This session the Connecticut legislature can show it’s ready to move the state firmly into the 21st century by adapting to the innovations that continue to disrupt the way we do business, while at the same time making the state friendlier to young millennials.
They can do this by choosing not to over-regulate companies like Uber and Lyft, which have become the go-to car service providers in cities across the world.
Uber and Lyft use a simple model – you download their app onto your phone, and when you need a ride you use the app to choose a driver and settle a price. The ride is then paid for using your saved credit card information.
Drivers for Uber and Lyft are independent contractors. They use their own cars, and determine what hours they want to drive. It’s a great job for someone who is unemployed, or could be a second job for someone who owns a car and wants to make money on the side.
Not surprisingly, taxi companies don’t like the competition. They are making a big push to get ride-sharing firms out of the marketplace.
To be fair, taxi companies have a reason to gripe – they are heavily regulated, making it difficult to compete in the new, more open, marketplace, so ridesharing firms are cutting into taxi companies’ profits.
But rather than asking for their own regulations to be relaxed, taxi companies have gone after Uber and Lyft, trying to litigate or legislate them out of existence.
In May, several Connecticut taxi companies sued to stop Uber and Lyft from doing business in the state, following a trend of other taxi companies suing the ride-sharing firms in other states.
Taxi companies also have tried to convince lawmakers to introduce legislation that would block ride-sharing firms from competing. Both sides have now lobbied-up, hiring big-name firms to represent them in Hartford.
The legislature is scheduled to hold a hearing on ride-sharing this Monday at 11:30 a.m. at the legislative office building.
So, what should state lawmakers do?
What they should do is follow the lead of other cities and states who’ve gotten it right, and not over-regulate a new and growing part of the economy.
There are a few examples close to home that show the smart way to deal with the growing “sharing economy.”
Despite overwhelming pressure by taxi companies, Boston chose to only lightly regulate ride-sharing firms. Drivers are expected to have a background check and to have adequate insurance before they are allowed to work for the ride-sharing firms.
In West Hartford, the city chose not to regulate Airbnb – which is to hotels what Uber is to taxis – out of existence, and instead to look at issues and problems on a case by case basis.
One concern that’s been raised by those opposed to the ride-sharing companies is that passengers are not as safe in a personal car as they are in a taxi. But worries about safety are overblown. A recent study shows ride-sharing companies are as safe as their heavily regulated counterparts.
Many of these apps self-police – if a driver gets bad reviews because of a dirty car or bad driving, users will look elsewhere for a ride. And can we all agree that bad driving and gross cars are kind of what we’ve come to expect from traditional taxi companies?
In October, a New York Times column reported that in a survey of top economists, all agreed Uber and other ride-sharing services should not have their prices or routes regulated.
This is the right way for the state to go – but then the fair thing is to change the way the taxi industry is regulated so that these companies can adapt to the changing economy and compete in the new marketplace.
Suzanne Bates is the policy director for the Yankee Institute for Public Policy. She lives in South Windsor with her family. Follow her on Twitter @suzebates.
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