In April 2019, I took a limo to Toronto’s international airport at the close of a workday. I live near the downtown hockey arena, where the city’s beloved Maple Leafs were about to start game 4 in a Stanley Cup hockey elimination round. These two factors as well as mandated detours slowed traffic significantly. I was feeling social, so asked the driver about the effects of Uber on his livelihood. Did I get an earful!
Uber is an example of a disruptive innovation, in the sense first articulated by Clayton Christensen. Firms such as Uber, Lyft, and Didi Chuxing provide new flexibility to individuals to get to their destinations with less effort, with greater certainty than via hailing a cab, and often at reduced cost. They also provide individuals with vehicles and a driver’s licence an opportunity to earn income, either as a supplement to their “day job”, or as a primary job. Uber is perhaps the poster child for the increasing prevalence of on-demand services in the gig economy (see Section 10.4 in Computers and Society: Modern Perspectives. Yet many drivers for such firms feel underpaid and exploited, as evidenced by the May 8 strike by Uber and Lyft drivers, just before Uber went public on May 9.
Christensen primarily focused on the disruption, or upheaval, to industries and marketplaces. Such disruption also plays havoc with the lives of individuals and communities. Uber’s disruptions have been most dramatically illustrated in the city of New York. There are 100,000 new vehicles daily on the streets of New York. This has increased congestion considerably. Furthermore, the livelihoods of numerous taxi and limo drivers have been threatened in two ways. Income for many has plummeted. Their ability to pay down debt taken on in order to fund licenses required to do their work has plummeted. There has been despair and suffering among taxi drivers and others who have long driven full-time for a living in New York City, and eight suicides of such individuals in the past two years. The situation was exacerbated by almost a decade of huge and reckless debt assumed by taxi drivers to purchase taxi medallions, in an atmosphere of crazed speculation. The insanity was hyped and encouraged by government officials motivated by greed. Yet the Uber phenomenon exacerbated the crisis.
What I heard from the Toronto limo driver — I had heard similar stories from taxi drivers in the past, and was met by similar despair recently by a black cab operator in London — was that the situation in Toronto is also dire. I learned about his own story during the ride. He seemed to be in his early 60s, a white-bearded man wearing a turban who picked his words carefully, a man with quiet dignity. Yet he was clear in describing his situation: three children in university; the need to work over 70 hours a week; huge operating costs, including a $5000/month payment for his licenses; and a resulting inability to earn a respectable livelihood. He spoke of numerous despairing conversations among limo drivers. He anticipates suicides in Toronto. Toronto and London typify the crisis in the majority of cities, even without NYC’s speculation and careless investment in overpriced taxi medallions.
Today’s high-tech entrepreneurs celebrate disruptive innovation. In the words of Mark Zuckerberg, “Move fast and break things.” This is not new; it happened previously with innovations such as the wheel, slaves, the printing press, and knitting machines, all of which reduced the need for paid human labour. But the pace of change is historically unprecedented, as is the diversity of occupations that are now in peril. Automation’s effect on manufacturing gets more severe; for example, there are now major assaults on the livelihood of retail workers.
Governments often use price supports to cushion the economic effects on its own workers of cheap offshore labour, financial support by other governments, and technological innovations. For example, this is often done to protect farmers. How should governments react to the onslaught of firms such as Uber? What do they owe individuals such as taxi drivers that are reeling under Uber’s blows? Although too little and too late, New York City is now taking steps to control Uber and support the taxi drivers. How will we learn to react fast enough to adapt to what future Zuckerbergs break? Is it time to institute a guaranteed minimum income, or will more specific measures suffice?
FOR THINKING AND DISCUSSION
What do we owe long-time taxi and limo drivers? What should be done to reduce the pain they are experiencing?
Ron Baecker 