Blow to the Sharing Economy: New York Will Not Issue New Licenses to Uber and Lyft for One Year

The New York City Council will not issue new licenses for taxi services based on the sharing economy for the next year, thus delivering a blow to companies like Uber and Lyft, which have relied on the largest American metropolitan areas as their main source of revenue.

New York is the first major American city to impose such a restriction, halting the explosive growth of ride-sharing vehicles as part of a package of measures that also includes establishing a minimum wage for drivers, according to The Verge.

The package of measures, opposed by all major providers of ride-sharing services, aims to reduce traffic congestion and raise driver wages during a period of massive growth in the use of rental vehicles.

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The decline in taxi ride revenues has demoralized many drivers, and the New York Taxi Workers Alliance has reported six suicides among taxi drivers in recent months.

New York Mayor Bill de Blasio stated that he intends to sign this law, which would initiate a one-year period during which no new vehicle rental licenses would be issued, except for vehicles adapted for wheelchair access.

“This action will stop the influx of cars that contribute to congestion on the streets and slow down traffic,” said de Blasio.

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The number of vehicles operating in New York has jumped from about 12,600 in 2015 to around 80,000 in 2018, according to the New York City Taxi and Limousine Commission. Additionally, there are about 14,000 yellow taxis operating in the city.

The effort to limit ride-sharing services in New York has not been met with approval from companies providing on-demand ride services, including Uber, Lyft, and Via.

“The city’s 12-month pause on issuing licenses for new vehicles will jeopardize one of the most reliable transportation options, while nothing is being done to improve the subway or alleviate congestion,” Uber stated.

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“This extensive transportation limitation will return New Yorkers to a time when they struggled for transportation, especially in minority communities and in underserved neighborhoods,” Lyft stated.