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After Uber, Americans spent more on taxis and less on public transit

Alison Griswold
An iconic New York yellow cab

You can trace Uber’s rise in America in the data.

Average annual household spending on local taxis, a category that includes Uber and Lyft, more than tripled from 2015 to 2018, according to the latest data from the Bureau of Labor Statistics’ Consumer Expenditure Survey. The average US household spent about $70 per year on taxis in 2018, up from $20 in 2015 (adjusted for inflation). Over the same period, estimated average household spending on local public transit like trains and buses declined by 15%, from $98 to $83.

The data is nationally representative, meaning it includes places where public transit—and public transit spending—is minimal. The expenditure numbers are likely accurate to within about $5, so the decline may not be as large as the estimates suggest, but could also be larger.

The spending data validates the thesis of early Uber investors, who argued the ride-hailing company wouldn’t just take share from taxi companies but would also grow the market for taxi-like services. Benchmark Capital partner and former Uber board member Bill Gurley made this case in 2014, arguing Uber’s superior user experience (faster and more predictable pick-up times, cashless payments) and new use cases (service in less urban areas, rental-car alternative) made its potential market “far different from the previous for-hire market.”

The data also raises questions about whether Uber is complementing public transit or competing with it. Several academic studies have found ride-hail services like Uber hurt ridership on transit options like buses and trains. Public transit is not well funded in the US. Ride-hail services—especially cheap shared rides—can be a welcome alternative for commuters, but siphoning away riders could push local transit systems into further decline.

On the other hand, there’s still reason to believe people prefer public transit when it works. After New York City opened the Second Avenue subway in the previously transit-starved Upper East Side in January 2017, daily yellow cab trips plunged there three times faster than in the rest of the city.

 

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