Why jitneys were regulated out of existence, and why Uber/Lyft will not suffer the same fate

If you’re interested in macro trends, Mary Meeker’s recently released internet trends report has a lot of good stuff. One thing that jumped out to me is this statistic: in 1915 jitneys in L.A. gave 150,000 rides a day. Today in L.A., Uber does 157,000 rides/day. Uber is as big now (in percentage terms bigger) as the jitneys were during the “jitney craze.” 

Of course, only five years after they appeared on the scene, the jitneys were regulated out of existence. Uber itself likes to promote this story as a cautionary tale against regulation today. But although the regulations for so called TNCs are still being hammered out, the regulatory scene today is far different than it was in 1915. So far it’s pretty clear Uber, Lyft, and others will not be regulated out of existence this time. 

Why the different outcomes? Why did jitneys get outlawed so quickly, and why are Uber and Lyft escaping the same fate? 

First I should reiterate that ridesourcing and jitneys have a lot in common. They emerged suddenly, making use of a new technology (automobile; smartphone). Both responded to demand by using flexible routes and pricing, and both were made possible by a supply of cheap labor. Both were a hit among customers and made their way into popular culture. Neither initially fit into existing regulatory categories. 

1. Jitneys probably created more directly obvious problems

Despite the similarity, the two forms of transport differ in important ways that matter for regulations. Compared to Uber and Lyft, the negative impacts of jitneys were probably more immediately obvious to the public. Once jitneys became ubiquitous in major cities, people blamed them for traffic congestion, accidents, and general chaos. Because jitney drivers’ income depended directly on the number of passengers served, it was not uncommon for jitneys to race each other on the street to pick up the next passenger. You can imagine what that did for road safety in an era with many fewer traffic laws. Uber is also controversial, of course, but not in a way that so directly impacts urban life. 

2. Central vs. fragmented organization

The more important differentiating factors, though, are organizational and political. Whereas Uber and Lyft are central companies that recruit independent drivers, jitneys started out as independent drivers. Although some entrepreneurs owned and operated entire fleets of jitneys, the industry was still very fragmented. The industry mainly consisted of small operators with limited political influence. Many jitney operators worked only part-time or for temporary periods and did not have enough vested to fight political battles. There was no centralized corporation as there is in Uber’s case. 

The jitneys were thus ill-prepared for the regulatory pressure brought against them. In 1915 streetcar companies held the political weight. Streetcars then dominated urban transport, and city and state governments depended on them for urban expansion and hence economic growth. Local officials often had close relationships with streetcar company leaders. Streetcar companies thus had the political influence to impose harsh regulations on their new competitors.

In contrast, ridesourcing companies have developed a structure to offer flexibility through independent contractors while maintaining the organizational and political advantages of a central corporate decisionmaker. Their competitors and political opponents, the taxi industry, were fragmented and politically weak, especially in California where the battles first broke out. The political weight was on the side of Uber and Lyft, and they have been able to influence regulatory policy much more than the jitneys ever could. 

I agree it probably was a mistake for cities to prohibit shared vehicles and hence jitneys early in the 20th century. Today, I believe we’ve already turned the corner on regulations for ridesourcing. Uber and Lyft, or services like them, are here to stay and the task now is to figure out what role policy plays in making sure they serve the public interest.