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September 7th, 2020 at 3:02 am

What happens if Uber and Lyft flee California? Look at Austin

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Line of rideshare vehicles driving in protest

 The ride-hail services are threatening to stop service in the Golden State to protest a judge’s ruling. They did something similar in Texas in 2016.

A California judge has ordered Uber and Lyft to treat drivers as employees; the companies say they’ll leave the state rather than comply.

RAFAEL RODRIGUEZ REMEMBERS the moment he learned Uber and Lyft were leaving Austin. “It was Mother’s Day, and I was with my girl in a restaurant,” he says. “I said, ‘Now I’m not paying for that piña colada.’” Today, he laughs about it. But in 2016, the situation was worrying. Rodriguez was a full-time driver for the ride-hail companies. Just two days later, the platforms ditched the Texas capital, frustrated that they had lost a ballot measure that forced them to fingerprint potential drivers for background checks. Rodriguez was out of a job.

Now, something similar might happen on a much bigger scale, in California. Earlier this month, a state judge ordered the ride-hail companies to treat ride-hail drivers as employees, instead of independent contractors. The companies had said they would stop operating in California on Friday, but an appeals court on Thursday delayed the effective date of the ruling until it could rule on the companies’ appeal.

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“Everything that we have built is based on this platform that brings earners and brings people who want transportation or delivery together,” Uber CEO Dara Khosrowshahi said in an interview with New York Magazine’s Pivot podcast on Wednesday. “You can’t flip that stuff overnight.”

The strategy seems to be a political bet, one that has worked for the companies before. They hope that if riders and drivers are angry enough about their departure, state lawmakers will rethink a law passed last year that effectively classified the drivers as employees. In 2015, Uber used nifty in-app graphics that generated rider outcry to beat back a vehicle cap proposed by New York mayor Bill De Blasio. (When the city tried again three years later, Uber cold-called its customers about it. That effort failed.) The company also mobilized rider outrage in London in 2017, when city regulators threatened the app’s license over safety issues. Today, despite ongoing regulatory fights, Uber is still operating in London.

So starting Friday, hundreds of thousands of California drivers, many of them part-time, might be out of a gig. Austin drivers have some words of advice for them: Brace for chaos. And then, get creative.

The week after Uber and Lyft left Austin in spring 2016 was confusing, drivers from the city say. People who hadn’t followed the news, or voted in the election, got mad. Others got desperate. “In the downtown bar area, people were going up to the cars on the street, banging on the window, and waving cash at them,” says Christopher David, who founded an Uber competitor, Arcade City, in Austin. “There was a huge shortage of cars.”

Soon, though, replacements arrived. Arcade City began as a Facebook group that paired drivers with people who needed to get places. (The operation has run into trouble with the law for improper permitting.) Other platforms willing to follow the city’s new rules trickled in over the next weeks and months: Fare, Fasten, Wingz, GetMe, and the nonprofit RideAustin. The city eventually established a hotline and then a job fair for drivers who had lost work.

But Austin drivers who spoke to WIRED said their best fares came from opportunities they created themselves. “Within a couple weeks or so, I started realizing it’s actually better that [Uber and Lyft] are not here,” says Miguel Monsivais, who drove for both companies starting in 2015. “This is our money, and it belongs to us. It belongs to the community.” Today, Monsivais drives a pedicab and picks up passengers for Arcade City, which still operates in Austin. He has also set up regular rides with repeat customers—something the ride-hail apps don’t allow drivers to do.

Rodriguez, the driver who lost work when the companies left Austin, has since gone freelance. “It’s an empowering peer-to-peer profession,” he says. “It’s more like creating a community service than working for a middle man that will take the profits.”

“In the downtown bar area, people were going up to the cars on the street, banging on the window, and waving cash at them.”

CHRISTOPHER DAVID, FOUNDER, ARCADE CITY

Research from Austin shows that after Uber and Lyft left, not all riders chose other apps. An online survey of 1,840 app users sent out six months after the companies left found 45 percent switched to driving their own vehicles—and 9 percent bought one. Just 3 percent shifted to public transit.

The changes didn’t last long. In 2017, Texas state legislators passed a bill removing the fingerprint requirement approved by Austin voters. When Uber and Lyft returned to town a year after leaving, they lured riders back with steep discounts, and competitors saw a precipitous drop in ride requests. “The swiftness of our decline was certainly faster than we modeled,” RideAustin CEO Andy Tryba wrote in a 2017 blog post, where he noted that the company tried to keep prices competitive with Uber and Lyft. Drivers, he wrote, were loyal to RideAustin. But eventually, they had to follow the riders. RideAustin shut down this summer. Most of the other services slowly collapsed or left the city.

A California shutdown may play out differently because of the Covid-19 pandemic. The San Francisco Bay Area and Los Angeles are usually two of the companies’ biggest markets. But both say that rides in California have been slow to rebound from the spring dropoff. That means few might notice when the services go away—and bother legislators about it.

At the same time, data released by Uber this week suggests riders in lower-income areas are most likely to be using the ride-hail service today as they did a year ago. “I am concerned with the dwindling travel options during Covid, especially for underserved communities,” says Robert Hampshire, a professor of public policy at the University of Michigan’s Ford School whose research focuses on transportation. “First, it was reduced public transit service. Now it is the possible departure of Uber and Lyft. The lives of people that depend on these services, as opposed to personal vehicles, is getting more and more difficult.”

Uber and Lyft are hoping for a reprieve in California. They, along with other gig companies, have supported a $110 million ballot measure campaign that would create a “third category” of employment, and allow them to avoid classifying drivers as employees.

Uber can also take advantage of a legal quirk: The order requiring them to reclassify drivers doesn’t apply to its Uber Eats drivers, and so Uber doesn’t plan to shutter that growing service in California. Rich E., an Austin driver who also went through the 2016 upheaval, now drives for Uber only occasionally. (He asked WIRED not to use his full name, because he fears retaliation.) But “Uber Eats right now is good,” he says, “People tip on it.”

Updated, 8-20-20, 4:30pm ET: This article has been updated to include news of a delay in when the companies must classify California drivers as employees.

Via Wired.com

 

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