Friday, March 24, 2017

Driverless Cars Tootle, Or Rather Speed, Into 2017 – Part 2

We continue with some old business, in “Tesla’s Self-Driving System Cleared in Deadly Crash” (Neal E. Boudette, The New York Times, January 19).  The federal government concluded that that company’s “autopilot” feature, despite being overnamed and being engaged in a fatal May collision, did not need to be recalled.  It has been modified to shut off once the driver ignores three warnings to put their hands on the steering wheel, and two competitive systems, from General Motors and Audi, will monitor driver’s eyes (!) for the same purpose.

“Are General Motors and Lyft About to Crush All Self-Driving Rivals?”  John Rosevear posted this question on February 19th in The Motley Fool.  GM is planning on making “thousands” of driverless Bolts next year for Lyft’s ridesharing, which the latter company apparently and rather reasonably considers critical not only to their prosperity but to their survival.  In an area this fast-moving they can’t be sure, so the short answer to Rosevear’s query is “no.”  Meanwhile, per Yahoo Tech three days later, competitor Uber is now testing its self-driving cars in Arizona, where the governor took a ride in one and praised it. 

In the February 23rd New York Times, John R. Quain raised the issue of product standardization between driverless vehicle manufacturers.  True, we will need that, but it’s too early to try to establish such conventions.  We don’t know which self-driving technologies will win out on merit and in the market, which are two different things.  It will be later in the process, maybe two years from now, before official standards are agreed upon and put into place.

The consortia and partnerships are well under way, and so are the legal cases.  Per The New York Times (“A Lawsuit Against Uber Highlights the Rush to Conquer Driverless Cars,” February 24), Google’s Waymo driverless vehicle organization has brought an action against Uber for allegedly stealing trade secrets.  With top technicians getting high seven-figure bonuses to change companies, and nondisclosure agreements insufficient to clearly define the thin and permeable line between personal knowledge and proprietary information, this was neither the first nor the last.  The same goes for such ploys as, attributed to Uber executive Anthony Levandowski, trying to pay off “distracted” employee’s girlfriends to break up with them, and, as did Uber’s Otto division, filming videos of legally unapproved self-driving trucks.  It’s an exciting high-stakes game out there – don’t be surprised to see many more of these sorts of things.

On March 8, we learned from Fox Business that “Uber Self-Driving Cars Are Coming Back to California Roads.”  They were barred from them in December, but now have a permit to test there again, if for only two units, to become the 26th company allowed.  That state has also proposed that cars without steering wheels be testable there (USA Today, March 10th). 

My latest “why didn’t I think of that” moment came from John R. Quain’s March 9 New York Times “Cars Will Talk to One Another.  Exactly How is Less Certain.”  Since driverless vehicles will be receiving a lot of electronic information, it only makes sense for them to broadcast it to others nearby.  Per Quain, they can relay news of “disabled cars and vehicles that are braking hard ahead, as well as slippery road conditions.”  And more.  They may not be able to stop stupid human drivers from trying to beat trains to intersections, but can at least tell them they are there.  Two great advantages this communication will have – and I am almost certain it will be built into all American cars within ten years – is that it works even in areas without cellular service, and does not require infrastructure improvements.  Perhaps it could also issue warnings about people cruising, in the left lane, at two-thirds of the speed limit. 

This month’s most massive transaction was, as reported in The Wall Street Journal on March 13th (“Intel Joins Silicon Valley’s Race to Make Best ‘Server on Wheels,’” Ted Greenwald), was Intel buying Israeli car-camera company Mobileye for $15.3 billion.  The two together will form only part of a driverless-vehicle consortium, but, with Intel’s chips, it’s a powerful combination.  Intel’s estimate of “autonomous-driving systems, services and data” reaching $70 billion by 2030 strikes me as conservative, and, just maybe, if enough others share Intel CEO Brian Krzanich’s view that “what’s under the hood” will soon refer to computing features, millennials may find more interest in driving.


We finish with “The 5 Biggest Challenges to the Driverless Car Revolution,” or at least how Justin Loiseau saw them in his March 11th Motley Fool piece:  pricing, consumer understanding, “safety/security issues,” regulation, and technology.  It’s way too early to worry about the first.  The second is also premature, as we don’t know exact capabilities yet.  The third is more a matter of perception, as driverless vehicles should start cutting highway deaths as soon as next year.  The outlooks for the last two, though, are clearly positive.  The bad news for investors, to which The Motley Fool caters, is that we can’t yet tell the Fords and Chevrolets from the Stutz’s and Hupmobiles.  But driverless cars are the McCoy, the real deal, the genuine article; if you have an appetite for risk, you should place some bets somewhere.        

Friday, March 17, 2017

Driverless Cars Tootle, Or Rather Speed, Into 2017 – Part 1

The current year is shaping up as a critical one for self-driving vehicles.  A great deal has happened already.

One large choice, or “metadecision,” as we could call it, is how much of the burden of getting driverless vehicles information on what’s around them should be borne by the roadways.  In “States Wire Up Roads as Cars Get Smarter” (The Wall Street Journal, January 2), author Paul Page described signs recently installed in the Washington area warning drivers of upcoming problems, such as in the story a sudden thunderstorm, of which they may not yet be aware.  Such things are valuable both for our current meatmobiles and for self-driving cars and trucks, but, as Page mentioned and probably understated, the amount of money “needed to wire the nation’s more than 4 million miles of paved roads and 250,000 intersections” would be in the billions of dollars.  For a variety of reasons, including lower cost and more flexible technology improvement implementation, I expect that the vehicles will need to be the smart ones, and industry consensus on that should be reached within two years.

The same publication, a week later, issued Stephen Wilmot’s “How the Auto Makers Can Survive the Self-Driving Car.”  This piece was directed toward investors, who would do better to disregard two things it contains: the assertion that “electric cars are starting to take off” (which they have been doing for 50 years, and look no stronger now with recent sales crashing to almost nothing in states which have replaced their subsidies with registration charges in lieu of fuel taxes), and the idea that driverless taxi services, since rides in them will cost less, will cause huge drops in car sales, even starting “this decade.”  Wilmot also pointed out, though, that concentrated auto purchases by whatever companies win the self-driving taxi battle will “undermine the stable system of car dealerships that has controlled the industry for decades” (good riddance, as I see it), and that those who choose not to buy cars, who will be almost exclusively in urbanized areas, will instead purchase “mobility as a service,” which could take the form of agreements with these corporations to obtain transportation in different ways to cover different needs.  Companies could, for example, deploy automated taxis for trips to airports, but deliver customer-driven Jeeps for summer-home weekends – look for such agreements to be commonplace by the middle of the next decade.

We learned, also from Paul Page in The Wall Street Journal, that one of the last things the Obama administration did was to start a federal point of contact for driverless-vehicle regulation (“U.S. Sets Up an Advisory Panel on Self-Driving Cars,” January 11).  The 25-person committee was designed to include top executives from General Motors, Amazon, Uber, Alphabet, and FedEx, so can hardly be accused of being anti-business.  Creation of that panel, even though we don’t yet know what regulations will be ongoing, was a positive step.

Driverless technology has also moved along this year.  “Waymo’s self-driving cars need less driver intervention” (Ryan Randazzo, Arizona Republic, January 13) documented how Google’s driverless autos, which have been tested in Arizona for several months, now need human intervention only every 5,000 miles, and, by using GPS and radar, can assess their environments for 200 yards in each direction.  Still, new problems continue to appear.  In “These Drivers Are Not Crazy – They’re Just Doing the ‘Pittsburgh Left’” (The Wall Street Journal, January 20), James R. Hagerty described that city’s motorists’ custom of letting others turn left in front of them.  While technically illegal it is commonplace there, and is often authorized by drivers waving or blinking lights.  The same practice is also frequent in Boston, and other American areas, such as New Jersey and California with multiple consecutive lane-changes, have their own deviations.  Either laws against these maneuvers will end up being enforced, driverless vehicles will need to anticipate them in some places but not in others, or that light-clash or hand-wave will be officially mandated – something will work.

Given that most people have never seen one in action, it is no surprise that we have “consumers still confused about self-driving cars” (AFP Relax News, January 18).  This early in their implementation, it is not disturbing at all that 72% to 81% of Korean, German, Japanese, and American survey respondents said they didn’t yet trust the things.  More telling, however, is the 68% of people in our country who “said they’d change their opinion once such cars have proven they’re safe.”  Those in one industry, though, understand them much better.  In “Self-driving Cars a Sure Bet – Just Ask Insurance Companies” (Newsmax, January 17), Lee Gruenfeld called their implementation “a slam-dunk certainty,” and cited an insurance executive as saying “the self-driving car is going to eat us alive” and that his or her company had planned on “automobile-related revenues being down by 50 percent at the end of ten years.”  We can take that to the bank, since, as Gruenfeld put it, “if you know any actuaries, you know that these are serious people not given to flights of fancy.”  We may not achieve great oil-consumption savings, as he suggested, but the almost certain precipitous drop in highway deaths is reason enough to agree.

Given that, we can take the idea of making driverless vehicles illegal in my state, to save jobs, as humorous.  Yet, in David Curry’s “Really?  A 50-year ban to self-driving cars in New York?” (Transport, January 17), we learn that the Upstate Transportation Association is trying to do just that.  They have about as much chance of success as this week’s 26 inches of snow has of melting this weekend – and that is a good thing. 


More on this topic next week.

Friday, March 10, 2017

February: Almost Every Jobs Number Improved, Including the AJSN Showing Latent Demand Down to 17.9 Million

This morning’s Bureau of Labor Statistics employment data was superb. 

All 9 of what I consider the front-line BLS statistics were positive.  Nonfarm payroll employment went up 235,000, about 100,000 more than our population increase absorbed.  Seasonally adjusted unemployment was down 0.1% to 4.7%, and the unadjusted one fell 0.2% to 4.9%.  The total number of officially jobless Americans was off 100,000 to 7.5 million, including 1.8 million out for 27 weeks or longer, also down 100,000.  The count of those working part-time for economic reasons, or seeking full-time work while holding on to part-time labor, now 5.7 million, dropped the same amount.  The two measures showing how common it actually is for people to have jobs, the labor force participation rate and the employment-population ratio, after gaining a large 0.2% apiece last month, were each up another 0.1% to reach 63.0% and 60.0% respectively.  Average nonfarm payroll earnings, which had done well recently, were given another positive adjustment, and might have been due for a correction, were up a well-over-inflation 6 cents per hour to $26.09.

The American Job Shortage Number or AJSN, which shows in one non-seasonally-adjusted figure how many more positions could be quickly filled if getting one were as easy as getting a pizza, also improved, as the counts of people in most statuses of marginal attachment improved as well.  Overall, the AJSN fell 448,000, as follows:




Compared with a year before the AJSN is almost 300,000 lower, with almost exactly that amount due to a drop in official unemployment.  Otherwise, the largest changes were in those reporting they wanted to work but did not search for it in the previous year, down 269,000 for a latent demand reduction of 215,200, and in those who fall through the cracks, the non-civilian, institutionalized, and unaccounted for, up almost 1.5 million since February 2016 and thus expectable to absorb about 150,000 more positions. 


There is no doubt about the strength of this data.  February was the best month in years, with its advance unusually broad-based.  The AJSN went along with that, with its large improvement completely meaningful as similar numbers of people usually work in January and February.  The only bad news is that another interest rate hike is now almost certain – however, if it is small, the economy can take it.  As for the turtle, he took another step forward – and even stretched in the process.   

Friday, March 3, 2017

Robots and Jobs: Scary Pizza and Way Beyond

For those who think robots won’t cut many jobs – and we’ll meet a couple of them here – how about “a new pizza delivery truck equipped with 56 ovens and staffed by just one employee, whose only tasks are driving the truck, slicing the pizza, and delivering it to the doorstep”?  Zume Pizza out of Mountain View in Silicon Valley is doing just that, per The Christian Science Monitor on October 2.  And it started in 2016, not 2036.

What views have we heard about robots since then?  Futurist Elon Musk came out for a guaranteed income, not now but eventually (CNBC, November 4), saying that “there is a pretty good chance we end up with a universal basic income, or something like that, due to automation.”  The New York Times also made the distinction between that and globalization, in Claire Cain Miller’s December 21st compendium of workers’ stories “The Long-Term Jobs Killer Is Not China.  It’s Automation.” 

While foreign employees have replaced Americans and will continue to do so, technology is more responsible for work going away.  That correct conclusion of Miller’s was strengthened if not explicitly echoed in “Robots Are Coming to Take Your Job” (Fox Business, December 29, credited to Fool.com).  This investment-focused piece mentioned what is shaping up as one of the most commonly implemented automation areas this year, used by the pizza company above, McDonald’s and Starbucks per this article, and widely publicized this week as soon to arrive at Wendy’s, the use of apps and kiosks instead of counter workers to receive food orders.  It should take no more than a year for companies diligently refining this technology to find that the clear majority of customers, even without phones, will prefer to order this way.

The best thing about “The Robot Revolution Will Be the Quietest One” (Liu Cixin, The New York Times, December 7) was its intriguing title.  Otherwise, we didn’t need Cixin, a nine-time winner of China’s highest science fiction writing award along with a Hugo, to tell us what’s here, even if he said “it’s my duty.”  We already know that “the robot revolution has begun” and that driverless vehicles will replace various jobs, and it is still wrong to say that “car ownership is likely to become nearly obsolete.”  (The people who believe that should take a drive, automated or otherwise, into a truly rural area and see how little traffic there is.)  It wasn’t news even in December that artificial intelligence has great potential but is still almost completely in the future.  Cixin does get points for noting that people not needing to work may have something in common with old-time “aristocrats” who “have often spent their time entertaining and developing their artistic and sporting talents while scrupulously observing elaborate rituals of dress and manners” – that’s a form of futurist Herman Kahn’s idea of quaternary activity, as described in his now 41-year-old The Next 200 Years – but it’s not mentioned enough.

On the other hand, how quickly will these changes occur?  Steve Lohr’s “Robots Will Take Jobs, but Not as Fast as Some Fear, New Report Says” (The New York Times, January 12), concerns an excellent recent McKinsey Global Institute study.  The findings of the research include that “what is technically possible is only one factor in determining how quickly new technology is adopted” (time lag, cost-effectiveness, and high early prices being only three reasons), and that in the “near-term” many more jobs will be changed than eliminated (and in what we might call the medium-term, positions will go away as human workers take the nonautomatable tasks from multiple jobs).  The McKinsey study named “natural language processing” as a great facilitator of employment losses, and said, again correctly, that “the jobs of America’s 1.7 million truck drivers” are not, driverless technology or not, “in imminent peril.”  The article implied, rightly once more, that delayed automation effects should not fool us into thinking they won’t happen, as, eventually, almost all work which can be quantified into algorithms will be endangered.

These conclusions would have been useful in influencing Jay Wacker’s views in a Forbes piece released only six days later, “How Much Will AI” (artificial intelligence) “Decrease The Need For Human Labor?”  Wacker, an “ontology architect,” was asked to comment on the title’s subject, and came up with too much wrong.  Saying that “generally, other professions grow to fill the loss” does not recognize that we know of no major phase of work beyond services.  “Computer, mathematical, engineering, and science occupations” don’t look like a “growth industry,” but rather areas vulnerable to both automation and globalization.  The vast reduction in number of agricultural jobs does not assure the remaining ones.   When robots can’t make up a hotel room, I doubt that “robots and AI will decrease the need for cleaning.”  He also failed to distinguish between jobs rating to go away within the next few years and those almost certain to be lost by, say, the mid-2030’s, which would tell us why driving positions are not yet “imperiled” in the same sense that warehouse workers, which Wacker mentioned in the next sentence, already are.

A February 20th Washington Post editorial, “No, Robots Aren’t Killing the American Dream,” landed somewhere between these two last pieces.  It pointed out that people have been concerned about losing work to automata for centuries, and “that today’s fear of robots is outpacing the actual advance.”  From there, though, the article went into a rather fuzzy advocacy of liberal talking points, in particular unions, “a robust federal minimum wage” (why federal?), and even “legislation to foster child care.”  How these requirements could get jobs to return, or even slow their departure, is beyond me.


We finish with Inc.com’s February 21 “Bill Gates’s Plan to Deal with Job-Stealing Robots:  Just Tax Them.”  Yes.  But let’s go with what I wrote half a decade ago, that we should factor the number of jobs created or maintained into corporate tax rates, so that, for example, restaurant chains employing hundreds would, all other things being equal, pay much less than law firms with fewer than a dozen.  Yet the image of an automaton, such as my toy John Robot, getting a W2 and paying taxes (would they be charged for Social Security as well?) injects some badly needed humor.  Which, yes, we can use.  

Friday, February 24, 2017

Trump and Jobs: A First Presidential Look

What will President Donald Trump do about employment?  Despite how much has been said, by him but to a much greater extent on his behalf, we know very little. 

That is not only because of his extremely chaotic nature and his well-established tendency to lie, but also because it is way too early to know.  There is a reason why the first serious assessments of presidents are done after they have been in office 100 days – it takes that long for them to find their footing, to talk with people in both legislative houses, and to get a realistic picture of what they can and cannot do.  We may also not know much before then what concessions Congress will want from him, and what key senators and representatives will request to be added to laws he wants to pass.  We don’t have much help from commentators, who, if on the left, are mostly only repeating concerns they have had about him since before his election, and, if on the right, are finding their own positions between supporting him and holding back in favor of true conservatism instead. 

Thus, we are reduced to reading tea leaves.  Some people, such as stock investors, expect good things, probably from Trump’s almost certain attempts to cut taxes on those with the most income and net worth.  In some cases, employers have seemed scared to announce job cuts, and others have re-publicized upcoming hiring increases.  Most of their business moves have nothing to do with Trump, such as Amazon’s long-in-the-works promise to add 100,000 full-time American positions by the end of next year, “as bricks-and-mortar retail crumbles” (The New York Times, January 12th), “but at what cost?” (USA Today, January 13th). 

What pertinent things did our president propose before he was elected?  Per “A look at Trump’s economic proposals” (USA Today, November 9th), there were many of them.  He wanted to reduce income tax rates, the highest one to 33%, and eliminate gift and estate levies.  He would slash corporate rates from 35% to 15%, and cap small business income taxes at the same level.  Trump also advocated a wide-range of protectionist laws, most spectacularly 45% and 35% Chinese and Mexican import tariffs.  He would increase forgiving of student loans, offer new child-care tax credits, and, surprisingly, mandate six paid maternity-leave weeks.  He wanted no federal minimum-wage increase.  Trump asked for Obamacare to be repealed, but backed a $1 trillion infrastructure proposal that, though it would never approach the 13 million jobs he said it would create, would generate a lot of them.          

On the prospects for these things being accomplished over the next four years, we do know a little more now than then.  With Republicans controlling both houses, tax rates are likely to go down, though probably, since conservatives care more than Trump seems to about the financial consequences, not as much as he would like.  The tariffs will be debated, and could come out either way.  The student loan and child care measures would be good bargaining chips for Democratic support – if this president can show ability to work with Congress instead of only trying to dictate to it.  Almost day by day after the election he backed off further from his pledge to end Obamacare, though that still could happen.  The infrastructure project would seem in the abstract to have strong bipartisan support, but some on the right are against it, and we will hear plenty from them, on this and other issues, over the next year.

When looking at what could be accomplished over the next four years, we must also consider another possibility, peculiar to Trump.  As of yesterday evening, the prediction market predictwise.com gave him 20%, 15%, and 11% chances of leaving office in 2017, 2018, and 2019 respectively.  Sportsbook.ag, an offshore betting facility which allows, as American casinos do not, wagers on outcomes determined outside the rules of games or sports, had the odds only 27 to 20 in favor of Trump finishing a full term.  An early departure, with chances too significant to be ignored, would precipitate a Mike Pence presidency, with clear expectations of conservative Republican governance.  In particular, that could, or could not, mean an end to the protectionism Trump proposed. 


Other major things could also happen.  A trade war, or even a shooting war, with other large countries could change what Congress is willing to pass.  Negative world-leader reactions to Trump could distort job-related outcomes.  And of course there is the standing possibility of a recession, which last happened eight years ago.  These also mean an unusual amount of uncertainty.  We will know much more, though, by April 30th

Friday, February 17, 2017

On the Job: Three Months of Choosing Good Ones, Getting Them, Hating Them, and Containing Them

Whatever your work status, something has come out recently for you to think about.

In Northeast Pennsylvania Business Journal’s November 2016 Dave Gardner interview of Maurice Flurie, “CEO:  The trades are booming,” Flurie, who runs “state-wide cyberschool” Commonwealth Charter Academy, described a disconnect between the jobs for which public schools are preparing their students and actual marketplace needs.  He did not fall into the tired and incorrect view that employers deserve no blame for their unfilled below-market-rate-paying openings, but instead focused on teaching pre-high-school students entire careers, not only considering differing aptitudes but fully recognizing the value of skilled trades.  I have advocated those in construction, as demand for them will stay high in general, and see as the only concerns what can be up-and-down hiring and confusion with manufacturing positions having much poorer long-term prospects.

Also on career selection, The Economist, which has disappointed me recently in employment-related matters, did much better in their The World in 2017 special issue.  In “Apply within,” author Tom Standage only wrote up our Bureau of Labor Statistics forecasted jobs rate through 2024, but those projections showed more depth than those made before.  The top position, expected to provide twice as many opportunities as now, was wind turbine service technician, far ahead of second-place occupational therapy assistant.  After that, not until eighth place does one with which I disagree, statistician, appear.  The others follow my principles in 2013’s Choosing a Lasting Career remarkably closely:  giving best prospects to healthcare-related professionals other than physicians; a great emphasis on jobs that must be done locally and in person; a #10 rating for the position I named first overall, physician assistant; and avoiding currently good but dangerously vulnerable occupations such as pharmacist and computer programmer.  Kudos to the BLS for their pronouncement and to Standage and The Economist for educating us about it.

On December 16th, a Washington Post Jeffrey J. Selingo opinion piece asked “Why are so many students failing to find good jobs after college?”  I could almost completely dispose of it by answering “because the permanent jobs crisis means there are too many workers chasing too few jobs,” but the article brings up a few items worthy of other note.  I was surprised that as recently as 2005 the top motivation for incoming UCLA students was to “learn about things that interest me” – I had thought that the vocationalists, who seemed to win that war in the late 1970s, were still in the majority at least nationally.  According to other studies Selingo uncovered, fewer than 20% of students graduating 2010 or later found their university career centers helpful, rather stunning given such low official unemployment.  Selingo called on colleges to make use of federal 75% work-study subsidies by offering positions with skills more advanced than those typical for student-employee positions; whatever the solution, it is depressing to think how poorly university vocational help would be doing if we had another recession.

Just after Thanksgiving, Forbes career columnist Liz Ryan offered two lists for jobseekers and jobholders.  The second, “Ten Job-Search Habits to Break” (December 5), described how to stick to what she described as “the new-millennium approach using Pain Letters,” in which the applicant acts as a consultant, seeking out information on what the employer needs to improve, to show they can contribute effectively.  The behaviors Ryan recommends ending are using standard cover-letter language, describing career backgrounds instead of problem-solving examples, writing the likes of “results-oriented professional” or “motivated self-starter,” being obsequious in general, only waiting to answer questions in the interview, walking through an already submitted resume, and naming related experience, mentioning compensation levels, asking for approval, or trying to impress hiring managers.  All revolutionary but often justified, especially for people suspecting they may not have a real chance to be hired without it.

Ryan’s previous list, “The Top Ten Reasons People Hate Their Jobs” (November 29), put incentive for good work performances on employers’ shoulders, saying “motivation is a feature of the environment, not the people who work in it.”  Her in-effect checklist named the following as indications that organizational management may be falling short here:  employees “not respected as people at work”; people lacking both the correct tools for their jobs and ability to get them; apathy about personal lives; a supervisor unqualified or “a tyrant”; too many lies; no confidence in leadership; too much politics; being “underpaid and overworked”; inability to get their projects moving forward; and an atmosphere where employees “could get in trouble – or get fired – for almost any reason.”  Some are old and vague, but are indeed worthy of avoiding. 


That brings us to January 17th’s “Why America Needs the French Email Law,” written by Katie Denis in Pulse.  The title referred to the January 1st requirement in France that companies with at least 50 workers must name hours during which their employees cannot send (or answer) email messages.  We’re a long way from agreeing on some of the points Denis made, such as that “skipping vacation time doesn’t make you more valuable” or that we need to “appreciate power of downtime” – perception means a great deal, and innumerable corporate managers cannot tell the difference between work quality and quantity – but I agree that even if such a law were enacted in the United States, which it should not, it is positive that a major advanced country has actually done that.  There is not enough pressure on American employers to let their workers manage their own lives, and this law, applicable to them or not, will provide some.  It, along with the other five subjects here, was well worth publicizing.

Friday, February 10, 2017

Uber, Lyft, Airbnb, and their Jobs are Sputtering as Expected

It’s not been a good several months for the two largest car-and-driver-sharing companies and the main sleeping-space one.  As I predicted years ago when they made broad-based national news in 2014, these three ever-growing and still successful “sharing economy” companies are falling prey to two things:  the catching-up of regulations they had thus far avoided; and proper cost accounting being done by those providing those services, showing that neither ride-sharing nor home rentals are as profitable as Airbnb, Lyft, and Uber management want us to think. 

On June 27th, even a rare regulatory victory, in which Airbnb in San Francisco won the legal right to offer extensive short-term living quarters without being subject to hotel laws, sprung a leak, as that city’s supervisors ended up voting to require registration of each person providing such services, with $1,000 per incident fines for noncompliance.  The problem, as the board saw it, was not occasional home-sharing, but, per Katie Benner’s June 28th New York Times article, their owners doing that almost continuously.  That controversy resulted in the view from Abha Bhattarai’s July 31st Washington Post piece, “As regulatory attacks mount, Airbnb goes on a charm offensive,” describing how that company organized Washington rental hosts to meet with other local business owners to get their customers to shop with them, in exchange for, they hoped, their votes against a strongly regulatory city council bill. 

The Economist, for which being based in Britain is no excuse for being behind the times, issued a September 3rd piece, “Uberworld,” which looked like it could have been written a year before.  Its unbilled author told us that Uber is “the world’s most valuable startup” (more than Wal-Mart?), which is “shaking up the $100-billion-a-year taxi business” and “will transform daily life as profoundly as cars did in the 20th century” and “could reduce the number of cars needed by 80-90%.”  Though driverless vehicles will have great effects, cheaper taxis will not.  All we need to do to confirm that is to look at cities such as Seoul and Buenos Aires, where relatively low-priced cabs are used more often than in America and have facilitated such improvements as less drink-driving, but have barely if at all reduced the number of privately-owned cars.

Uber, though, has been expanding their business offerings in other, if not new, ways.  Per Business Insider on September 29th, it is now delivering food from over 500 London restaurants to a large area of that city.  If customers will choose Uber for such a service instead of from two other companies, and will pay rates not specified in this James Cook article but seeming to approach $12 to $15 per hour, it will succeed.

Another sign of regulation being applied as much to Uber and Lyft as to true taxi companies reached San Jose’s Mercury News two days later, as the California governor signed a bill requiring both to strengthen their already robust driver background checks.  One more, “New York cracks down on Airbnb” (Sara Ashley O’Brien, October 21, money.cnn.com), banned renting of “entire apartments” for less than 30 days in that city.  Those against that activity, per O’Brien, “say (the law) is aimed at people who use Airbnb to effectively turn their homes into hotels – and thus take potential rental housing off the market and deny cities tax revenue.” Airbnb’s resulting lawsuit, which they dropped six weeks later (“Airbnb Ends Fight With New York City Over Fines,” The New York Times, December 3), claimed that they should not be responsible for what their hosts do.

Going beyond simply driverless vehicles, one of the ridesharing companies seemingly let loose more than that in an October 28th USA Today piece, “Uber looks to flying cars as next big shift” by Eli Blumenthal.  The article itself, however, was about helicopters proposed for especially large and heavily trafficked cities, such as Sao Paulo, New Delhi, and the San Francisco Bay area.  Not the same thing as flying cars, and such services are, in New York for one place, available already.

On another flawed area of ridesharing, that company lost another judgment that same day.  The title of Danica Kirka’s October 28th Yahoo.com “UK Uber drivers win case to get paid vacation, minimum wage” said it all, with the chances of Uber getting away with calling its workers contractors taking another legal hit.  That issue was discussed further in The New York Times (“In Europe, Is Uber a Transportation Service or a Digital Platform?,” November 27th), in which Mark Scott recapped conflict between that company’s practices and both governments and taxi companies in France, Frankfurt, Barcelona, and elsewhere.   Scott also mentioned similar European issues with Airbnb.  A few days after that, a Danish appeals court upheld an unlicensed-taxi conviction against an Uber provider, (Salon, December 2), judging only that cabdriving regulations applied to that company.

Not every situation, though, has been clearly lost by the sharers.  In “New Orleans Becomes New Model for Airbnb to Work With Cities” (Katie Benner, The New York Times, December 7), we saw the results of a rare cooperative effort.  There, the company agreed, in exchange for being allowed to do business in its usual way:  to share data including host names and addresses; to its hosts being required to obtain city permits; to be limited to 90 annual rental days per entire home; and, perhaps most painfully, to almost completely stay away from the French Quarter.  If these agreements hold, expect them to be duplicated elsewhere.

Three more stories, though, showed how reality is catching up with the ridesharers.  Fox News’s “Uber, Lyft clashing with cities over new regulations” (Dan Springer, December 20) was mainly about what could be called an “et tu, Brute?” moment for those two, in which tech-loving Seattle determined that they should be subject to the same rules as taxi companies, since, as an assistant city attorney common-sensically put it, “at the end of the day, they do the same thing, they drive people from point A to point B.”  Fox Business informed us on January 5th that the state of Massachusetts will soon be subjecting “tens of thousands” of Uber and Lyft drivers to what “officials say are the country’s most stringent background checks.”  And, as for the cost accounting problem mentioned earlier, per The Wall Street Journal on January 19th, Uber has been fined $20 million by the Federal Trade Commission for misleading potential drivers about their actual earning potential.  
  
The possibility is real that, within two years or so, Uber, Lyft, and Airbnb will consistently be held to the same standards as traditional lodging and taxi companies.  Whether they will survive in some form, such as with driverless cars, we do not know.  In an intriguing February 2nd Forbes article (“Uber and Lyft May Just Be Here For A Brief Ride”), Jeff McMahon told us about an idea from urban real estate expert Randy Rowe, that automobile companies may, when self-driving vehicles are well established, sell contracts instead of cars, in which “you’ll get a certain number of points in a year, and if you order a sports car for that morning it costs you that many points, if you order a van for the family trip to the mountains it costs you that many points, and when you have your four-door sedan for your normal stuff it’s a different price.”  Ford, which is as Rowe put it “rebranding itself… as a mobility company rather than an automaker,” may lead the way.


Will that happen?  Hang on – we will see.  In the meantime, don’t buy stock from any ride or home sharing companies.