> “if Uber needs to “pad” their drivers wages $2 per hour and Lyft needs to pad $4 to reach minimum level due to Uber being able to use its size to get higher utilization, then that seems like competition as it should work?”

The problem is that Uber’s higher utilization is an arbitrary metric, and if we’re picking arbitrary metrics, why would we pick one that intrinsically entrenches the current market leader?

Just because Uber’s utilization might be higher than Lyft’s, that doesn’t mean either one of them is operating with a satisfactory utilization or an unsatisfactory one. What if Uber operated at 99% utilization, and Lyft at 95%. At that point, offering any financial incentive based on ranked utilization would be a huge waste of taxpayer money.

Meanwhile, if Uber and Lyft are at 15% and 10% utilization, it’s equally a waste to reward because those are such bad numbers that society is enduring major congestion costs.

Here’s an analogy. Suppose in the US that the government decided sports teams are a morally bad influence on society due to executive and athlete behavior.

As a result, they will reduce your team’s roster size unless you donate money to charity.

Suppose they were to “unlock” one new roster spot for every $1 million of charity donation. That seems possibly fair. Teams can each decide if it’s worth it, and it’s a flat fee affordable even by the least financially well-backed teams.

But instead suppose they tallied up all the donatioms to charity and ranked each team. The top team gets all roster spots, the next team gets most of them, and so on down to the teams that did not donate, which get no roster spots unlocked.

What’s the problem with the second model? It seems like a nice auction sort of way to do it, and that’s fair right?

Well one problem is that the whole point was to raise money for charity to offset ethical problems, and the auction method does not necessarily cause much donation to happen, only enough to be the winner, say. The winning team might have only donated $500k total, but they are still rewarded like they did something awesome. Society loses out.

The second problem is that it intrinsically favors teams with more money. They can buy the roster spots just based on their size, regardless of whether it is addressing the underlying ethical problem. For big teams it’s just a cost of doing business and the players can keep on doing cocaine in the hotel room, who cares. But for the small teams, even if they want to reform the underlying problem, they may not be able to afford to unlock roster spots, which reinforces that they won’t make as much money from winnings, which keeps them unable to buy future roster spots, and so on.

The utilization reward policy is like this in many ways. It doesn’t reward based on absolute levels of utilization or improvement of utilization... it intrinsically rewards based on your ranked utilization, which just reinforces the market share of existing operators.

That utilization is an arbitrary metric is exactly my point! Why use any metric in a minimum wage regulation? The regulation should be “drivers should make a decent wage, that is they should get enough hours and enough pay for each hour”. That’s it.

How the different market actors are affected (whether it strengthens the incumbent) and how it affects congestion etc shouldn’t even be a concern! Road congestion is one thing. Competition is a separate thing. Minimum wages is a third thing. I don’t see any reason why regulation needs to consider any 2 at the same time. Predatory pricing is (often) illegal, congestion should mean raising congestion fees, min wages should be simple. Am I oversimplifying it?

If a $15 min wage was imposed in other parts of the market such as retail, who would care if WalMart was unfairly benefiting from it and would there be suggestions that regulation should be using a more complex metric so smaller retailers would be allowed to dodge the min wage requirement somewhat?

> “If a $15 min wage was imposed in other parts of the market such as retail, who would care if WalMart was unfairly benefiting from it and would there be suggestions that regulation should be using a more complex metric so smaller retailers would be allowed to dodge the min wage requirement somewhat?”

Yes! In fact, in NYC there is already a huge backlash against the minimum wage increase stating that it unfairly hurts small businesses (who are forced to fire people and/or cut benefits since they cannot meet basic operating revenue requirements if they keep the same amount of staff and also have to pay them the higher wage).

Many proposals have been suggested that there should be offsetting tax breaks given to small businesses because the minimum wage unfairly hurts them more than larger chains.

A theme I see in all of your replies is something like “just do X” where X is enforcing a minimum wage or incentivizing rideshare utilization.

But it is way, way more complicated than that. If you “just raise the minimum wage” it can actually turn out to hurt workers overall, if the resulting price increases passed on to consumers cause demand to drop, or if businesses have to fire some workers and require overtime from a smaller staff, etc.

It’s the same with rideshare policies and many other things. If you “just do X” without understanding the economic ripple effects of X, you might end up hurting the very people that X was supposed to help.