Do We Really Want Uber to Kill The Community Based Car Services?

New York City’s defining feature—and indeed the very foundation of this close-knit community—is a vibrant local economy. It is a place of small stores and sidewalks; a place where public and private space overlaps; and a place where we buy goods and services from businesses owned by our neighbors. The proliferation of “new market entrants” has weakened our local economy and is threatening to erode the character of the communities in the outer-boroughs, all while impoverishing civic and cultural life.

New market entrants like Uber and Lyft are akin to chain stores or big-box retailers. History has proven that while competition is healthy, consolidation of power on the part of the new “big box store” can only be successful in the long run because it is at the expense of existing small businesses. Unless something is done, this type of consolidation will, in the long run, reduce competition, harm consumers and destroy the locally based business.

These “new market entrants” came to New York City with the promise of forward thinking technological development that will alter the transportation industry for the better. If history is any indication, nothing could be further from the truth. Chicago’s struggling West Side learned the hard way when Wal-mart came in and destroyed more jobs than they created. While they promised to bring jobs to the cash-strapped community, within two years of Wal-mart's opening its doors, 82 local stores went out of business. Instead of growing Chicago's retail economy, Wal-mart simply overtook it - absorbing sales from other city stores, and shuttering dozens of them in the process. Chicago's cautionary tale isn't isolated. Countless livery bases in New York City (traditionally known as community car services) are being forced out. If we lose too many of these small community based business, then the character of the City will die as well.

For minorities and women business owners in particular, New York City is an incubator for the American Dream. While many car services are community based and are owned by minorities, that fact could easily change. Every day I talk to livery base owners who are struggling to stay afloat. They tell me they're getting squeezed. The small local livery bases that currently exist are now in a battle that they cannot win. If they don’t match the “new entrants” prices and services, they lose customers. If they do match the “new entrants” prices, they will lose money on every sale. While Uber can afford to operate at a loss indefinitely, it’s only a matter of time before local livery bases will be forced to close. And as history has proven, once the “big box retailer” has eliminated the local competition, prices tend to rise.

Home-grown entrepreneurs and small mom-and-pop businesses, such as car services, have proven their commitment to our neighborhoods time and time again. Instead of falling for the “big-box swindle” we must stand by and help support the local community base liveries. Trading locally owned livery businesses for the likes of Uber and Lyft also entails the loss of significant secondary economic benefits. Local livery bases keep profits circulating within the local economy. They also support a variety of other local businesses. They create opportunities for service providers, like accountants. They do business with the community bank. They purchase goods from local stores. In this way, a dollar spent at a locally owned businesses sends a ripple of economic benefits through the community.

Small livery bases also create economic diversity and stability. Because they are locally owned, these bases are firmly rooted in the community. They are unlikely to move and will do their best to weather economic hard times. They created a service for their community, especially when it was unpopular and dangerous to do so. They contribute to the identity of the community and give neighborhoods their distinct flavor. Locally owned livery bases have also strengthen the community through their contributions to civic and cultural life. Local business leaders are more than providers of goods and services. They often take a leadership role in community affairs. Because they live in the places where they do business, local merchants tend to be far more committed to the community’s well-being and long-term stability than multi-billion dollar corporations.

In the long run, Uber and Lyft will prove to be fair-weather friends. They operate for profit only and have no community-based interest. Our communities and neighborhoods deserve better. The actions of policymakers, and, in particular, government regulators, are critical to ensuring that community based car services continue to be a vital part of our communities. Many contend that public policy should have no role in shaping the economy. This is, after all, a free market. But public policy is never neutral, and has, in fact, played a major role in the explosive expansion of Uber and Lyft. In many ways, public policy has undermined local livery bases by giving Uber and Lyft unfair advantages.

Contrary to conventional wisdom, the decline of community car service is not inevitable, nor is it simply the result of free market forces. Rather, public policy and government regulation has played a major role. Most livery bases are small mom and pop business that have traditionally operated on slim profit margins. New York City’s higher taxes, fines, fees, overlapping regulations, and licensing requirements are particularly tough problems for small livery bases. These issues frequently require big investments in time, as well as money, to sort out; none of which these businesses have. And despite the anger that many small firms feel toward the DeBlasio administration, no political champion is currently waiting in the wings. Small livery bases, and other small community based businesses, with narrow profit margins have come to view Mayor DeBlasio as unsympathetic to their plight.

Under these circumstances, even the most competitive, efficient, and popular livery bases are struggling to stay afloat. If the current trends continue, community based car services might soon be a thing of the past. It is time to recognize that unless the small local livery bases are given a break or someone stands up to help them continue to thrive, competition will be reduced, the character and economy of each community will suffer and this will send a ripple effect that will not be able to be reversed.