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Proposed Ordinance Would Decimate Ridesharing In Chicago

By Mae Rice in News on Mar 24, 2016 6:18PM

A yellow cab (Photo by Elena Kovalevich via the Chicagoist Featured Photos pool on Flickr)

Updated at 2:30 p.m. after interview with Ald. Beale: A new ordinance could decimate ridesharing in Chicago—so, UberX and Lyft—by requiring all rideshare drivers to get a chauffeur's license.

This ordinance, proposed by Ald. Anthony Beale (9th), would "make it nearly impossible for ridesharing to operate in the city," Lyft spokesperson Chelsea Wilson said in a statement. Uber concurs that the ordinance "threatens to take ridesharing away."

Beale told Chicagoist that really, the issue is that ridesharing has been regulated "piecemeal" in Chicago for too long. He hopes to "level the playing field" for cab companies and rideshare services. He argues that the status quo is "putting hard-working cab drivers out of business... family people who have worked for years."

"The first two years that Uber and Lyft came into the city of Chicago, they were able to operate without a business license," Beale added. "They made hundreds of millions of dollars... while they were operating illegally in the city of Chicago."

If Beale's ordinance passes—which it could as early as April 13, though Beale predicts that City Council "shenanigans" will hold it up for a while—it would essentially prohibit the part-time rideshare drivers who currently offer cheaper-than-taxi rates and work with only a driver's license. Under the ordinance, all drivers would need to obtain a chauffeur's license, and get background-checked and fingerprinted by the city. Uber and Lyft would also have to meet the same quota as cab companies: five percent of their fleets would need to be accessible to people with disabilities.

Uber reps said in a statement that the ordinance would "force UberX driver-partners to get expensive chauffeur’s licenses that are designed for full-time, professional drivers. This would eliminate low-cost options and leave only pricey chauffeur services." Uber added that Beale's ordinance would hurt customers who can't afford traditional taxis.

Lyft expressed similar sentiments in a statement provided by Wilson:

Lyft unequivocally opposes Alderman Beale's proposal to impose a penalty of over $300 on local residents who help provide safe, affordable rides to their fellow Chicagoans. The ordinance as written would make it nearly impossible for ridesharing to operate in the city. We would welcome the opportunity to instead work with Chicago leaders to preserve the economic opportunities ridesharing has brought to the city for drivers as well as local businesses and communities.

Beale questions the companies' claims that they provide affordable rides. "If that's the case, why do they surge price? Cab companies are not allowed to surge price if it's raining, snowing... [Uber and Lyft are] able to charge three times the normal amount [in those circumstances]. So who can afford that?"

He added that Lyft's estimate of the price of a chauffeur's license "sounds excessive. But if the cab drivers can get it and pay for it, why can't [Uber and Lyft]? Why don't they underwrite it? They're making enough money to do that."

Uber said in their statement that Beale's ordinance would "destroy earning opportunities" for the 35,000 part-time UberX drivers in Chicago. Uber argues that UberX provides essential jobs in areas with high unemployment—20 percent of UberX drivers live on the South and West sides, the company reports.

Beale argues that rideshare driving jobs are far from lucrative. He claims that the average Uber driver only stays with the company for 2-3 months, high turnover attributable to low, highly-taxed wages.

"The fat cats at the top [of Uber and Lyft] are the ones making hundreds of millions of dollars," Beale said, while people driving for Uber have to pay taxes on the full ride fare, including the cut Uber takes. Combine that with the expense of "wear and tear" on your car, and the rideshare model isn't so sweet for drivers, from Beale's perspective.

Beale added that his ordinance is also a reaction to safety concerns about ridesharing apps. "We don't even know who they are!" he said of rideshare drivers.

As we reported in December, a rogue Lyft driver once followed a passenger who declined a ride, though he was not matched with her. It's unclear how widespread incidents like that are.

Uber has started a petition against Beale's ordinance, which has more than 10,500 signatures so far.