Austin is home to the University of Texas at Austin, countless startups, and the widely popular South by Southwest festival. But even though the city is commonly referred to as the tech capital of the South, as of May 9 Uber and Lyft no longer operate there.
“The main problem resulting from Austin's ridesharing regulations is not that two successful startup companies will lose revenue... it is that life is now much more difficult for Austin residents.”
Why can residents of an innovative city that was among the seven finalists for the U.S. Department of Transportation's $50 million Smart City Challenge Grant no longer access the leading ridesharing services? The answer lies in regressive regulatory overreach that shows how even the country's most progressive cities are often still hostile to innovation.
This month, a mere 10 percent of Austin's registered voters upheld a City Council ordinance that makes it more difficult for ridesharing companies to provide employment opportunities in a timely manner as they grow to meet ever-increasing consumer demand. The most onerous part of the ordinance is the requirement that all ridesharing drivers will need to go through fingerprint background checks by February 1, 2017.
Fingerprint background checks, while they sound secure, are time-consuming and no more effective than the thorough background check systems that Uber and Lyft already use. Fingerprint databases also include arrests that did not lead to any convictions. Since about 1 in 3 felony arrests end up with the charges being completely dropped, this new requirement will result in many qualified drivers being turned away and innocent people being deprived of employment.
The main problem resulting from Austin's ridesharing regulations is not that two successful startup companies will lose revenue by pausing their operations in the city – it is that life is now much more difficult for Austin residents. As Daniel Bier, a resident of Austin's Oak Hill neighborhood, says, "Getting around Austin is hard, especially if you don't live in downtown. But with Uber and Lyft I always knew I could get a ride to and from almost anywhere in the city, whenever I needed it. Now that they're gone, it's already become a real pain to even get to my doctor's appointments. There just aren't enough cabs, and they aren't reliable."
Ridesharing helped fill gaps in Austin transportation. Public transit options are minimal and unreliable, and many Austin residents cannot afford to buy a car. Taxis in Austin are required to get a government permit to operate. But the city, which has a population of 885,400 people, only issues 915 taxi permits. Furthermore, these permits are owned by just three companies, leading to a lack of competition.
Public backlash against earlier attempts to force ridesharing companies to comply with burdensome, antiquated regulations convinced many cities and states to adopt light, modern regulatory frameworks. These frameworks ensure that ridesharing will continue to remain available as a safe transportation option while the industry grows and changes, but the failed Austin vote could provide political cover for the many local policymakers across the country who are still eager to stymie ridesharing's growth. This is the main reason why Uber and Lyft spent a combined $8.6 million fighting the regulation.
Now emboldened by Austin's regulations, mayors and city councils from cities such as Atlanta, Chicago and Los Angeles may move forward with similar regulations that require fingerprint background checks. And some local policymakers want to go further. Even though New York City is one of the three U.S. cities that currently requires ridesharing drivers to get fingerprinted (Houston is the other), on May 13 Mayor Bill de Blasio referredto Uber as one of the "very powerful forces" that are challenging his "progressive agenda."
But how can a company that provides thousands of local residents with jobs, increases access to transportation options (especially in underserved, low-income areas), and lowers prices possibly be seen as anything but progressive? While the regressive policy option is to regulate ridesharing out of existence, the progressive choice is for cities to resist the urge to overregulate and instead embrace the transportation that improves the lives of residents.
This piece originally appeared in U.S. News & World Report
This piece originally appeared in U.S. News and World Report