The Uber Dilemma for El Paso

uberthrtI have previously written about disruptive businesses, like Uber, there are unintended consequences they create along with the much needed added benefits of services they provide. I am in the technology sector and I have seen how disruptive business models force business owners to adapt. In my “Just Do It and Ask For Permission Later” blog post, I pointed out how the technology-driven disruptive business models use the “do it and ask for permission later” mentality to get their businesses off the ground. The fact is that government entities like to keep control over businesses in order to keep the revenues incoming.

As I pointed out in my original article, disruptive businesses like Napstar gave rise to the Apple Music service and others. Unlike Napstar, that ceased to exist because of powerful business interests, Youtube also abused intellectual property and it is now one of Google’s (ABC’s) largest revenue generators. One, Napstar, created the model to make Apple richer, and the other, Youtube, was acquired by Google to make its own revenue streams that much better.

Uber, today is in the midst of the fray between consumers and governments and not to mention established businesses all competing for that one dollar. On one side you have Uber, who is revolutionizing public transportation of many cities. On the other side, you have the taxi industry that is in flux because of services like Uber. To complete the three-segment dilemma, you have governments, like the City of El Paso.

Many have the mistaken belief that it is the City of El Paso (or any government entity) between the consumers and the industries like the taxi services. But it is not like that. It is actually a three-way battle for control of the dollar.

On one side are the consumers. They are consumers of both the taxi services and the Uber-like services. But, and this is important, they are also invested in the city, or government entity. For the consumers, it is important that they find a happy middle ground between Uber, the taxi services and the government’s need to tax.

Looking over Cortney Niland’s online survey asking if residents wanted “Uber to stay” in El Paso it is clear that the passions have overrun the logic behind the debate. Overwhelmingly, 96% of the 2,000 plus votes demand that Uber stay in El Paso.

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Unfortunately, the survey misses the most important question – the dollar bill.

Taxi services are regulated by the municipality. As such they pay a tax into the city’s coffers that somewhat offsets the tax burden, however small, upon the taxpayers of the community. Uber may pay certain taxes and the drivers may pay their own share of taxes but neither pays the taxes that the taxi industry pays. It is also highly ironic that many of the supporters of Uber’s business model are also the biggest proponents of higher minimum wages and employee benefits and yet they completely miss the fact that Uber drivers are independent employees who pay a higher tax rate (self-employment taxes) and have no benefits.

On the other side of the three-way debate, you have the technologically savvy consumers that have found the convenience of Uber outpacing the taxi industry that for the most part has stayed in the dark ages. Much of that is the result of municipalities that have not realized that they have created taxi monopolies that allowed the taxi industry to ignore service and has kept them from embracing technology. As monopolies they had no reason to.

On the third leg of the debate you have the taxi industry that argues, rightfully so, that they cannot compete against an unlicensed competitor because they are not subject to the same onerous overhead fees/taxes that they must pay. This is much like the restaurants arguing that it is unfair to compete against taco stands operating outside of their doors.

This is the three-way debate about Uber.

Those that have voted in the Niland survey and much of those that argue that the City should not kick out Uber miss the part of the revenues the arguments entail and focus strictly on the service side of the debate.

If voters were to look closely at this, they would soon realize that a municipality that finds a way to regulate Uber-like services while allowing the taxi services to continue to operate both serve the need for better services while allowing the taxpayers relief through the taxes that are levied.

However, Uber knows that it is better to operate “and ask for permission later” because of that, they get to control the narrative. They did exactly that when they issued the threat to leave El Paso should city council enact regulations that include them.

Uber has framed the narrative around the consumer convenience allowing the rest of the debate to remain hidden behind the fear of them leaving the city. That is what is driving the debate currently in El Paso.

But it needs to change.

The voters need to take control of the debate and look at it from the dollar point of view objectively.

As Saturday’s vote in Austin has proven, Uber’s threat to leave Austin is not strong enough to overcome objectively looking at the debate. Austin taxpayers understood the need to find common ground and voted to regulate Uber.

Uber is about making money. They are not about to abandon a city like Austin if there is money to be made. The threats to leave is part of their attempt at controlling the public debate and El Paso taxpayers should not fall for it.

This issue is fast approaching a vote on city council, it was scheduled for the next city council meeting, but was mysteriously removed. Will you stand on the sidelines and watch the debate controlled through emotion or will you reach out to your government and force them to work for a tangible solution that looks at the dollar from all three sides. The easy thing is to “keep Uber in El Paso” and the hard thing is to keep them in El Paso equitably and fairly for all.

If there is money to be made, then Uber will assume the dictates of the government entity rather than abandon the revenue streams that are there. The question is, will Uber get away with the empty threat of abandoning the city that can make the money, or will the taxpayers force the government to work responsibly for all three sides?

5 thoughts on “The Uber Dilemma for El Paso

  1. If I were Uber, I’d be spreading some Hunt-Foster size campaign donations around city council. It worked pretty well for them.

  2. the one issue that everyone ignores is safety and liability. Every uber driver has an insurance policy that excludes coverage when driving “for hire”. In other words, if you are a passenger in an uber vehicle and are hit and sustain injuries you have ZERO coverage. Taxi driver’s are required to pay for liability insurance for passengers which is quite expensive. And if you believe uber drivers pay taxes (like wait staff with cash tips) I assure you that income is grossly under reported. It is a completely uneven playing field.

  3. It’s not about passion, it’s about offer and demand. Uber drivers are residents from El Paso, people working other jobs, students, free-lancers, people that find additional income by doing something they like on their own schedule. Rates are fair and service is convenient, it attracts tourist to shop at nearby malls and restaurant instead of just spending time in the hotels. Also, there are several benefits for people that go drinking since they can rely on getting home safely, Uber’s rating system is simple but effective, user based for both drivers and riders.
    And BTW get your facts right it’s Napster not Napstar…

  4. I feel that Uber should make it a mandatory rule that ALL Uber drivers take daily showers and use deodorant! Some of these drivers smell funny like street money!

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