Report

Gig Labor Market – The Case of Uber

One of the major labor market issues affecting Uber drivers is occupational licensing. About one-quarter of the U.S. workforce must acquire a license from the government in order to work for pay (Bureau of Labor Statistics 2016). In some cities—New York, for example—ride-sharing without a taxi license is illegal. The requirements for licensure in New York City are stringent, and the licensure process takes three months on average, with upfront costs of at least $2,000. In addition, the driver must complete a defensive driving course, pass a medical exam, be subjected to a drug test, undergo fingerprint and background checks, take classes on wheelchair-accessible vehicle training, acquire a commercial vehicle license, and purchase commercial vehicle insurance. These substantial fixed costs result in fewer drivers but much lower turnover rates for Uber drivers in New York than in any other U.S. city where the company operates; they also result in longer working hours. Figure 1 shows driver turnover by city. New York City has lower turnover, and Houston, which has few regulations for drivers, has relatively high turnover of drivers.

Figure 2 shows that the ratio of New York Uber drivers to the population of the city or the metropolitan statistical area is considerably lower than either Chicago or San Francisco, and the base prices are higher. Although traditional medallion taxi drivers can serve as substitutes for Uber drivers in any city, the number of Uber drivers in New York is considerably lower than in Chicago or San Francisco. Also, the base Uber fares in Chicago and San Francisco are lower than those in New York City for both 2015 and 2016.

The number of workers directly working through apps now comprise nearly 1 per- cent of the total workforce, making gig labor markets one of the fastest growing areas in the labor force.

Evidence from a quasi-experiment in New York and New Jersey suggests that there are few gains from occupational licensing of ride-sharing providers as assessed through customer satisfaction or measures of customer safety.

Chosen excerpts by Job Market Monitor. Read the whole story at Employment Research Newsletter  

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