About the author: Joseph P. Schwieterman is a professor at DePaul University and president of the Transportation Research Forum.
Americans who rely on Uber,
and other forms of “shared mobility” to get around are facing serious headaches this summer. Sudden shifts in vehicle supply due to the pandemic, coupled with unforgiving local, state and federal policies, have left many scrambling to buy cars. And there is plenty of blame to go around.
Consumers paid over 50% more on average for an Uber or Lyft ride last month compared to January 2020, according data from a market-research firm. The high price of rides is being fueled by drivers withholding their labor, some due to concern for losing unemployment benefits. But the flow of red ink in the wake of new labor mandates, reporting requirements, and taxes and surcharges is also at work. Atlanta, New York, and many other cities have levied taxes in the name of easing congestion, even on neighborhood trips using Lyft Shared and Uber Pool, in which users effectively carpool to fill unused seats. Leaving aside the dubious merits of taxing services that involve carpooling, the tax is moot for Uber Pool users. The company suspended the budget-stretching service last year and has yet to restore it.
Customers using Zipcar, who rent vehicles by the hour, are slapped with state and local taxes that can exceed 20% on short-hop trips in many cities, according to research my colleagues and I conducted. Those rates in some cases are higher than on “sin goods” such as alcohol and tobacco. A roundtrip for groceries in some cities may cost you well over $5 in taxes alone. Unable to turn a profit, the car-sharing company Car2go withdrew entirely from North America even before the pandemic. A Tax Foundation study released in April found that peer-to-peer car-sharing, such as private vehicles lent out by individuals on the Getaround and Turo platforms, also face heavy tax burdens.
This turn of events is disconcerting. Only a few years ago, some planners boldly predicted that legions of urban dwellers would ditch their cars in favor of carsharing, ridesharing, and other “sharing” options. Consumers were entranced by visions of streets dominated by shared autonomous vehicles taking us from doorstep to doorstep. Owning a car might even become passé. Now, there’s a risk that shared-mobility providers will never become more than niche players.
Low-tech options like Greyhound and Megabus are still generally the cheapest way to go for income-constrained households to take longer road trips. Due to the absence of meaningful congestion-management measures governing our highways, however, a bus packed with 55 people usually sits in the same traffic jam as a string of lightly occupied cars—a perverse form of “shared sacrifice.” Rail and air providers received tens of billions of bailout dollars during the pandemic, while private bus lines received a pauper’s share, forcing major cutbacks.
It’s the families who need to occasionally rent cars to run errands or visit relatives who’ve perhaps had it worst. Rentals are often completely unavailable in many areas due to fleet cutbacks during the pandemic. And when you’ve lucky enough to find an available vehicle, taxes and fees piled on to skyrocketing rates. A person using an Enterprise sedan for a week in many cities will often pay more than $100 in taxes, our research has found. And if the weekend closing of neighborhood locations forces you to rent at the airport, you’ll find taxes and municipal fees often lightening your wallet by more than $160 a week.
Deep into the second year of pandemic disruptions, many households are no longer willing to shoulder the burdens created by supply shocks and punitive policy. For those families, getting a car is an overriding priority. When they do, most drive nearly everywhere rather than cobbling together a life walking, biking, and using transit and shared-mobility options. After households acquire their first car or an extra car, these vehicles become all-purpose mobility machines, squeezing out other forms of travel, including transit use.
Basic economics tells us that it’s a wise use of societal resources when households acquire cars in response to appropriate price signals. But when the decision to buy is fueled by price and regulatory distortions—as often happens now, particularly in cities—the money should be spent elsewhere. Although the share of households with access to cars fell from 2011 to 2017, the trend has recently been reversed. Expect the share to be up markedly once data from 2020 and early 2021 becomes available.
The solution requires clearing the thicket of policy discouraging sharing while encouraging more effective use of the roads. Fortunately, some cities and states are developing policies that encourage smarter decisions about how and when to travel. New York City is developing congestion pricing for much of Manhattan, while Los Angeles, San Francisco, and Seattle are exploring fee-based incentives for downtown driving. Georgia is expanding express toll lanes through public-private partnerships. Strategies to integrate “microtransit,” such as ridesharing and carsharing, in the larger urban-mobility picture, are gaining momentum. Jersey City, N.J., for example, has developed an expansive mobile-app-based shuttle service using shared vehicles, with rides costing just $2, to improve mobility and reduce single-occupant travel.
Unfortunately, impending federal infrastructure bills largely turn a blind eye to technology-oriented solutions in favor of a bricks-and-mortar strategy. Although there are funds for private-public partnerships, there is little prospect that these bills will spur the kinds of innovation we need to ease bottlenecks and stretch the value of our overburdened road system. Far more emphasis is needed on expanding microtransit and public-transit partnerships to expand mobility across dispersed regions, allowing state governments to rebuild crumbling interstate highways using reasonably priced tolls, and to boldly experiment with GPS-based technologies to reduce reliance on traditional fuel taxes for the upkeep of streets and roads.
If you are hit with more than your fair share of roadway backups this summer, take comfort in the fact we can find a better way.
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