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I N D U S T R Y I N S I G H T / E R N I E D U R B I N
Technology is changing everything. Economically speaking,
technology has created the "sharing economy." is new
economic principle has evolved and grown exponentially over
the past several years, primarily the result of reliable high-speed
Internet and handheld mobile devices.
e flagship of this new economy is Uber, an
online transportation network company based
in San Francisco with operations in more than
500 cities worldwide. Uber provides a software
app for mobile devices that connects consumers
with drivers who use their own cars to transport
passengers from point A to point B for a fare.
Uber has been incredibly disruptive to the
transportation industry, particularly to taxicab
companies and drivers. Many researchers are
studying the "Uber effect" on the labor market
and its economic impact in major metropolitan
areas. ere is no doubt that taxi companies have
been particularly hardhit. In New York City,
where taxis still have the largest share of the
business, their portion sank from 84 percent in
April 2015 to 65 percent by April 2016.
FEELING THE EFFECTS
New York City requires taxi drivers to
display a medallion. ese medallions are
limited, and their market value was well over $1
million per taxi in 2014. In January of this year,
medallions were selling for as little as $250,000,
a direct result of Uber and Lyft, a similar but
much smaller company. Many independent
taxi owners have large debt service on these
medallions and are now deeply underwater.
With their future in doubt, taxi company
owners and taxi drivers have responded to Uber
THE
UBER EFFECT
