What’s happening to Uber in Illinois?

I love UberX because it recently cost me just $12 to get from Lincoln Park to Union Station.

Drivers – including single moms, college students and people who want to make their own work schedules – love UberX because it means they can earn good money on their own terms. (For those who aren’t familiar, UberX is a ridesharing option run by Uber that serves as a cheaper alternative to taxis, because drivers use their own cars to provide rides.)

But taxi drivers – and the politically connected who have a vested interest in keeping things the way they are – aren’t fond of Uber, because it undermines the taxi monopoly that has remained unchecked in Chicago for decades.

The city’s bottom line also stands to suffer if the current taxi model is done away with.

Chicago’s existing taxi system revolves around the “medallion.” A medallion is a permit issued by the city that a driver must own or lease to operate a cab.

These medallions don’t come cheap. In September 2013, the city of Chicago hosted an auction for 50 medallions and started the bidding at $360,000 a piece. On top of the money the city makes off of medallion sales, Chicago also gets a 5-20 percent cut each time a medallion is sold privately (that takeaway would range from $17,500-$70,000 on a $350,000 medallion).

The average cab driver can’t afford a price that steep. Of the nearly 7,000 taxis operating in the city, it’s estimated that only 2,000 are owned by independent taxi drivers. The rest of the drivers on the road are leasing the right to operate taxis using the remaining medallions, paying an average of about $500 per week.

Drivers also are on the hook for fuel, airport taxes and cab maintenance.

UberX drivers, on the other hand, bypass the prohibitively expensive medallion system altogether.

To operate, drivers have to own a car, have proper insurance and a valid driver’s license, and pass a DMV background check. There are no sign-up costs, and Uber takes a small commission from each completed ride.

The city of Chicago and the state of Illinois have attacked this model.

In February 2014, Chicago proposed a regulatory ordinance that would have crushed Uber’s ability to do business.

In June 2014, Chicago passed a modified version of that ordinance, which limits Uber drivers’ ability to operate in numerous ways, though it is not nearly as bad as Mayor Rahm Emanuel’s original proposal. Under the city’s new rules, if a driver works more than 20 hours a week, they have to pay to get a chauffeur’s license. Uber drivers also cannot pick up passengers at the Midway or O'Hare airports, or at McCormick Place, though the city ordinance gives the Commissioner of the Department of Business Affairs and Consumer Protection the authority to allow pickups from these locations if he or she deems it can be safely done – while preserving the city’s tax revenue.

The bill before Gov. Pat Quinn, however, is worse than the city’s ordinance. This bill sets an 18-hour weekly limit on drivers who want to avoid additional steep regulations that would be enacted throughout the entire state.

Uber is a growing company, and it wants to expand here in Chicago. According to Crain’s Chicago Business, the company wants to expand its staff from 75 workers to 500 by the end of 2016. The jobs will pay a yearly salary of $50,000 to more than $100,000. And Uber isn’t asking the state for special handouts or tax breaks to go through with this expansion – they just don’t want any further harmful restrictions placed on their business and the drivers who count on it to make a living.

The governor of Illinois has a chance to welcome 425 jobs into Chicago.

All he has to do is hold off on signing bad legislation.

To subscribe by email to Dewonked, type your email address in the box and click the "create subscription" button.

Leave a comment