A typical ride share from UberPool could start in San Francisco’s Tenderloin district with a single occupant. Requiring one hour and nine pick-ups from the driver, the trip would be brief for some passengers and longer for others. The common denominator was the Uber app that decided it could combine all of them. The driver liked the concept because she had a steady hour of work. Riders also were happy because it was cheaper to share.
So yes, Uber affects drivers and riders. But the firm’s impact is much broader.
The Uber Impact
Focusing only on ride sharing, we can look at how Uber is edging its way into our lives while other habits have been pushed out. Commuters have begun to take Uber for part of the way and then catch the bus or the train. Or they are just sticking with Uber. Think carpooling with all of its plusses and none of the hassles. However, if the result is fewer people owning cars then businesses ranging from auto dealerships to parking garages to the Starbucks drive-thru will suffer from the spread of Uber.
Meanwhile, taxicab owners know that Uber is a threat. Long protected by a type of licensing system that limited the number of cabs, the taxi industry has seen Uber, Lyft and other similar driving services chip away at their monopoly.
In NYC, the value of the right to drive a cab has plummeted:
Our Bottom Line: Creative Destruction
Long before Uber’s co-founders were even born (Travis Kalanick, b.1976; Garrett Camp, b.1978), economist Joseph Schumpeter (1883-1950) described what propelled capitalism. Calling the process “creative destruction,” he said that economic growth depends on the entrepreneurs who develop the innovative business ideas that make old industries obsolete.
With Uber and its gig economy siblings, we have only begun to see the ripple of creative destruction.