By Don McIntosh, Associate Editor
All that Portland cabbies asked for was “Same city, same rules.” But the new rules City Council approved April 21 create what Commissioner Nick Fish called a “separate but unequal system”—900 full-time taxi drivers, stuck with sunk investments they made under the old regulatory framework, will now compete with a limitless supply of lightly-regulated casual drivers in a 120-day experiment that opens the door to Uber and other app-based ride services. All signs suggest the experiment will become permanent when that period ends.
That spells worry for companies like Union Cab, where owner-drivers are members of Communications Workers of America (CWA) Local 7901; and for driver-owned Radio Cab and investor-owned Broadway Cab, which employ members of Teamsters Local 305 in dispatch, fueling and office support.
“Instead of adding better regulation, you are destroying existing regulation, just to meet the clock of Uber,” Union Cab president Kedir Wako told the City Council at an April 14 work session.
The new rules are the product of a strange four-month process that culminated in nine hours of tense City Council hearings and final-hour fireworks between members of a divided City Council. The fast-track re-write of city taxi rules was announced in December, after Uber launched its smart-phone-based ride service in defiance of Portland regulations, and overwhelmed the capacity of the City’s bungling enforcers to stop it. The scofflaw company agreed to halt its operation in exchange for a promise by Mayor Charlie Hales and Commissioner Steve Novick to rewrite the rules and make Uber legal by mid-April.
To work through the details, Hales and Novick appointed a new “innovation task force” that lacked any taxi industry representation—or even familiarity with the industry. The 12-member task force got a crash course in taxi rules, and strained to recommend a regulatory overhaul by the arbitrary deadline.
In its April 9 report to City Council, the task force proposed that the city get rid of its cap on the number of taxis, and let Transportation Network Companies (TNCs) like Uber and Lyft operate—charging whatever fare they want—under a separate set of looser regulations than the ones taxis face. For example, taxi companies would still have to make 20 percent of their fleets wheelchair accessible, but TNCs could refer disabled passengers to taxi companies or elsewhere.
Tucked in at the end of the report was a dissenting view from task force member Kayse Jama, a union ally and immigrant rights activist with the Center for Intercultural Organizing. Jama argued that the city should keep its cap on fares, and should require TNC companies to accept dispatch by phone, and require TNC drivers to accept cash—in order to make service available to seniors and the poor who lack credit cards or smart phones. But those recommendations weren’t heeded in the City Council ordinance proposed by Novick. Instead, Novick’s ordinance ended the fare limit for taxis, too.
Steve Novick, deregulator
Steve Novick ran to the left of Jeff Merkley in a 2008 campaign for U.S. Senate, and campaigned as a progressive in his 2012 race for City Council. But it’s been a long strange trip since Hales put him in charge of the Portland Bureau of Transportation in mid-2013. Last year Novick proposed a regressive tax to fund street repairs, then abandoned it in the face of public backlash. Now he’s the front man for taxi deregulation — a proposal that for many years was advocated by the Cascade Policy Institute, Oregon’s right wing “free-market” think tank.
What we are proposing to do is to let the normal free market rules apply.” — Portland City Commissioner Steve Novick
In trucking and aviation, deregulation ushered in an era of bankruptcies, mass layoffs, and drastic wage cuts. Previous attempts at municipal taxi deregulation didn’t work out well either, according to a comprehensive 1996 University of Denver study—contributing to rising prices, traffic congestion (and falling service standards and driver earnings). Cities cap taxi rates to protect the public, and they cap the number the number of taxis to ensure drivers can make a living. But Novick repeatedly questioned why those limits should remain, when there aren’t similar limits on restaurants or big box retailers.
That’s an ironic position given Novick’s sponsorship of a City ordinance to divest Walmart bonds. Uber is the Walmart of transportation services, City Commissioner Amanda Fritz wrote in an April 20 op-ed in The Oregonian. At the final April 21 hearing Novick said he hates Uber. Yet the ordinance he sponsored legalizes its operation in Portland.
“He’s not the guy I used to know,” said CWA Local 7901 legislative chair Mark Sturbois, who observed the task force meetings and city council hearings as the changes were discussed. “The fact is, a taxi is part of a public transportation system. That’s why they’re regulated. They have to protect consumers with safety and pricing.”
In an interview with the Labor Press last November, Novick spoke of ensuring protections for workers while ending limits on market entry. But nothing in the final ordinance protects workers.
At hearings leading up to the final vote, Novick’s proposed resolution drew objections from the taxi industry and from Fritz, Fish, and Dan Saltzman.
Fritz wanted to know what it means that taxis could change prices every hour, just like Uber: “How is somebody approaching a taxi cab supposed to know what the fare is? Ask every cab in line?”
[In fact, taxi companies say they’ll stick to their previous rates of $2.50 a mile—listed on the placards that until last week they were required to post — and leave the price-gouging, aka “surge pricing” to the company that invented it, Uber. [Uber has applied for a patent on its method of “dynamically adjusting prices for service.”]
Fish, meanwhile, objected to Uber’s user agreement, which says the company is legally responsible for nothing that happens to drivers and passengers who connect via its service. The ordinance at least takes a stand against that, saying Uber’s waivers of legal responsibility will have no force or effect in the City of Portland. [Thus Uber passengers can sue the company if they’re injured in Portland.]
The ordinance says all TNC drivers must have a city business license, so Fish asked Uber and Lyft representatives whether they’d bar drivers who don’t have the business license.
“That’s something we would work on,” hedged Uber general manager Brooke Steger, to audible shock from the crowd.
“I didn’t realize that was a squishy,” Fish replied.
“Nobody has assured me this isn’t a race to the bottom on wages. That said, we’re just going to have to find out in the next 120 days.” — Portland City Commissioner Dan Saltzman
At the final hearing, taxi company representatives criticized many instances of unequal treatment under the proposed rules: Taxis have to have cameras installed, for the safety of drivers and passengers; TNCs don’t have to. TNC drivers can start right away, with four months to complete training and certification after getting a permit; not taxi drivers. TNC companies like Uber and Lyft get unlimited entry into the market for a flat $20,000 permit fee; taxi companies like Radio Cab pay per-vehicle and per-driver, totaling up to $150,000.
Will the extra fee money buy extra enforcement, Fritz asked? No plans for that, said Novick aide Bryan Hockaday. “So we’ll have a thousand more drivers,” Fritz said, “and no more enforcement.”
Fritz, whose husband was killed in a car crash last September, was especially fierce criticizing the ordinance for inadequate insurance requirements: Taxis have to have at least $500,000 in liability coverage, but TNC vehicles as little as $50,000.
In the end, Fritz and Fish voted no, but Saltzman joined Novick and Hales to approve the resolution 3-2.
“Nobody has assured me this isn’t a race to the bottom on wages,” Saltzman said as he declared his vote. “That said, we’re just going to have to find out in the next 120 days.”