In Ohio, Uber Drivers May Face Problems

However this time, it’s not state regulations that are the issue -- it's other Uber drivers.

by Rick Rouan, The Columbus Dispatch, Ohio / October 7, 2015

(TNS) -- Matt Wagner hasn’t given anyone a ride home from a bar or a lift to a concert in his Honda Civic for about a month, and it’s unclear whether he will continue to search for Uber passengers.

He started driving for the app-based car service Lyft when the two companies dived into the Columbus, Ohio, market in 2013. Lyft left Columbus in January, and Wagner jumped to Uber, sometimes clearing up to $400 in a week.

But Uber slashed fares, making it harder to scratch out a profit.

As the company prepares to more than double its Columbus roster of drivers, Wagner expects it to become even more difficult to make money.

“You only have to lose money so many times before you decide it’s not worth doing,” Wagner said.

Across the country, Uber is battling regulators who want to clamp down on the service that lets riders use a smartphone app to hail drivers who use their personal vehicles as taxis. Columbus’ regulations took effect last year, and the legislature is considering statewide rules.

At the same time, Uber is doubling down in many markets, including Columbus.

The San Francisco-based company announced plans last month to hire 10,000 drivers in Ohio, including 3,000 in Columbus, next year. The city already has licensed about 2,500 Uber drivers.

Nobody knows how many drivers Columbus can support. The city capped the number of taxi licenses it would issue years ago and only recently increased the total to 530. It also licenses 289 so-called black cars and limousines.

Many of those drivers are competing for the same riders, but it’s unclear how strong that demand is in Columbus.

Some taxi representatives have asked city officials to study the market and divide a limited number of licenses among the industry’s players. No such study has started, and the Federal Trade Commission has sent letters to other cities discouraging caps on Uber drivers.

When they announced plans to add drivers in Ohio last month, Uber officials said they expected demand to heat up with the introduction of other app-based services and lower prices.

So, even if drivers don’t make as much money on an individual fare, they should have more opportunities to give rides, said James Ondrey, the company’s general manager in Ohio.

So far this year, ride requests on the Uber app have increased four-fold, Uber spokeswoman Lauren Altmin wrote in an email.

The company has not provided the number of rides.

Ohio University finance-department chairman Andrew Fodor said the market will regulate itself once supply and demand meet, with drivers quitting once they can’t make enough money.

“I think you’ll know when you find the saturation point when a lot of the Uber drivers quit,” he said. “It gets to the point where they don’t get enough fares in a day to make it worth their while once they take care of overhead.”

Ohio State University economics professor Kurt Varetti said the number of drivers will grow or shrink until it can meet demand.

The labor market also will influence drivers, with more signing up to drive when higher-wage jobs are scarce.

The number of drivers needed for a market, though, is hard to predict, he said.

Drivers have to pay for a city license, a vehicle inspection, and gas. Uber also takes a portion of every fare. Many of the company’s drivers work part time, often as a second job.

“The fact that drivers are still trying to get into this shows there’s still a perceived market,” said Mike Brown, public affairs director at Experience Columbus. “There will be additional competition in that market ... We aren’t here to completely regulate the market.”

Demand for taxi licenses has remained steady, and the city is licensing more Uber drivers every day, said Brown, who also is on the city’s Vehicle for Hire board.

Altmin suggested that there is a pent-up supply of drivers who either don’t have time or are unwilling to go through the city’s licensing process.

Several Uber drivers interviewed by The Dispatch praised the platform but said they are worried about the increased competition that will come from adding thousands of drivers in Columbus. The company has dealt with similar frustrations in other markets.

“The traffic on the ground doesn’t warrant more than 3,000 drivers,” said Daniel Famajo Kemoh, a driver from Westerville. “Maybe 1,000 more would be more realistic.”

Driver Brooklyn Brown said she will “see what it’s looking like” next year before she decides whether to continue driving, but she’s skeptical that the city can support so many drivers.

“I wonder if there’s going to be more drivers than riders,” she said. “Columbus is a small big city.”

Wagner replaced his 2012 Honda Civic with a newer model when he was making more money driving, but he said that other income, not Uber fares, now covers most of the car payment.

“Right now, I’m pretty skeptical about continuing,” he said. “I’m concerned that the more they add, the less I’m going to be able to make money at it.”

©2015 The Columbus Dispatch (Columbus, Ohio) Distributed by Tribune Content Agency, LLC.

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