History repeats itself on overregulation of transportation – Orange County Register

The California battle between ride-sharing companies and unions has finally come to an end, with the state Supreme Court unanimously ruling that the companies can continue to classify drivers as independent contractors rather than employees.

In 2020, California voters approved Proposition 22, which “exempted businesses from complying with a new state law that would have classified their workers as employees and instead granted workers the right to limited health care benefits and guaranteed minimum wages.” The law was upheld.

Since their inception, Uber and Lyft have faced significant efforts by industry participants—especially taxis in various states and localities—to use government to regulate new entrants that would be forced out of business. Uber has done most of the work to fend off attempts to limit their flexibility, responsiveness, and employment patterns. About 55 percent of Uber’s employees identify as people of color, and these minority entrepreneurs have used Uber’s flexible employment to supplement their incomes.

Unfortunately, in such battles, consumers and employees do not always win. The story of the jitneys is one cautionary tale.

The men and women who drove passenger cars to transport their fellow countrymen were known as “jitneys,” slang for nickel or dime. Like modern-day Uber and Lyft drivers, many jitney operators offered their services part-time to supplement their current salaries.

When minibuses began to spread in 1915, New York Times reported that anyone with a car, “new or old, aristocratic or plebeian, large or small, or whoever has the means to purchase a car, can go into the bus business at once if he so desires.” Our research confirms these reports Times:Black Southerners in particular took advantage of the opportunity to provide their customers with an alternative to the segregated streetcars.

In 1915, streetcars were one of the main places where blacks in the South experienced the harsh realities of Jim Crow. While the streetcars served African Americans, they were forced to sit in the back and were often subjected to verbal and physical abuse by white passengers. The streetcars had many other shortcomings that frustrated customers, both white and black. They ran slowly, had fixed routes, and all it took was one streetcar to break down to bring all streetcar traffic to a halt.

Many black Southerners saw the cabs as a way to escape the streetcars, and some became cab drivers themselves. One Northern newspaper noted that “(a) number of enterprising colored Southern men, knowing that the race is opposed to separate cars in this section of the country, and uses them only when necessary, have established cab lines for their race.” Both black Southerners and women showed an enterprising spirit and drove cabs.

Unfortunately, excited customers only got better service for a short time. To address this threat to their profits, the streetcar companies did exactly what taxi companies and unions tried to do to Uber and Lyft—they used their political connections to push lawmakers to pass legislation that would restrict competition.

In almost every case, they succeeded. Localities passed laws that prohibited carriers from picking up passengers on popular streets, from staying on certain routes, or from running on set schedules. Most damaging, however, was legislation that required ride operators to pay bonds of $5,000 to $10,000 ($155,000 to $311,000 today) before they could begin operating.

Each of these regulations was designed to deprive buses of an aspect of competitive advantage. The trams wanted to make buses less responsive to consumer demand by imposing strict regulations. If all else failed, the trams lobbied for a total ban or increased the start-up costs so much that part-time bus operators could no longer afford to run them.

Ultimately, the trams won in eight short months. In 1916, the most important tram publication appeared, Electric Railway Magazinecelebrated that “in many cities city buses have been legally abolished and that the general trend of events is towards their abolition.” Some city buses were still operating in 1925, but excessive regulation was in most cases too stringent.