Taxis, Uber and Lyft battle for Sacramento cab fare

Standing on the Capitol lawn on a sunny day in July, Jose Lopez waits with fellow taxi drivers for potential fares. Out of shouting distance, a group of men with luggage head toward L Street. One of Lopez’s colleagues walks over, uncertainly, to offer a ride. No luck.

Business is slow, especially while the state Legislature is on summer recess. But Lopez and other drivers complain that there’s a bigger reason their work has stalled in recent months: Uber and Lyft.

Cabbies are clashing with these rideshare companies, which allow people to turn their personal cars into taxis.

“They’re taking customers from us,” says Lopez, sporting loose-fitting slacks and a balding head of silver hair.

It used to be that a cabbie working in Sac would make around $75 a day, working more than the standard eight hours. But thanks to the apps’ “disruptive innovation” technology, taxi drivers say they are losing 50-60 percent of their income and waiting twice as long in between customers.

A lot of this is because rideshares undercut cabs on prices. By way of example, cabbies say it costs between $30 and $40 to get from the Capitol building to the airport, where they also pay a cab-entrance fee. A search on the Uber website shows the same ride starting at $27.

Lyft says its fares are 30 percent cheaper than taxis on average. That seems to match Uber prices.

The recent battles pitting taxi drivers against ridesharers represent an age-old conflict of new technologies displacing familiar business models. Taxi drivers are predictably miffed about losing market share to what they see as upstart startups that enjoy less regulation. The city of Sacramento, for instance, recently passed tough new rules for cabs— but ignored rideshares like Uber and Lyft.

The pro-rideshare camp says it is competing on price and convenience in a market that taxi companies have for too long monopolized.

“If you’re leaving the house to go to the grocery store, there’s a chance your neighbor needs to go, too,” says Chelsea Wilson, Lyft’s San Francisco-based communications manager. “This is changing transportation into a community-powered movement.”

But the rideshares are attracting disapproval, too, with critics saying they exploit vulnerable workers and diminish the odds that any driver, cabbie or Uber or Lyft, can make a living wage.

Who is right? That’s part of what regulators are trying to decide now. California is at the forefront of attempts to rein in these wild new rideshare companies, most of them founded in San Francisco.

Among the most controversial proposals is a bill at the Capitol that would up the companies’ insurance requirements, effectively drawing a line between when drivers are just private citizens out for a cruise, and when they’re acting as employed contractors.

The outcome of such draft legislation in the coming months will help to shape the ridesharing industry. And that, in turn, is likely to reshape the way we get around, how we deal with money, our interactions with strangers, and maybe even our perspectives on the community of a city.

Uber and Lyft are just two minnows in the brave new world called the sharing economy.

The term refers to industries in which your average Joe or Jane Citizen can earn a few bucks by sharing something with strangers, usually connecting with them through an app or website.

Feastly users don’t have to be gourmet chefs, but they can cook meals and charge people to come and eat at their homes. Dog lovers can make some scratch by watching people’s pets through DogVacay. And those of us who aren’t cabbies by trade can give people rides, for a fee, with smartphone apps like Sidecar, Lyft and Uber. Sidecar has yet to arrive in Sacramento, but locals have been using Lyft and Uber since 2013.

How it works: You launch the app, which tells you how far away a driver is and the cost of a ride. You both agree, and after they drop you off, the app transfers payment from your bank account to theirs.

When customers pay for an Uber ride, 20 percent of the fare goes to the company and the rest to the driver. Uber, which was founded in 2009 but is not a public company, was estimated to bring in more than $1 billion in rideshare revenues last year. In June, the company raked in $1.2 billion in new venture-capital investment.

Lyft didn’t get into the rideshare game until 2012, but brought in a quarter-billion-dollars in investment this past April.

Uber drivers sometimes have a glowing “U” sticker on their car’s front window. Lyft drivers can be identified by a big pink, fuzzy mustache on the car’s front grill. Lately, however, these logos are less common—possibly because in larger cities like Los Angeles, taxi drivers are known to hassle rideshare drivers that prominently flash their U’s or mustaches. In some cases, taxis have even slashed rideshare cars’ tires

In the beginning, startups all across the sharing economy were met with skepticism and worry. Was it safe to let a stranger into your car? Sleep at your house? Borrow your boat?

“As a woman, you have to keep that in mind,” Lyft driver Dora Vaudrin, who lives in Citrus Heights, said on a recent Tuesday afternoon. The petite 30-year-old, dressed casually in shorts and dangling earrings, had a plan to duck-and-roll out of her car in case a passenger attacked her. That never happened.

As safety and other concerns have largely subsided, the sharing trend has caught on. It appeals to a young generation’s desire for a certain lifestyle—why buy a car when you can share one?—and to a sort of libertarian interest in cutting the middleman.

Oakland-based writer Susie Cagle blogged at Medium that the peer economy’s vision is “an act of civil disobedience in the service of a righteous return to human society’s true nature of trust and village-building that will save the planet and our souls.”

For the Occupy Wall Street crowd, paying a little less to traditional corporations, which it deems corrupt or bloated, is a plus. Now they can pay strangers directly (with a cut for the startup, of course). More substantially, many users find it cheaper to stay at an Airbnb host’s apartment instead of a hotel, for instance, or to hop in an Uber car instead of a taxi.

Not a fan of the sharing economy, Cagle wrote that its proponents consider this a “higher form of enlightened capitalism.”

Cabbies say part of the reason these new mobile apps can siphon away their riders is that they deal with far less overhead. Besides worrying about where they’re allowed to park or how often their cars are inspected (sometimes daily), Lopez says cab drivers are paying taxes at all levels of government, plus paying for commercial plates and city permits. These are costs that rideshare companies don’t necessarily incur.

“OK, when they’re paying like us, no problem,” cabbie Lopez says. “But they don’t have as many expenses.”

Rideshare companies do spend on things like auto insurance (more on that later), taxes and criminal background checks. But cabbies say they have to go through more rigorous checks, plus get licensed and display photo ID in their cars, making them a safer option for customers.

Yet ridesharers turn that same criticism around on taxis. Lyft driver Chris Lenny says rideshares may not be as sharply regulated, but that’s because they come with a personal connection. He can trust the person sitting next to him in the car: Besides a police check, a driver’s photo appears on the app, which also shows that person’s track record based on past users’ reviews.

This connection also makes it easier to find that sweater you left behind in the driver’s car.

“It’s a better service than what’s been in place before,” Lenny says. He added that taxis “have been needing change for a long time.”

His frustration with taxis is not uncommon. Stories about cabbies overcharging for a ride or taking the long way to drive up the meter add extra appeal to ridesharers. One Sacramento council member, for instance, recounted during a meeting this year how a local cabbie once got lost bringing him downtown from the airport.

Meanwhile, a tourist using Uber can land in São Paulo, Brazil, know nothing about the city, and rest assured the driver won’t rip him off because the price is set ahead of time. And with rideshares, there’s no tipping.

By comparison, taxis seem inefficient. The rides are more expensive, too, and yet drivers make so little. Where does the money go?

Certainly not into new technology. Rideshares brag about the efficiency and advantages, such as smartphone app maps that let drivers see in real time when and how much their services are needed. In the past, for instance, peak hours meant that normal taxis were in short supply (like at 2 a.m. on a Saturday, after bars close in Midtown). But apps use surge pricing, so that more drivers will come out to earn the higher fare, and more riders will wait until prices drop, in theory.

Advocates say sharing is also more efficient because it cuts congestion and pollution and helps everyday people make use of their underutilized resources.

Lyft’s Wilson would not say how many users Lyft has in Sacramento. Uber spokeswoman Eva Behrend said in an email, “We have thousands of rider and driver partners in and around Sacramento.”

There are about 500 cabbies.

As these startups mature, however, they attract more opponents who feel companies are looking less like an alternative to The Man and more like a vehicle for exploitation.

Critics say the sharing economy takes advantage of the vulnerable, especially in the wake of the Great Recession. Those who turn their cars into cabs are not just students or housewives with flexible schedules and a desire for spending money, they’re also laid-off workers who drive to make ends meet while applying for new jobs.

But new jobs with good pay will be harder to come by as the sharing model spreads to more industries. As with outsourcing, companies save money because there is less regulation, as well as more people willing to work for lower pay and fewer benefits.

“Across the U.S., high costs of living are driving more of the employed toward ’side hustles,’” Cagle argues. She calls this “unprotected freelance work.”

Freelance drivers work without union protection, without the traditional benefits of health care, workers’ comp, retirement plans and the like. Standards are lowered industrywide, creating a cycle of job uncertainty.

But Lyft says it’s unfair to characterize drivers as unprotected. The company explained that it contributes to community-building by meeting with drivers to answer questions and connecting them with other drivers.

Vaudrin said she and about 40 other Sacramento-area Lyft drivers meet every Tuesday to socialize, welcome new members, and share their experiences to support one another. She now acts as an official mentor, inspecting new drivers’ cars as well as showing them the ropes. Some users develop friendships above and beyond their rideshare connection.

“Once a driver signs up, Lyft does have a lot of infrastructure in place to support the driver,” Lyft spokeswoman Katie Dally said.

There’s also the argument that a cab driver’s loss is a gain for people who might have come to depend on their Lyft or Uber income. Vaudrin said she uses it to supplement her waitressing pay, though she wouldn’t share how much she makes from driving. Lenny said he has just found a new job, but it requires an extended period of training. Until the job starts, he’s relying on his Lyft earnings. “This is helping me to survive during my unpaid training,” he said.

The new apps on the block come at an especially inconvenient time for local cab drivers. Earlier this year, the city of Sacramento passed a slew of regulations that drivers fear could push many of them out of work. Chief among their worries is a test that will be mandatory for new drivers or for those who are up for permit renewals.

Dafna Gauthier, the city’s business-permit manager, told SN&R the test would have material that drivers should know, such as geography, “regulations, making sure they can count change back and that kind of thing.” But drivers criticize the measure as essentially an English test that discriminates against immigrants.

And, at least for now, Uber and Lyft drivers are exempt from these rules.

Ed Camillo, a cab driver wearing a black hat over his shoulder-length curls, says he’s been in the business for 30 years. He explains that his Portuguese language skills come in handy when some customers prefer to speak that with him. “Why, in a place like America, should I have to speak any particular language?” Camillo said in English, before dashing off with a newly arrived fare.

Other drivers said they speak as many as four or five languages, and being tested on one is antithetical in a country that prides itself on its melting-pot diversity.

Kazman Zaidi, president of the Sacramento Taxi Cab Union, estimated that out of the 400 to 500 cabbies in the capital, around 100 would fail the test. He said older drivers shouldn’t have to take the test, as their experience has been test enough.

But Gauthier said Sacramento would not grandfather in any drivers because “the people who ask for this are the ones we have issues with.”

She added that the new rules, which include a professional dress code effective July 1, resulted from complaints.

“Contrary to what people think, it’s drivers who are also asking for this, saying, ’We’re tired of people making our industry look bad,’” she said.

Again, these rules won’t apply to rideshare drivers. Gauthier says the city wants to wait to see what the state does before it works on regulations of its own.

But for taxi drivers, it did budge, somewhat; the test rollout date was postponed to last week, August 4, giving drivers time to observe Ramadan.

It may be cold comfort to taxi drivers, but rideshares, which also go by the bulky term, transportation network companies, or TNC, are brushing up against their own regulatory roadblocks, too.

Assembly Bill 2293, sponsored by Bay Area Democrat Susan Bonilla, would require that rideshare companies be on the hook for commercial auto insurance when their drivers turn on their apps, whether they’re ferrying customers or not.

Bonilla proposed the bill after an Uber driver hit and killed 6-year-old Sophia Liu in San Francisco while he was logged on but without a passenger this past January. That led to a bitter battle over who should pay damages to the child’s family: Uber, the driver’s personal insurance provider or someone else.

Bonilla and supporters of her proposal say it would eliminate this gray area, while critics say it offers little benefit except to add to the balance sheets of insurers. The bill is sponsored by the Association of California Insurance Companies and the Personal Insurance Federation of California.

The state Senate likely will vote on the bill, which has passed the Assembly, this fall.

Zaidi helped bring hundreds of cab drivers to the Capitol to back the proposed legislation, which he said would level the playing field by regulating rideshares more similarly to the taxi industry. Drivers on both sides—apps and taxis—say that they’re OK with competing with one another if the playing field is fair.

“I have zero animosity,” Lenny says about cab drivers.

He acknowledged that his involvement with Lyft was hurting the traditional taxi business, but that’s part of what defines disruptive innovation. “There are pros and cons to progress. There are always going to be difficulties. But I see [rideshares] as a big step forward.”

Vaudrin, on the other hand, doesn’t believe there have to be winners and losers. She said there will always be different customers, some who want to hail a cab and some who want to pull up an app. She sympathized with the taxi drivers—but with optimism: “I understand where they’re coming from, because we are taking some of their business,” she said.

“But I really do think there is enough room for everyone.”