Uber goes where taxis don’t

Who is Uber good for?

People talk about the ride-sharing service as if it’s mostly a boon for rich people, who have conspired with the titans of Silicon Valley to take food out of the mouths of hard-working taxi drivers. And sure, what’s good for Uber is bad for taxi drivers – or at least, bad for the owners of taxi medallions. But the assumption that the beneficiaries are rich is a little strange.

As I noted in the very first article I ever wrote about the company, the primary appeal of Uber for me has never been avoiding taxis, or even getting a cheaper fare. If I’m in an area where it’s easy to catch a street hail, I’ll usually just stick my arm out like the old-fashioned girl I am. No, the biggest benefit I’ve always seen is that Uber allowed you to catch a ride from places where taxis are scarce.

Five years ago, when we moved in, my neighborhood in Washington was one of those places. I almost never saw available taxis near us. For taxi drivers, time is money – any time they’re not driving someone around, they are burning gas looking for a fare. So no wonder drivers would rather head downtown, where there were lots of people looking for taxis, than cruise a larger area for the few fares that might need a ride. Street hailing simply isn’t efficient without a dense population of taxi riders. And while you can theoretically call a taxi to your house, this is a highly unreliable means of transportation.

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I’ve always thought that in terms of letting you do something you couldn’t do before, Uber provides the biggest benefit to people who live in lower-income neighborhoods, not in rich ones. That’s where dispatch is often unreliable, where street hails are rare, and where many residents don’t have a car. A new study suggests that in low-income areas, this benefit of Uber is potentially very large.

It’s absolutely true that Uber avoids regulations restricting supply. But that’s pretty much tautological; if Uber didn’t increase the supply of rides available over the existing stock of taxis, there would be no Uber. But supply restrictions are also the single biggest reason that people in low-income communities have trouble getting rides. If there are only so many taxis, those taxis are going to gravitate toward the areas with the highest returns, which is to say airports, train stations, wealthier communities, and business and entertainment districts, where they’ll find the highest densities of fares. •
Megan McArdle is a Bloomberg View columnist who writes on economics, business and public policy.

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