BC should think twice before opening its doors to multinational ride-hailing corporations

Last year, the BC government introduced legislation expected to bring ride-hailing to the province, but many questions remain about what that will look like in practice. One of the bodies responsible for working out the policy details is BC’s Passenger Transportation Board (PTB), an independent tribunal that has been handling passenger transport license applications from ride-hailing companies including major players such as Uber and Lyft.

I made the following submission to the PTB in response to Uber’s and Lyft’s applications (submissions were due September 24). My submission outlines concerns about the economic conditions and lack of protections given to drivers, the tendency of ride-hailing giants to form oligopolies, and the risk of large ride-hailing companies adding to congestion (and therefore to emissions, pollution and other large social and economic costs).

My submission speaks to a specific set of criteria that the PTB considers when it reviews applications. If you want to take a look at those, you can find them on their website.

Re: Application 6988-19TNS, UBER Canada Inc. and 6990-19TNS, Lyft Canada Inc.

To Whom It May Concern:

I’m an economist and researcher at the Canadian Centre for Policy Alternatives. I’ve previously been asked to speak to legislative committees in BC regarding the ride-hailing industry and have published an analysis on this issue. In my view, the introduction of ride-hailing multinationals like Uber and Lyft would not promote sound economic conditions in the sector, nor would it reasonably balance the satisfaction of necessarily competing public needs. Consequently, I urge you to reject these applications.

I’d like to give you an overview of my reasoning and evidence in reaching this conclusion, focusing on three main points.

First, in the absence of any limits on fleet sizes or minimum wage regulations, accepting these applications would fail to uphold decent economic conditions for drivers of passenger transportation vehicles. This reality can be seen clearly in other jurisdictions: it is among the reasons that New York has introduced fleet size limits and a minimum wage in this sector, and it is why California has passed legislation requiring the recognition of ride-hailing drivers as employees. Wages in the industry are dismal, which is consistent with what we would expect a priori from allowing unlimited vehicles into this market.

There are legitimate and ongoing debates about the optimal suite of policies and regulations to address the economic conditions of drivers in the passenger transportation industry. However, in the absence of fleet size limits, employee status or minimum wage regulations for drivers, and lack of meaningful minimum fare regulations, the experience from other jurisdictions is clear: drivers will not enjoy sound economic conditions in terms of their levels of pay or benefits. While only some of these regulatory issues are within the purview of the PTB, you have the power to approve or reject applications relating to economic conditions. Approving these applications would harm the economic conditions of drivers.

A second concern relating to sound economic conditions is ride-hailing multinationals’ track record of engaging in what appears to be predatory pricing. This includes the practice of operating at a loss to offer deep discounts in different markets. Reasonable observers conclude that the purpose of this practice is to establish a position of market dominance vis-à-vis potential competitors (and the network effects inherent to this industry then tend to further entrench dominant players).

This strategy also appears to be buttressed by multimillion dollar industry lobbying campaigns to promote a favourable regulatory environment, such as the threat of a $90 million industry-funded campaign to overturn California’s new legislation. While there are real problems with the status quo in the passenger transportation business in BC, allowing aggressive multinationals like Uber and Lyft into the British Columbia market would diminish rather than promote sound economic conditions in this sector.

Third, sound economic conditions in any sector should not include the imposition of costly externalities on others. Unfortunately, there is a clear body of evidence that the introduction of ride-hailing multinationals like Uber and Lyft does exactly this. Specifically, this industry adds substantially to the total vehicle miles travelled (VMT) in a given jurisdiction. Evidence suggests that ride-hailing has added 2.8 vehicle miles to roads “for each mile of personal driving removed” in the United States. In short, ride-hailing worsens the already-large economic and social costs of automobile transportation.

Externalities imposed by the industry (from the resulting increases in VMT) include the costs of increased traffic congestion, increases in deadly air pollution, higher greenhouse gas emissions, added noise pollution, additional traffic deaths and injuries, and diminished public transit ridership. Even if the PTB determines that there is some public need for additional passenger transportation services, any benefit of meeting these particular needs must be weighed against the corresponding harms to public needs and interests in the transportation sector and beyond.

…

Thank you for your consideration,

Alex Hemingway

Further analysis and evidence relating to each of these points can be found in my November 2018 piece, What’s missing from the Uber debate? Market power, congestion, pollution, and even deaths. That piece also charts a path forward for ride-hailing that doesn’t privilege expansionist multinational corporations and also doesn’t leave passenger transportation solely in the hands of unaccountable taxi firms. BC is uniquely positioned to break new ground on this file with a driver or community-owned model of ride-hailing; we just need to be bold enough to pursue a different way forward. Click here to learn more.

Topics: Climate change & energy policy, Employment & labour