This price war between uber and lyft seems foolish and unsustainable, but as a consumer, I'm down.
In my eyes Uber and Lyft have lost all moral high ground. These companies are just not following regulations to make more money. This money was going towards drivers, but it's clear that that's no longer the case. If you have any moral qualms about Walmart's treatment of employees, I don't see how you cannot have issues with Uber.
The differentiator you're probably thinking of is whether the worker chooses which hours they work. If the worker decides independently how much they will work and at what times then the IRS doesn't tend to consider the relationship employment -- regardless of how much time is put in. This is precisely how these driving services operate.
If the employer is scheduling a fixed schedule, say 9-5 M-F, then the IRS considers it an employment arrangement. Regardless of the number of hours worked. But that is not at all how these services operate.
Sometimes it backfires; Uber sent warning emails about surge pricing New Years Eve to drivers and to riders, and the cumulative effect of the warnings resulted in a glut of drivers and relatively little surge pricing in Seattle, at least according to a driver I talked to. In this case, leaving it as a contract arrangement even works for Uber because it lets them leverage market forces where a traditional employment model would make it impossible.
If I can commute across the bay so can everyone else.
What's your response going to be when Oakland also becomes "extremely expensive neighborhoods" (if it isn't already)?
But the more general answer to your question: When supply outstrips demand the only reasonable response is to build more housing.
Complaining that driving jobs have low value isn't constructive. The value of those jobs will approach zero soon due to technology. Instead, address the economic imbalance and let supply meet the demand.
Of course, in this case I think it's pretty clear that Lyft and Uber are subsidizing the rides and paying drivers much more than the cost of the ride. If wealthy investors want to pay people to drive me around, I'm game.
I suspect Uber and Lyft would continue to experience their current glut of drivers, even if the entire model boiled down to nothing more than drivers effectively trading the equity of their vehicles for cash at a terrible exchange rate.
It's pretty straightforward to figure out what the costs are of an UberX or Lyft driver, knowing their car model and year and also knowing how much they drive. These are facts, and they can be calculated once and held to public scrutiny and review. There's no need for everyone to redo that calculation.
Now that we have something that can be calculated, we can move forward based on reason, without having to decide which of two assumptions we prefer.
Plus there's Sidecar, which will surely die soon because nobody even knows it exists.
Maybe. But maybe instead:
Routing and capital intensity (lack of car idle-times) continues to improve. Shared-rides in larger-vehicles (vans) grow in proportion and convenience. Cities expand pick-up/drop-off zones for car services. Attempts at monopoly price hikes spur freelance/coop/upstart competitors along the most profitable corridors, able to snipe Uber rides via overlay apps/services. So costs and prices stay low long enough until...
Driverless vehicles become the major mode of urban short-trip car travel. Driver costs are eliminated, insurance costs reduced, and capacity/intensity further improved – with high-capacity vehicles that tirelessly reposition without breaks/distractions. Automated rides stay nearly as cheap as 'mass' transit on dedicated rails, indefinitely.
Also, it seems like regulated utilities have been more effective at providing essential services widely at low cost than large private oligopolies such as cable and wireless, so I have no particular desire for an Uber/Lyft duopoly.
You aren't likely to want to own your own self-driving car in a major city, unless you're an eccentric rich person, or a car hobbyist, or a old fogie. Urban garage/parking space is expensive for an asset that's idle 22+ hours of every day, and fueling/maintenance/looking-for-parking are likely not the best marginal use of your time.
What's your dislike of "something used by tens of thousands of unknown people", as long as it's well-maintained? Do you avoid libraries, sidewalks, parks, airports, shops, and restaurants?
Right now, Uber and other transport-network-providers are becoming "people I know and trust", because their systems have consistently delivered quick, clean, reasonably-priced rides across many times/places. App-dispatching a suitable-quality autocar from the nearest competitive local provider is going to save a lot of time/energy/pollution, compared to coordinating loaners from friends/family.
If transport regulators like city councils and taxi commissions were better at this sort of thing, they'd have bootstrapped a similarly rapid and ubiquitous ride-service years earlier, using their unique governmental coordination powers. Instead, they let a patchwork of inferior alternatives fester for decades.
I'm not sure of the eventual market structure of autocar-dominated city streets. Automation and standardization might make room for many providers, or just a few. Regulators could easily screw things up, by locking in specific practices or incumbent providers based on early guesses, biases, and corruption.
We'll just have to let lots of things be tried and see what works. For rapidly exploring the possibility space, the vigorous investor-fueled competition we're seeing now is very helpful.
I own my own home, means of transportation, eat most of my meals at my own table...the idea of being a renter of all the major environmental necessities of life is simply not appealing to me in the slightest. I'd rather sleep in my own natural latex, bed bug free bed, and sit on my own sofa or read a book on my own chair, call me crazy. There's never sticky goo on mine, or weird smells. I like private ownership.
For me, Uber is the opposite of "people I know and trust," and I have no desire to have them monetize my movements.
First it will be the occasional users or those with a second car or on a budget, but eventually most of us will either pay per use or have an account for regular use rather than outright buying a car like we do now.
For commuting, many will be taking shared vans (possibly pod-based) that pick an efficient route rather than plying a typical bus route.
And we'll get the vehicle we need when we need it. You won't take a ute to dinner with your partner. You won't have a three-door hatch when you need to choose and bring home large items, or transport the family on a road trip.
The future Uber won't even be people you know or don't know. It will be a driverless car.
Self-driving cars-for-rent will get you places both faster and cheaper than possible in your own car. That could make private car ownership seem quaint or even ostentatious in most cities.
Rental cars carry costs that I don't have with my own vehicle: frequent transactions, additional liability issues, wasted mileage driven between fares, uncertain transit times, daily cleaning and inspection for damage, commercial licensing and insurance, middle men, management, marketing, accounting, additional taxes, regulations, and covenants. If I leave something important in my car, it's still there the next day. I don't have to worry about vomit in the backseat. I don't face a transaction cost and a delay (or the uncertainty of a no show) to go to work, to drive home, to hop in the car and go to the mall, or grab a bite. I can leave things in my car. I have less exposure to pathogens and pests from surfaces in revolving contact with thousands of strangers from all over the world, lower probability of exposure to cold and flu viruses, fewer vectors for bedbugs to travel into my home.
I can't see rent seekers (esp short term ones) being so far under my costs that after adding their markup, it will be particularly cheaper for me. The 5 year TCO for a Prius (staple of the ridesharing industry) according to Edmunds is a little over $18 a day at 41 miles per day, 44 cents/mile inclusive of insurance, gas, maintenance, etc. The average fare mile on the Peninsula for a cab is $3. I don't see ridesharing companies finding an order of magnitude in efficiencies and still delivering any kind meaningful profit.
Maybe private toilets will seem quaint and ostentatious, and we'll be soon freed from the tyranny of private bathrooms by happier times of public lavatories.
For city-dwellers, it's different, and the Edmunds TCO leaves out a lot. We pay $hundreds more per month for housing with parking. Then, we pay to find parking near our destinations in extra drive-time, money, and walk-time. And we ride for far fewer than the assumed 41 miles a day, 15K miles a year – so the fixed costs of car ownership are amortized over fewer miles.
That makes the per-mile costs of rideservices already roughly competitive or outright superior for many city-dwellers. That's especially true for the non-poor, who face a higher lost-compensation opportunity costs for every minute spent driving/refueling/parking/walking.
That's also before app-assisted multi-rider pooling, or automated-driving. Those could more-than-halve rideservice costs again.
Parking cost when I'm away go down because the car can park itself somewhere cheaper (in automated facilities), or drive itself home, be at the disposal of friends/family, drop off or pick up things for me. Since in your world their are fewer cars, that puts downward pressure on parking prices. Parking facilities can be located in more economical areas, and pack cars more efficiently because they are automated and instrumented, and their own labor costs are reduced.
One of the main practical use cases for local cabs/ubers is a ride to the airport. Since my car can drive itself home, I really have no need for a ride for hire. Also, since giving a friend a friend a ride to the airport no longer a personal time investment, the odds of getting a ride from a friend increase. If you're worried about me not maximizing my 44 cents per mile, I can take someone leaving the airport home, assuming they meet my standards of reputation. At this point you're probably crowing victory, but note that is purely a highly infrequent, discretionary use of my excess capacity, perhaps less than 1% of miles driven for most people. It's more tax efficient to just swap (robo) rides with friends.
A self driving car will reduce all these onerous costs that ridesharing is supposed to save me from, plus I can earn money from it in your Renters Paradise, so I don't see any downside in owning a car. I hardly feel the cost as it is, even without driving anything close to the most economical, lowest TCO car on the market.
Price wars can be horrible for consumers, that's why some forms of them are illegal[0]. If Lyft and Uber talk to each other about gutting prices to put cabs out of business it's illegal. If they read the same econ books and independently come to the conclusion that it's the best thing to do, it's legal.
We regulate the cab industry to insulate it from this type of thing, because once the high prices and bad service that come with market concentration happen it may be months or longer before better options become available.
It's fairly basic game theory and strategy. If it's not empirical enough for you then Economic theory in general might not make the cut either :)
Even in non-empirical economic theory, the idea doesn't sound particularly obvious or sound to me. Obviously predatory pricing by a large firm can drive small firms out of business, but the large firm doesn't actually make profit from that until they raise their prices again, which sends a signal to others to start competing. And yes, there are barriers to entry, but it doesn't seem like the resources a small firm spends to enter a market would be destroyed when that firm gets driven out of business by the large firm's predatory pricing. Assets will get liquidated, sold to someone else, and potentially used to start competing again when the large firm raises its prices.