Drivers have flexibility to set their own hours, a benefit that 80% cite as important to them; nearly one in four (23%) were unemployed prior to becoming a driver. [12] 63% of drivers work behind the wheel fewer than 20 hours per week, using the job to supplement their incomes and pay bills. [13]

The Economic Development Research Group found that Uber contributed $17 billion in gross domestic product to the US economy, as well as $580 million in added business productivity and $11 million in additional spending by international visitors who use ride-hailing to travel to more locations than they otherwise would have. [13]

Lyft reported that its drivers earned more than $3.6 billion in 2017, and that passengers contributed an additional $2 billion of spending in their communities. [14] 54% of riders say they explore their cities more and 45% spend more at local businesses because of ride-hailing. [14]

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Pro 3

Ride-hailing increases mobility for seniors, people with disabilities, and low-income populations, and decreases discrimination experienced with taxis.

Ride-hailing initiatives such as uberASSIST, which offers door-to-door assistance, create an opportunity to serve the estimated 26 million US seniors who rely on others for transportation. [22][23] Uber and Lyft partner with senior organizations, retirement homes, and healthcare providers to arrange rides for seniors who aren’t comfortable using technology. [24] Some ride-hailing companies, such as Mobility 4 All and Lift Hero, have specially trained drivers and exist specifically to offer transportation options for seniors and people with disabilities. [25][26]

Lyft offers discounted rides to grocery stores for low-income households to increase access to healthy food options such as fresh fruits and veggies, and has also pledged $1.5 million to transport veterans and people with low incomes to medical appointments and job interviews. [27][28]

Researchers have noted high levels of discrimination in taxi service towards black riders, who have a 73% higher chance of having their taxi canceled and wait 6-15 minutes longer than white riders. [29] Anne Brown, PhD, Assistant Professor of Planning, Public Policy, and Management at the University of Oregon, found that “ridehail services nearly eliminate the racial-ethnic differences in service quality.” [29]

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Con 1

Ride-hailing services increase traffic congestion, emissions, and total vehicle miles traveled.

Ride-hailing adds a total of 5.7 billion miles of driving each year in the nine metropolitan areas (Boston, Chicago, Los Angeles, Miami, New York, Philadelphia, San Francisco, Seattle and DC) that account for 70% of such trips in the United States. [3] At least 40% of the time, drivers are traveling without passengers in the car, adding more miles and vehicle emissions that wouldn’t exist without ride-hailing. [3][2] As many as 60% of riders would have used public transit, walked, biked, or not taken a trip at all if ride-hailing wasn’t an option. [9] That means that nearly two-thirds of ride-hailing trips added additional cars to the roads. [10]

Studies show that ride-hailing makes traffic worse during already congested rush hours, because of the extra cars they add to the road, and because these drivers look at their phones more for passenger pick ups and directions. [9][10] Researchers found that ride-hailing contributes to a net increase in greenhouse gas emissions. [2]

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Con 2

Ride-hailing drivers earn low pay that is often below minimum wage.

As contract workers, drivers don’t receive employee benefits. They also pay for gas and car maintenance, something 44% of drivers say they have a hard time affording. [15][16][17] The Economic Policy Institute says that “Uber drivers earn less than what 90 percent of workers earn,” and their hourly compensation “falls below the mandated minimum wage in nine of 20 major markets.” [15]

A 2018 report from economists at UC Berkeley and the New School found that 40% of ride-hailing drivers “have incomes so low they qualify for Medicaid and another 16 percent have no health insurance; 18 percent qualify for federal supplemental nutrition assistance (nearly twice the rate for New York City workers overall).” [18]

Half of ride-hailing drivers are the main earners for their families and are supporting children [18] Given a median hourly pay of $14.73 for Uber drivers, a 40-hour work week would result in an annual salary of close to $31,000 before vehicle expenses, and about $20,000 after accounting for costs incurred by drivers – right at the poverty threshold for a family of three. [19][20] Wages for drivers dropped 53% from 2014 to 2017. [21]

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Con 3

Ride-hailing services have a history of poor driver screening that puts passengers at risk.

While taxi drivers are subject to rigorous security screening involving fingerprint checks in an FBI database, ride-hailing drivers are only subject to limited background checks. [30] A 2016 lawsuit brought by the cities of Los Angeles and San Francisco revealed that 25 drivers with serious criminal records, such as murder and kidnapping, had passed Uber’s background checks. [31][32]

San Francisco District Attorney George Gascon, who sued Uber for allegedly failing to protect consumers from fraud and harm, said of the company’s security screening process that does not include fingerprinting, “It is completely worthless.” [33][34]

A Dec. 2019 report from Uber stated that, among riders and drivers, there had been 10 murders in 2017 and nine in 2018, and 2,936 sexual assaults ranging from nonconsensual touching to rape in 2017 and 3,045 in 2018. [35] One woman wrote in an open letter from 14 victims of sexual harassment and rape by Uber drivers, “Although I immediately reported what happened to Uber, shockingly, this predator continues to drive for Uber to this day. I am 21 years old and will have to live with this the rest of my life.” [36]

Actress Pamela Anderson has made public service announcements warning that ride-hailing apps “are optimized for predators and will remain so until common sense safety measures are put in place.” [37]

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Lyft driver and passenger.
Source: Al Olson, “This Is What Lyft Is Doing to Keep People from Driving High in Colorado,” thefreshtoast.com, Mar. 23, 2017

Did You Know?

 

  1. 70 percent of Uber and Lyft trips occur in nine big metropolitan areas: Boston, Chicago, Los Angeles, Miami, New York, Philadelphia, San Francisco, Seattle, and Washington, DC. [3]
  2. Among ride-hailing users, 17% percent use the services daily or weekly; 3% of all American adults report using them daily or near-daily. [1]
  3. One in five adults (19%) age 30-49 have used ride-hailing, compared to 4% of Americans over age 65. [1]
  4. Ride-hailing users are twice as likely to be Democrats (65%) as Republicans (33%). [1]
  5. People age 25 to 34 who have a bachelor’s degree and earn over $50,000 annually are two to three times more likely to use ride-hailing as those who are older, do not have a college degree, and earn less. [3]

 

Footnotes:

  1. Aaron Smith, “Shared, Collaborative and On Demand: The New Digital Economy,” pewinternet.org, May 19, 2016
  2. Caroline Rodier, “The Effects of RideHailing Services on Travel and Associated Greenhouse Gas Emissions,” ncst.ucdavis.edu, Apr. 2018
  3. Bruce Schaller, “The New Automobility: Lyft, Uber and the Future of American Cities,” schallerconsult.com, July 15, 2018
  4. Winnie Hu, “Uber, Surging Outside Manhattan, Tops Taxis in New York City,” nytimes.com, Oct. 12, 2017
  5. Regina R. Clewlow and Gouri Shankar Mishra, “Disruptive Transportation: The Adoption, Utilization, and Impacts of Ride-Hailing in the United States,” ucdavis.edu, Oct. 2017
  6. Frank Martin-Buck, “Driving Safety: An Empirical Analysis of Ridesharing’s Impact on Drunk Driving and Alcohol-Related Crime,” frankmartinbuck.com, Nov. 17, 2016
  7. Brad N. Greenwood and Sunil Wattal, “Show Me the Way to Go Home: An Empirical Investigation of Ride-Sharing and Alcohol Related Motor Vehicle Fatalities,” MIS Quarterly: Management Information Systems, Mar. 1, 2017
  8. Johnny Jet, “Do Uber’s New Safety Features Make Ridesharing Safer?,” forbes.com, June 15, 2018
  9. David Schaper, “Ride-Hailing Services Add to Traffic Congestion, Study Says,” npr.org, Aug. 1, 2018
  10. Steven R. Gehrke, Alison Felix, and Timothy Reardon, “Fare Choices: A Survey of Ride-Hailing Passengers in Metro Boston,” mapc.org, Feb. 2018
  11. Patrick Sisson, “The Rideshare Guy on Uber, Lyft, and What Their Drivers Really Want,” curbed.com, May 22, 2018
  12. Uber, “Uber in the Economy,” uber.com, July 28, 2018
  13. Economic Development Research Group, “Uber’s Economic Impacts in the United States,” edrgroup.com, July 26, 2018
  14. Lyft, “2018 Economic Impact Report,” lyft.com, 2018
  15. Lawrence Mishel, “Uber and the Labor Market,” epi.org, May 15, 2018
  16. Kate Gibson, “About Half of Uber, Lyft Drivers Make Less Than Minimum Wage: Revised Estimate,” thedrive.com, Mar. 6, 2018
  17. Erik Sherman, “Uber and Lyft Drivers Are in a World of Trouble If This New Study Is Right,” inc.com, June 1, 2018
  18. James A. Parrott and Michael Reich, “An Earnings Standard for New York City’s App-based Drivers: Economic Analysis and Policy Assessment,” centernyc.org, July 2018
  19. Rani Molla, “Half of U.S. Uber Drivers Make Less Than $10 an Hour after Vehicle Expenses, According to a New Study,” recode.net, Oct. 2, 2018
  20. Assistant Secretary for Planning and Evaluation, “Poverty Guidelines,” aspe.hhs.gov (accessed Dec. 17, 2018)
  21. Steve LeVine, “The 53% Ride-Hailing Pay Cut,” axios.com, Sep. 24, 2018
  22. Mark Edelen, “The New Senior Transportation: Uber and Lyft Ride-Sharing,” after55.com, Jan. 9, 2017
  23. National Aging and Disability Transportation Center, “2016 Transportation Trends: A Look at the Year’s Top Mobility Challenges & Opportunities,” nadtc.org, Feb. 2017
  24. Marco della Cava, “Lyft Deal with Allscripts Lets 180,000 Doctors Call Rides for Their Patients,” usatoday.com, Mar. 5, 2018
  25. Taryn Phaneuf, “Ride-Hailing Service Aims to Go the Extra Mile for Seniors, People With Disabilities,” americaninno.com, Sep. 26, 2018
  26. Cassandra Dowell, “Brookdale Turns to Uber-Like Service to Transport Residents,” innovation.seniorhousingnews.com (accessed Dec. 17, 2018)
  27. Jeanette Settembre, “Lyft Is Offering $2.50 Rides to Grocery Stores for People Living in ‘Food Deserts’,” marketwatch.com, Dec. 12, 2018
  28. Lyft, “Expanding Lyft Relief Rides to Help Those in Need,” blog.lyft.com, May 2, 2018
  29. Anne E. Brown, “Ridehail Revolution: Ridehail Travel and Equity in Los Angeles,” its.ucla.edu, Jan. 1, 2018
  30. Bob Egelko, “Lyft, Uber Drivers Won’t Need Fingerprint Checks, California Rules,” sfchronicle.com, Nov. 9, 2017
  31. Marrian Zhou, “Uber, Lyft Reportedly Skimp on Background Checks,” cnet.com, Aug. 31, 2018
  32. Nick Statt, “Uber Will Pay $10 Million to Settle Lawsuit over Driver Background Checks,” theverge.com, Apr. 7, 2016
  33. Dara Kerr, “California DAs Sue Ride-Sharing App Uber, Settle with Rival Lyft,” cnet.com, Dec. 9, 2014
  34. Ellen Huet, “SF, LA District Attorneys Sue Uber, Settle with Lyft over ‘Misleading’ Business Violations,” forbes.com, Dec. 9, 2014
  35. Kate Conger, “Uber Says 3,045 Sexual Assaults Were Reported in U.S. Rides Last Year,” nytimes.com, Dec. 5, 2019
  36. Katherine, Lauren, Sophia, K.B., Rachel, Jane Doe 6, Stephanie, Joy, Jennifer, Sasha, Annie,Elizabeth, Briana, and Addison, “Open Letter to the Board of Directors of Uber Technologies, Inc.,” wigdorlaw.com, Apr. 26, 2018
  37. Kari Paul, “Pamela Anderson Claims Uber Is Not Safe for Women,” marketwatch.com, Jan. 8, 2018