This week, the District of Columbia government proposed to deregulate the local taxi industry, which is facing challenges from ride-hailing companies Uber and Lyft. Issued by the Department of For-Hire Vehicles (DFHV) through an emergency notice, the new rules permit cab drivers to institute all-digital meters and loyalty programs, accept smartphone feedback from customers, and more.
“The original regulations merely created a floor for taxicab service in the District that was already enjoyed in other major cities,” the DFHV report stated. “The pace of for-hire innovation in the past several years, the realities of the current market that now include lawful competition from private vehicles, and the increasing challenges of earning a living by driving a taxicab have combined to render [them] obsolete.”
It then noted that “there has been a continuous decline in total monthly taxicab rides – month after month for the past 12 months – without interruption….At the current rate, the Department projects that 2016 will show a 13 percent decline in annual taxicab rides.”
Such numbers come after years of regulations that have become increasingly unpopular among cab drivers. Passed by the D.C. City Council in 2012 in order to modernize the fleet and improve customer service, the laws forced cabbies to use a limited palette of cab colors, specific patented dome lights, and also install costly meters and credit card systems.
And drivers like Umoh Ekott claim that these regulatory costs—combined with increased competition—have made joining the taxi industry more expensive than signing up with Uber. In a Tuesday interview with WAMU radio’s Martin di Caro, Ekott said that lamented his $500 meter, $700 patented dome light, $200 weekly rental fee, and numerous credit processing fees. “Ubers are not regulated. So a lot of cab drivers, they jump up to Uber,” he said.
This anecdote reflects a July study by the Mercatus Center at George Mason University. The report found that D.C. cab drivers pay around $2000 in startup costs due to overregulation. This then increases the competitiveness of companies like Lyft, as barriers to entry are lower and ridesharing prices remain cheaper than taxi fares.
But some people have issues with the new reforms.
David Miller, the chief executive of Hitch, told WAMU that the law “is a typical example of governmental overreach” – particularly as his company’s payment software might be pushed out in favor of whatever the taxi companies, associations, and co-ops decide under the new rules.
“In the end, it is going to result in higher costs for drivers as well as complicated efforts of visitors and residents of the city simply trying to pay for cab rides,” Miller claimed.
And Mary Cheh, a D.C. Council member, told the station that she preferred public hearings over emergency rulings.
“I would prefer a system that was more open and inclusive of the people who are being regulated,” Cheh said. “Some of the ideas Mr. Chrappah has are very good ideas and probable ones we would want to embrace fully, but there is also something to having a process and getting buy-in from people.”
Its supporters, however, still think that it’s a good first step towards reform.
DFHV acting director Ernest Chrappah told WAMU that “the taxi market needs a jolt. It needs to be revamped, and we are going to help make that happen.”
Michael Farren, one of the researchers behind the Mercatus study, also told the WEEKLY STANDARD on Wednesday that “it’s encouraging to see District of Columbia taxi regulators join the movement toward taxi deregulation.”
“That said … much remains to be done, including justifying the existence of the remaining regulations,” he continued. “It’s heartening to hear the DFHV say that these changes are ‘the first of several major reforms’ and I look forward to seeing the further changes they have planned.”
