Editorial: Who should Regulate Chicago's Ride Shares?

People who got into the taxi business by paying $300,000 or more for a city medallion are understandably threatened by the people who got into the same business by fastening pink mustaches to their personal cars.

Lyft, a ride-sharing company, requires a hot pink mustache on the grille of each driver’s personal vehicle. Flickr/Alfredo Mendez

The people who got into the taxi business by paying $300,000 or more for a city medallion are understandably threatened by the people who got into the same business by fastening pink mustaches to their personal cars.

The plush 'staches are the trademark of Lyft, one of three ride-share services — the others are Uber X and Sidecar — that are upending the taxi industry in Chicago. The taxi companies, which have long benefited from a regulatory scheme that limits the number of cabs on the road, suddenly face competition from the upstart ride shares, which provide essentially the same service without oversight.

That conflict is playing out at City Hall and in Springfield, where aldermen and lawmakers are debating rules for ride shares. Meanwhile, a federal lawsuit filed by taxi companies argues that the existing rules should apply to everyone. Those rules, of course, would squeeze out the newcomers.

But the car's already out of the garage here. Consumers like ride shares. They like being able to find a nearby car, check out the driver and agree to a fare, all on their smartphones. They like the option of paying a premium for faster service in peak hours or bad weather. They like choices.

Sticking to the current rules would rob them of a promising new model while protecting an archaic system that works mostly for the medallion owners. It doesn't work for the independent contractors who actually drive the cabs. Last week, a group of them sued, saying they should be considered employees of the cab companies from whom they rent the medallions. (Another pending suit argues that the drivers should be considered employees of the city.)

With no guaranteed wages, they sometimes lose money on their shifts after paying for gas, taxes and other expenses, they say. And they can't just charge more to cover those costs: Taxi fares are set by the city, and the cabbies haven't had a raise in nine years. In a nonbinding referendum on the March 18 ballot, Chicago voters overwhelmingly said they shouldn't get one now, either.

Those unhappy riders deserve the option of taking their business elsewhere. That doesn't mean the ride shares should continue to operate without rules. A lot can go wrong when you climb into a car with a stranger and head out into traffic.

The ride share companies protest loudly that regulation is the enemy of innovation. And face it, the outlaw factor is part of their appeal. But it's not unreasonable to set rules that promote passengers' safety or make sure they're covered in the event of an accident.

The companies insist that they do all of that already, but they dodge when asked to prove it. Chicago had to subpoena their insurance policies, for example. A Tribune investigation last month found holes in Uber's background checking system that missed at least one driver with a felony record. The company wouldn't provide records that would show the extent of the problem, which it says is fixed.

Ride shares also say they're more than meeting the requirement imposed on taxis to pick up fares in underserved neighborhoods. But state Sen. Martin Sandoval, D-Chicago, who chairs the Senate Transportation Committee, said he's never been able to get a ride share to come to his Southwest Side home.

Government isn't doing its job if it accepts the companies' assurances that everything is hunky dory. So the question now isn't whether the ride shares will be regulated, but who will set the rules.

Chicago aldermen are weighing an ordinance proposed by Mayor Rahm Emanuel. It would require ride share drivers to pass background checks and drug tests. Their cars would face annual safety inspections. The ride share companies would have to pay a $25,000 city fee and a ground transportation tax of $3.50 per vehicle per day. They'd have to carry insurance that would cover at least $1 million per accident.

The rules currently on the table in Springfield would go well beyond that. Ride share companies would have to carry commercial insurance. Drivers would have to have chauffeur's licenses. Cars would have to be less than four years old and have special plates. They couldn't pick up or drop off passengers at airports, convention centers or taxi stands, and they couldn't charge more than taxis.

The companies, naturally, would prefer to work things out with the mayor. They argue that the state proposal is an end-run by the taxi industry, meant to usurp local control and "ultimately kill peer-to-peer transportation."

It makes a certain amount of sense to have some statewide rules, if you ask us. It's not as if every trip begins and ends in Chicago. And ride shares will surely be moving into other parts of the state. But lawmakers need to leave room for local governments to call the shots where appropriate. As it happens, Emanuel's ordinance would exclude ride shares from Chicago's airports. But why should Chicago — or any city with an airport — have to get permission from Springfield to do otherwise?

Lawmakers shouldn't be in the business of marking cars or dictating fares, either. Their aim should be to promote safety and competition, not to take sides in the taxi vs. ride share battle.

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