What’s in a zip code?

uberx

When you see this headline, your first instinct is this must be about car insurance or whether the resale housing market has recovered in your area. Well, here’s a different reason to sing praises or curse depending on where you live. This is about the ride-sharing app provided by Uber and UberX. Yes, this app is proving to be a catalyst for all types of different discussion around the country.

Let’s start with a simple thought. Over the years, cities have developed sets of sophisticated regulations to license and monitor the performance of cabs and limos. This is not just a way to extract fees, administrative charges, and taxes from those providing public transport services. It’s also a serious attempt to maintain safety standards by ensuring only vehicles with a sufficient safety performance can be used to move paying customers around, that these vehicles are properly maintained and repaired when damaged, that the drivers are insured and have no criminal record suggesting they might be a danger to passengers, and so on.

But here’s a different thought. One of the blights on modern cities is the level of congestion. There are just too many vehicles on the road. Worse, streets cannot be widened. The foundations under buildings will not permit the construction of underground car parks. So unless people live out in the suburbs or exurbs, there’s serious pressure on parking. People who have no space to keep their cars are dependent on reliable and cost-effective public transport. Taxis are a vital part of urban living. The pattern of availability and the speed of travel dictate where people can live and get to work conveniently. Put this the other way round: if there were more taxis and their per-mile rates were lower, more people would move out of the central areas and live in areas now considered less convenient.

So here comes Uber. It gives vehicle owners a direct financial incentive to supply a taxi service. Yes, it often falls outside the current system of regulation, but it could revolutionize where people live. The more vehicles supplied as people movers, the more tempting it will be to relocate where property and local services cost less.

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Except, if you look at New York and New Jersey, there’s an oversupply of Uber drivers in New Jersey and the service is cheaper to use. Not only is this threatening the income of regulated taxi drivers, it may change property values. Areas like Hoboken and Jersey City have commanded high resale prices because of easy access to commuter road and rail links. If people move away and demand drops, long-term owners may lose some of their property equity. This will not be popular and gives the politicians an incentive to enforce the taxi-driver regulations, and either limit or exclude Uber. Redesigning cities is only politically possible when the right people do not lose money. As it is, New York drivers can rideshare in New Jersey, but not vice versa. If the laws were changed, the supply of drivers to New Jersey would fall and entrenched interests would be protected. UberX is also going to notify users when the surge charging periods end.

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