Monday, December 8, 2014

Uber and Lyft are so last week. Here's the new taxi model - not.

I just posted a comment in a private thread on a leading social media service, and I wanted to transfer my thoughts to my own blog before Mashable or Buzzfeed or whoever rips off my revolutionary idea. My original comment is in my usual bold italic style, and I'll insert comments as I go along.

I probably shouldn't say this, but I'm about to reveal my solution for hired car customer satisfaction - rather than having a booking company arrange things with independent contractor drivers...

Note that this pretty much applies to both the new model (Uber/Lyft) and the old model (your average taxicab company). For example, here's how one company organized its workforce:

USA Cab owns a fleet of about 45 taxis that it leases to drivers, and it operates a taxi dispatch service. At issue in the case was whether USA Cab’s classification of the drivers as independent contractors was proper. The Plaintiffs’ brought a putative class action alleging that due to the misclassification, USA Cab failed to provide workers’ compensation insurance, failed to pay minimum wages, improperly required drivers to pay security deposits and other fees, and denied them meal and rest breaks.

When you call a cab company, you think of the cab company as a single the same way that you think of McDonalds as a single entity. In reality, however, the cab company contracts with other people, but imposes all sorts of regulations on what those people can do. Here's another example:

Every time I use my [credit] card to pay, the [taxi] drivers ask if I would mind giving them cash, notwithstanding that just about every major cab company advertises that they gladly accept cards. So I finally started asking what the difference was....The answer came in two parts.

First, the cab companies charge the driver a percentage of the fare in order to process the cards. That fee can run up to ten percent according to some drivers that I spoke with. The drivers are getting ripped off but they do not fully understand it because they are unaware of what the cab companies are actually paying their credit card processor to handle the transaction....

The other problem with accepting credit cards, according to many drivers, is the delay in payment by the cab companies. They can take up to three weeks to remit the money back to the driver, according to a cabbie I spoke with in New York. So that means that when you pay by credit card, the driver is not getting the money at the end of the shift, has to pay a premium to get paid, and may have to wait until the cab company gets around to settling with him.

Now I don't know how fast the newer companies such as Uber and Lyft pay their contractors, but the fact remains that they are contractors, not employees.

Which brings me back to my original comment in the private thread.

...what would happen if a company actually owned the taxicabs and used salaried employees? Then they could control quality and roll out service improvements more easily...

Think about it. I am an employee of a large company, and if the company wants to roll out a quality initiative, it can persuade its own employees to do what needs to be done. Granted that firms have similar control over independent contractors (or franchisees), but it all works a little better if you have a boss who reports to the boss who reports to the boss that wants the change made.

...nah, it would never work.

This is how I concluded my private comment. Why won't it work? Because the entire economy is moving away from big firms with many employees. The trend is more toward franchising, independent contracting, anything that keeps the employee numbers down and reduces cost. Remember my "page 462" post, in which a store (the Empoprisorium) is a literal shell, contracting with major companies such as Vizio to provide goods and employees, but making sure that all of the profit goes to the shell store.

Which reminds me - on about page 383 of the guide, you'll see that all sales that you conduct in our store have to pass through our cash registers. None of this booking sales on the floor that go some other way. If we catch you making sales that don't go through our cash registers, we will kill you. Literally. See page 462.

So you'll have more and more cases where you'll deal with a "company" that in actuality is a lot of independent firms, all being ripped off.
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