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Thursday, February 29, 2024
With rising competition from companies like Uber and Lyft Madison’s Union Cab has worked to change its business model and stay afloat.

With rising competition from companies like Uber and Lyft Madison’s Union Cab has worked to change its business model and stay afloat.

Tensions rise as Uber, Lyft threaten Madison’s Union Cab Co-Operative

When David Rossing finished graduate school and began driving for Union Cab in 2010, it was a temporary job while he looked for a tenured position at a university. But eight years later he has fallen in love with the organization and takes pride in his career as a cab driver and part-owner of the Union Cab cooperative.

“You have a sense of dignity; you’re able to wear a lot of hats and have a lot of growth,” Rossing said.

In his time at Union Cab, Rossing said he has witnessed increasing competition from Uber and Lyft. However, the worker-owned cooperative has been able survive, in part, by changing their business model to focus on steady contracts, such as with the Morgridge Center on UW-Madison’s campus and by working with members to collectively determine the best places to cut costs, according to Union Cab’s former business manager, Jason Glomp.

“We’ve had to really look at what we do, tighten things up, and make sure we’re in a position where we can survive and thrive while they’re here,” Glomp said. “The [taxi cab] industry worldwide is getting killed.”

Increasing account business has helped Union Cab survive in the changing market. These contracts are regularly scheduled drives, such as transporting Medicaid recipients to appointments and taking students involved in Badger Volunteers to and from volunteer sites.

State-funded groups must abide by state procurement regulations when drawing up long-term contracts for services such as transportation. Because these regulations require proof of insurance from all vendors Union Cab doesn’t face Uber and Lyft as competitors in these markets, according to University Relations Specialist Greg Bump.

These regulations are made, in part, to address safety concerns. This is an area Union Cab says they work diligently to excel at and while some customers choose Union Cab for their solid reputation as a safe transportation option, driver trainings and insurance come at a monetary cost for the company when competing against Uber and Lyft’s lean business models.

“Our reputation in the community is really what keeps us going,” Glomp said.

Union Cab drivers are required to undergo a state-run background check before even training to drive for the company. Such driver training is state-mandated and uniform across all transportation companies operating in Wisconsin (not including Uber and Lyft). Union Cab employees then undergo further training, such as augmented diversity and inclusion trainings in order to make all passengers feel safe in the cabs and trainings to help drivers better serve passengers with disabilities.

But Uber drivers, Rossing said, undergo no training at all.

“Our drivers are trained. They have to take a street test before they are even hired here … they have to demonstrate that they have knowledge of the city,” Glomp said.

Uber drivers undergo significantly less mandated preparation before taking the streets. Sarah Oakley, a lab manager and Uber driver in Madison decided to start driving as a way to make extra money in her spare time. Oakley was approved to drive for Uber within a day of submitting her paperwork.

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“I needed to submit my driver's license information, car insurance, vehicle make, model, plates, and registration, and a picture of myself. After I submitted everything, a background check was completed,” Oakley said.

Uber is also not required to comply with state regulations for transportation companies.

These requirements include pulling up at specific “Taxi-Cab” waiting areas at airports and hotels, having a specific number of wheelchair accessible vehicles in their fleet and a restriction against kicking passengers out once they have begun their journey, unless they pose a significant threat to the safety of the driver.

“We follow the rules, they don’t,” Rossing said.

Rossing worries that the company being exempted from these rules allows Uber to offer customers an unbeatable price for transportation that Union Cab will ultimately be unable to compete with.

However, the state legislature is currently looking to “even the playing field,” according to Rossing and eliminate regulations for taxi-cab companies.

Rossing warned that these losses could put the co-operative out of business in the next few years. But, the Uber Corporation is operating on huge losses as well, up to $2.8 billion nationally, according to Rossing. However this is a strategy he speculates will benefit the rideshare company in the long term.

“They’re doing this so they can can operate on a monopoly,” Rossing said.

Because in a worker co-operative there is more opportunity for all employees to voice their ideas and opinions, Glomp said Union Cab has more opportunities to change and grow according to what consumers and workers want.

“Tom Mounds of Badger Cab or Joe from Badger Taxi — they would have to tell their workers ‘Okay, you’re taking this cut,’ whereas here we can all talk about it and say,‘Okay what are we all going to do to save our collective company,” Glomp said.

The transportation industry across Madison took a hard hit with the entrance of Uber and Lyft, according to Glomp, and many businesses were forced to increase technology and rethink business strategies. But Glomp said rideshare companies haven’t changed the business as much as some may think.

“[Uber] upped the game as far as technology goes, but they didn’t reinvent the wheel,” Glomp said.

For Rossing, the worker co-operative aspect is what’s kept him at Union Cab for so long. The job is worth his time, he says. Oakley, on the other hand, enjoys the freedom driving for Uber affords her, but not the pay or company culture.

“The only way driving for Uber is worthwhile is if I'm already driving somewhere and can pick someone up on the way, or if there are surge prices,” Oakley said. “Just driving, open to any destination, I make just above minimum wage, which isn't enough to justify the time for me.”

Uber drivers are supporting a business model that will eventually hurt them in the long run, said Rossing, who argues the company has plans to switch to driverless vehicles in the near future. However, Oakley explains, Uber drivers aren’t always looking for a full-time job in the same way that Union Cab employees are.

“I would not consider driving for a cab company because I enjoy having the freedom to drive for Uber when I want. I can drive for three hours one night, but then not drive for two weeks. I can decide to drive whenever I want, without the need to conform to a specific schedule,” Oakley said.

Regardless, Glomp and Rossing agree that Union Cab is a staple in the Madison community, and one they hope stays around for a long time.

“I think the future of Union Cab is actually very strong,” Glomp said.

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