In Vancouver’s Uber vs. Taxi Debate, We Need a Co-operative Solution

| Business

Co-operation is better than exploitation.

There’s been a lot of noise lately in the debate in Vancouver over whether the city’s licensing board should allow the crowd-based ridesharing service Uber into its passenger transportation landscape. This battle is one that is high-stakes: loaded terms like “cartel” and horror stories of sexual assault by unlicensed drivers have been tossed by the two sides. Both sides have some points – but I think there’s a different solution: co-operatives.

The argument seems, at first blush, to be simple: Vancouver is underserved by taxis, with extremely long passenger waits reported on weekends and busy evenings. The Vancouver Taxi Association, a trade group representing taxi companies is, according to some, the cause of these problems: as they represent taxi companies, an increase in taxis on streets isn’t in their private interests because it could reduce prices by increasing supply, so they oppose more cabs rolling out. Which is where Uber enters – a crowd-based ridesharing service, Uber’s extremely well financed business is to connect independent drivers who want to make a few bucks with people who want a ride, all via the cloud and smartphones. Uber’s business model short-circuits the protectionism of the Taxi Association, which really puts them on the defensive, and that’s where the debate really exploded at the end of 2014 and continues into this year.

Uber has announced its intention to return to the Vancouver market. They’ve been here before, but they ran into a rather significant roadblock: the passenger transportation licensing board. Vancouver regulates who can act as a driver-for-hire, regulating the number of permits (“plates”) for taxis. Uber’s business model was deemed to fit into this regulation regime – which made the Vancouver Taxi Association awfully happy. But Uber hasn’t taken no for an answer and has been pushing on many levels to have regulations changed. There’s been a hint of progress on that side, which has led to the VTA launching a lawsuit to stop Uber, Uber calling the VTA a cartel, and all kinds of horror stories about Uber’s independent drivers being floated in the propaganda war.

Neither existing business model is the best

The propaganda war is making a lot of noise for very good reasons.

Many Vancouver residents have a strong dislike for the Taxi Association. Because of its inherent protectionism, it doesn’t want more cabs on the road, and the licensing boards have tended to agree. This lack of cabs creates passenger headaches – like trying to get home on a Friday night – but it also creates a nightmareish scenario for cab drivers.

Vancouver drivers are almost never the owners of their taxi license. Someone else – one of the “shareholders” in the taxi companies – actually owns the taxi plate. And the costs are astronomical – some online sources suggest that the current market value of a taxi plate is pushing $800,000! Since these plates are so expensive, what owners do is split them into shifts and then they lease those shifts out to drivers. Drivers then have a massive amount of money that they pay out each month – all for the privilege of driving a car.

It’s profitable for the plate owners, but creates a system where drivers don’t want to take short fares because they make next to no money on them, so drivers will sometimes say that the credit card machine is broken to avoid fees that eat into profits.

But Uber isn’t much better in terms of sharing the wealth with its drivers. Even though it’s currently valued at $40 billion dollars (that’s a lot of Vancouver taxi plates), its drivers don’t share in that profit – rather, they are paid a portion of what Uber sets as a fare for the ride. When there are a lot of Uber drivers on the road, that means that drivers at that time might only be making minimum wage. Sometimes Uber sets “surge” pricing when demand is high, which means drivers make more money – but customers pay more too.

A co-operative alternative

So, both the Vancouver Taxi Association model and the Uber model have significant problems. Both are not best for customers, and both are not the best for drivers. The VTA maintains tight control on the industry, and Uber seems to be pushing for a rush-to-the-bottom approach of paying drivers.

What’s the alternative?

Co-operatives. What Vancouver needs is a true taxi co-operative – an innovative model of organizing a transportation company that allows the drivers to own their own plates and their own company. A co-operative would allow drivers to manage their own business, removing the massive amount of profit their bosses, the “plate shareholders” extract from the system. They would be in a position to make more money, and with the City of Vancouver’s participation, we could potentially drastically increase the service of cabs across Vancouver.

A taxi co-operative could easily comply with the Passenger Transportation Board’s regulations around drivers, fares, licensing, and more. A co-operative can institute policies over criminal record checks, drivers’ histories, and everything else needed to make the system safe and compliant with regulation.
And because a co-operative could empower drivers to be in a more rewarding employment situation, while putting more cabs on the road, we could solve a painful Friday night problem across the city.
There are many examples of true taxi co-operatives across Canada and the US. One of the ones I know best is Union Cabs in Madison, Wisconsin. Union Cabs is a worker cooperative, where each of the drivers is a co-owner of the organization. The amazingly empowering business model puts the drivers both in charge but also accountable for their operations; they can earn much better wages; they’re better run and better regulated than the unregulated and unlicensed Uber offering; and the system works better.
Instead of trying to chose sides in the Uber-Taxi Association war, what we really need is a third option – a co-operative.