Overlooking Michigan Avenue at rush hour. (Kari McMahon/Medill)

City’s new congestion tax puts burden on Uber and Lyft drivers

By Kari McMahon
Medill Reports

On a recent journey downtown local Uber driver Matt collected a fare of $10 but said he only made $4 from it. The city, which began imposing a new congestion tax a month ago, made $3.

Matt, who typically drives eight hours a night, said that working as a ride-hail driver was not an easy job. He said the congestion tax is just another challenge he has to deal with on top of ride-hail companies taking a significant cut of his fares and having to compete with thousands of other drivers for those fares.

“It really is just a cash grab for the city, cloaked under the guise of congestion reduction,” said Matt, who did not want to share his full name for fear of losing his job. “Now you just have the same number of cars looking for potentially fewer riders.”

 In January, the City of Chicago implemented a new congestion tax on ride-hail providers to encourage riders to either use public transport or shared trips in the downtown area. The thinking behind the tax was that it would encourage residents to use public transportation, thereby lowering the number of vehicles in the city center and reducing congestion.

According to the law, ride-hail drivers would experience a tax surge between 6 a.m. and 10 p.m. if a journey begins or ends downtown. During this time, solo journeys would be taxed $3, increasing to $8 if pick-up or drop-off occurs at a particularly congested locations such as O’Hare International Airport or Navy Pier.

The city decided to implement the tax after a congestion report released in October 2019, found that the number of ride-hailing trips have almost tripled since 2015 with half of the trips either starting or ending downtown. The trips contributed not only to congestion but to a decline in CTA ridership and slower bus speeds, which created challenges for individuals commuting downtown.

Audrey Wennink, director of transportation at the Metropolitan Planning Council a nonprofit organization that helps communities address tough planning and development problems, said she supported the tax and hoped it will encourage a change in behavior because individuals could take a public transit trip for the cost of the solo journey tax.

But drivers of ride-hail services such as Uber and Lyft said the new tax would likely do little to solve the problem it was intended to fix. They expressed frustration that the city was making money at their expense.

Chicago’s ride-hail tax ranked as the highest in the country, despite only 5% of the projected $40 million revenue from the tax going toward improving the public transport system according to the City’s 2020 budget.

Mark Smithivas, a part-time Uber driver and organizer of Gig Workers Matter, a nonprofit organization in Chicago supporting workers without contracts, said drivers disliked picking up shared rides because they typically got paid less and they have more problems with unhappy passengers.

“Pooled rides tend to pay less on a per mile rate than a regular ride,” Smithivas said, adding that their plight is difficult to understand for those who have never had to drive a pooled ride. “They can be more difficult because you are picking people up at various stops and when you are in the middle of rush-hour or a very congested part of the city, it is very stressful.”

Smithivas said congestion from ride-hail cars would decline if the companies provided more incentive for drivers to pick up shared rides.

Matt, the Uber driver, agreed that shared rides created more problems. He said passengers often expected a “private car experience” and tended to be more dissatisfied when using shared rides. This typically resulted in lower ratings for him which could have an impact the number of fares he picks up.

Some drivers said they actively avoid picking up pooled rides, a mindset which could potentially have an impact on the success of the congestion tax.

However, Kate Lowe, an associate professor for the University of Illinois at Chicago, pointed out, “If financial incentives were more extreme [for drivers] and more people shifted to share, I think the drivers would have to adapt.”

Some transportation experts said they hoped the tax would reduce congestion but supported an increase if a change in behavior doesn’t happen.

Samuel Kling, a fellow at the nonpartisan non-profit Chicago Council on Global Affairs, said the tax gives the city a learning opportunity to figure out how to build a congestion system for all vehicles.

For Matt, however, this provided little comfort as ride-hail drivers were the only ones targeted by the tax.

“Guys who are trying to make money or earn a living driving Uber or Lyft, it’s just another thing that makes it harder,” Matt said.

Overlooking Michigan Avenue at rush hour. (Kari Mcmahon/MEDILL)