Brett Coomer / Houston Chronicle

The taxi wars: Uber is ‘destroying the taxi industry’

Houston cabbies say the UberX model, with drivers who dabble, is an insult to the profession

Editor’s note: This is the third story in a four-part series, reported and published with the Houston Chronicle, which examines the impact of Uber, the app-based ride-hailing service, on America’s fourth-largest city. Read parts one and two and four.

HOUSTON — At Bush Intercontinental Airport, Salvador Oshiro used to wait an average of three hours between customers wanting a ride into town. The longtime taxi driver passed the time chatting, lifting weights, watching TV and queuing for two fetid toilets in the enormous concrete shells of the taxi staging area, once a repair hangar for airport vehicles. The intervals were longest in the summer, when many businesspeople took vacation and the pitiless sun made taffy of the day. But this year, with Uber at full steam, his wait at Bush International was worse than ever: four or five hours to pick up a fare.

Oshiro (not his real name) has been a cab driver at Bush since 2009, when he came to Houston after two decades doing this work in Los Angeles. He owns his taxi but leases the permit giving him the right to drive. Until early this year, he drove about 66 hours a week and earned $30,000 a year after taxes and expenses. It was enough to cover groceries, a mortgage in the northern suburb of Kingwood and Sundays with his wife and two kids.

Two men walk through the vast taxi staging area at George Bush Intercontinental Airport in Houston, where drivers wait hours to pick up passengers at terminal curbs.
Jon Shapley / Houston Chronicle

In January, he started coming up short on his 11-hour shifts. The calculator in his head, constantly subtracting for gas and lease and insurance, spit out smaller and smaller numbers. His income dropped 30 percent. He stretched his driving day to 15 hours and worked the hell out of downtown and the airport. Everywhere, it seemed, late-model cars stamped with a large “U,” lit up by a dashboard iPhone, were snatching fares.

One day, Oshiro looked at his wife’s SUV and thought that he, too, could try Uber. Since he was already a registered, licensed cab driver, his application process went quickly, and he was soon spending weekdays in the cab and weekends logging on to the Uber app. Though the latter pays just $1.10 per mile, half the taxi rate, “Uber gives you more customers, all these customers that used to take taxis.”

“I was at the airport yesterday and did only two trips,” Oshiro, who asked to use a pseudonym for fear of retaliation by the corporation, said in July. “Every trip, I waited five hours. But with Uber, I [once] went to the airport and waited 10 minutes.”

Professionals gone part-time

Houston and other big cities have long debated how best to manage vehicles for hire. Are taxis private or public transportation, free-market animals or creatures of the state?

Cabs were first licensed during the Great Depression, when thousands of unemployed men flooded the industry, spurring violent competition. City by city, regulators set qualifications, normalized rates and issued permits or medallions to limit the number of cars on the road. Some drivers became owner-operators, while others were company employees paid wages per shift.

Alanda Marks, center, of Houston Limo Lady, holds a sign saying “Uber is a scam” during a protest in a staging area at Houston’s Bush Intercontinental Airport in July 2015.
Melissa Phillip / Houston Chronicle

Since the 1960s, waves of deregulation and reregulation have buffeted the taxi industry. Deregulation in the late 1970s and ’80s opened up the sector to real competition, variable fees and new services. On the other hand, it converted drivers from employees to independent contractors, depriving them of the right to a minimum wage, overtime and collective bargaining.

Many U.S.-born drivers sold their permits and quit the industry. New immigrants have since taken their place — but as leaseholders. They pay exorbitant daily and weekly rent to garages that in turn funnel money to individual permit owners with hundreds to their name. A study of the Houston taxi market found that “a driver working long hours could be expected to average $210 to $240 per day driving his cab” [PDF]. Nationwide, the average, full-time taxi driver earns less than $23,000 per year.

Oversupply — [Uber’s] economic model depends on that.

Bhairavi Desai

National Taxi Workers Alliance

Uber representative Debbee Hancock denied that UberX undermines driving as a career. Its model “provides a meaningful, flexible economic opportunity for individuals to use their own car,” she wrote in an email, which “benefits riders and drivers alike.” Hancock added that there’s room for many more Uber drivers in Houston: City regulations, she said, “are destroying more than 2,000 [such] jobs” every year.

The rise of Uber has left taxi drivers in cities such as Houston; Austin, Texas; Philadelphia; San Francisco; Los Angeles; San Diego; Chicago; Washington, D.C.; New York; and Boston playing defense. For decades, they’ve wrangled with medallion and garage owners; now, all eyes are on Uber and its proliferating workforce. “Oversupply — [Uber’s] economic model depends on that,” said Bhairavi Desai, leader of the National Taxi Workers Alliance, a group affiliated with the AFL-CIO labor federation.

In 2013, the UHTDA asked the city to approve a driver-owned vehicle cooperative. The association's proposal (obtained through a public information request) detailed working conditions and costs, as summarized in this table.
United Houstonian Taxi Drivers Association

Peter Carrizales, a 31-year veteran driver who now manages a seven-car fleet, has seen UberX (the company’s low-cost brand) decimate his lessees’ business. Every one of his taxi drivers is behind on his or her required $600 weekly lease payment, Carrizales said. “I tell them, ‘Pay your rent, buy your food first’ … I’m about $15,000 in the hole since Uber came in two years ago.”

More galling to Carrizales, though, is Uber’s insult to taxi driving as a viable career. “For 30 years I’ve done physicals, background checks, drug tests, keeping myself in order so I can keep my license. And now this company’s just going to come in here, charge 20 percent and let [their drivers] go?” He recently told his older son, who dabbles in UberX, “When you’re out there for a few hours, you’re stealing food from the mouth of a guy who’s out there eight or nine hours — who’s a professional.”

Ebrahim Ulu, president of the United Houstonian Taxi Drivers Association, understands a driver’s desire to go with Uber and escape the clutch of traditional taxi companies. “But what did Uber do in every city? They didn’t improve permits or driver conditions,” he said.

In 2013, the UHTDA sent Houston a 22-page document listing the grievances — lack of time off, abuse by lease owners, poverty-level income — suffered by “slaves” of the lease-to-drive structure. It proposed that the city grant new permits to individual drivers for the purpose of forming a worker cooperative that would offer protections and benefits to owner-employees.

For over a year, nothing came of this proposal. In taxi-industry time, 2013 is ancient history, when neither the city nor the UHTDA foresaw the effect UberX would have on Houston and beyond.

Driver-owned solution?

Ebrahim Ulu, longtime taxi driver and UHTDA president, says Uber drivers and cabbies have a lot in common.
E. Tammy Kim

In May, the Austin City Council signaled its support for a taxi-worker cooperative very similar to that outlined by the Houston drivers, in an effort to “even [the] playing field for both cab drivers and for taxicab companies." Though the Austin co-op is pending final approval, the downward pressure exerted by Uber — on drivers, but also on taxi companies and medallion prices — may change how Houston issues its own permits.

At the end of August, the Houston City Council considered a program that would issue new taxi licenses to a driver-owned group, what could become a worker cooperative [PDF]. According to Lara Cottingham, deputy assistant director in Houston’s Administration and Regulatory Affairs Department, the number of licenses is in flux: The city will eventually have to take Uber into account when calculating how many taxis and other vehicles for hire should be on the road.

For Oshiro, who’s thinking about switching permanently to Uber, “The only big change for me [would be] if the city would give medallions directly to the drivers.” Anything short of that, he said, will mean fewer taxi hours and more time in his wife’s car, glued to the Uber app. By his calculation, $50,000 in gross earnings becomes $39,000 in a cab and $38,000 with UberX, though “the problem with Uber is you have to work more to produce the same income.”

The difference is starkest at the airport, where six hours — driving plus waiting — gets him one $60 cab fare or two $30 Uber trips. One involves more gas; the other, more time sitting in the parking lot. Uber’s “not bad” as a concept, he said, “but the way they’re doing business, they’re basically destroying the taxi industry. They’re making drivers slaves for them because we have no options.”

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