If the City Council approves a proposed $3 tax on solo ride-share trips downtown, Chicago will have the highest ride-share fees in the country.
But the city may not keep that perch forever. Other cities, including Boston and Seattle, are looking to either impose ride-share fees or increase existing rates to deal with heightened congestion and lower public transit use, both of which have been blamed on the growth of ride-hailing.
Mayor Lori Lightfoot’s proposed fare increase is part of a larger trend of cities pushing back against companies such as Uber and Lyft, which have been largely unregulated since they burst onto the urban scene at the start of the decade.
“A number of cities are moving toward fees of different kinds and in particular fees that are focusing on the congested core,” said Bruce Schaller, of New York-based Schaller Consulting, who has studied the effects of ride-share on traffic congestion.
Schaller said he believes that the proposed fees in Chicago will do what Mayor Lori Lightfoot says they will do — reduce traffic congestion in the Loop.
“I think with $3 you’ll get to where people will actually start changing behavior,” Schaller said. “This sends a bunch of good signals as to what the city’s values are, and what kind of city you want to be.” He said Chicago’s proposed price increase may create a “snowball effect,” leading to higher fees in other cities.
New York City currently has the highest ride-share fee, at $2.75 in the Manhattan core. It also has gone further than Chicago in regulating the industry by providing drivers a minimum wage, and putting a cap on the number of new drivers. New York also plans to implement a congestion fee in 2021 on personal vehicles entering Manhattan below 60th Street.
Seattle is considering a 51-cent hike on ride-share fees that would bring the total there to 75 cents per ride, and is discussing a minimum wage for drivers.
Schaller compared the ride-share situation to what happened when taxis first came to cities at the start of the last century — at first they were unregulated, and then cities started to crack down with rules and taxes.
“Everyone gets their free-market moment, then there’s a screw-up and a problem and the public responds,” Schaller said.
Ride-share trips in Chicago from Uber, Lyft and Via currently are assessed a flat 72 cents per ride in taxes and fees. Under Lightfoot’s plan, announced last week, that would drop to 65 cents for shared trips and increase to $1.25 for single riders.
The largest hike would be on trips to or from downtown during peak hours, where solo riders would pay a total of $3 in taxes and fees, while shared trips would pay $1.25 total, under the plan.
In 2018, Chicago raised $110 million in ride-share taxes, which helped fund the CTA. The administration hopes to make an extra $40 million under its latest proposal, with a portion of that money going to the CTA to improve bus service.
Lightfoot has talked for several months about plans to limit congestion in the Loop. The city is also doing a congestion study to find other ways to alleviate traffic.
Ride-share companies have criticized the proposed tax increase, saying it would hurt low-income areas, which are currently underserved by both cabs and mass transit.
“The mayor’s proposal shows a total misunderstanding of what causes congestion and how Chicagoans are moving around the city,” said Lyft spokeswoman Campbell Matthews. By adding on to already-high fees, Matthews said, the mayor is “clearly backtracking” on campaign commitments to not increase fees that hurt low-income Chicagoans most.
Ride-share companies such as Uber and Lyft entered the market on a promise to supplement public transit and help ease congestion.
But data collected by the city shows almost half of Chicago’s millions of monthly ride-share trips are taking place in just a few wealthy, crowded and already transit-rich areas, adding to concerns that ride-sharing is contributing to traffic in the busiest neighborhoods.
A Tribune analysis of ride-share trips that occurred in March shows that more than 4 of every 10 passenger pickups happened in just five of the city’s community areas — the Loop, Near North Side, Near West Side, Lakeview and West Town.
Ride-share companies have countered that they want to help take private cars off the street. City data backs up their claims that they are serving low-income areas where, historically, cabs have been less likely to go.
Studies in other cites have blamed ride-share for increasing congestion, and Lightfoot noted that ride-share use in the city has grown 271% in recent years. As of March, there were 66,562 active ride-share drivers who make four or more trips a month, compared with 15,078 in March 2015, according to the city’s Department of Business Affairs and Consumer Protection. The number of cabs operating is limited to 6,999, but there is no cap on ride-share vehicles.
While ride-share use has gone up, taxi use has plummeted, along with the value of taxi medallions, bankrupting some owners. Ride-share trips now far outnumber cab trips, with almost 10 million rides in March, compared with 21 million taxi trips for all of 2018.
Bryant Greening, co-founder of Legal RideShare, a firm that specializes in ride-share cases, said that he is concerned about ride-share drivers, since he thinks the proposed new fees will result in less demand.
“The tax specifically targets one of the most lucrative times, rush hour, and one of the most lucrative locations, downtown,” Greening said. ” I see drivers taking a big hit in terms of their ability to earn wages.”
But Greening said that the tax probably will ease congestion, and may aid the beleagured taxi industry.
Fayez Khozindar, executive director of the United Transporters Community Council, which represents cab and limo drivers, said the proposed fees are a “Band-Aid” and won’t give cab drivers the relief they need.
“This is peanuts … we demand a real level playing field,” Khozindar said.
Khozindar said the council wants ride-share drivers to go through the same chauffeur training as cab drivers, including a written exam. He said ride-share cars also should undergo the same inspections as cabs.
Lightfoot said during a news conference on the ride-share fees on Friday that the city is looking at “equity” issues involving cab and ride-share drivers.
On the Facebook page for Chicago Rideshare Advocates, which is pushing for higher wages and better job protections for ride-share drivers, drivers complained that the tax would make customers pay more, but would not increase their wages, resulting in lower tips and fewer rides.
“It’s going to hurt drivers, there are no two ways around it,” Eli Martin, a ride-share driver and co-founder of Chicago Rideshare Advocates. “Drivers are already in a very precarious situation.” He said most drivers would like a freeze on the hiring of new drivers.
Schaller said that ride-share drivers need a minimum wage.
He also noted that despite their complaints about more regulation, fees are not the biggest issue for ride-share companies. The problem is that their fares are artificially too low to sustain them as a business, Schaller said.
“The reason their losses are so big is that they’re spending so much money to give such good service, low fares and short wait times,” Schaller said. “Something’s got to give.”
Transportation song quiz
Last week’s transportation song included both a Chicago Symphony Orchestra musician and a trippy double-entendre. “Just slippin’ on by on L.S.D. …” The song was “Lake Shore Drive,” a 1971 hit for Aliotta Haynes and Jeremiah. It featured CSO violinist Joe Golan. Nancy Huetteman of North Center was first with the right answer.
This hopeful airplane song was co-written by someone usually associated with a horse. What’s the song, and who wrote and first recorded it? The first person with the right answer gets a Tribune pen, and glory.