The economic impact of Uber on the city of Edmonton and what it means for the on-demand workforce. Plus more information on Canada's new workforce.

1.
TRADEBAIT MARKET COMMENTARY MARCH 2016
The Uber Impact: Canadian Workers in the New “On-
Demand” Economy
Just last month Edmonton, Alberta became the first city in Canada to pass a
by-law allowing Uber drivers to operate in the city. Unfortunately, this was
soon overturned based on the inability of Uber to meet the conditions that
drivers carry valid provincial insurance, and complete both criminal record
checks and vehicle inspections by March 1.
This was a quick and unreasonable decision from a city that should
encourage innovative means to move people since it is not currently being
offered. Edmonton is plagued by transportation inefficiencies, backlogged
infrastructure projects and urban sprawl often meaning added time and costs
to travel.
We all know that Uber has expanded at a rapid pace around the globe with
their growth generally outpacing local regulation, but this time around Uber
has been stifled. This shut down is a small drop in the bucket for the tech
giant, but more importantly, it means thousands of local drivers are earning
less each day.
Regardless of whether you are Pro-Uber / Anti-Uber (we understand
arguments from both sides) it is worth understanding the market size of the
on-demand workforce and the potential economic impact of this regulation.
The on-demand economy has seen incredible growth over the last few years.
Intuit research estimates that in 2015 a total of 3.2m people in the United
States regularly work as providers in the on-demand economy. They estimate
this to more than double by 2020 to 7.6m.
TradeBait estimates that there is
currently between 200,000 and
225,000 individuals regularly
working in the on-demand
economy growing to between
900,000 and 1,000,000 in
20201.
1
Using the same proportion of on-­demand workers to total population with subjective downward adjustments for reasons
mentioned in text.

2.
TRADEBAIT MARKET COMMENTARY MARCH 2016
Proportionally, there is a much smaller on-demand worker population in
Canada as the availability of on-demand applications is not as widespread
compared to the US, in addition to initially stricter regulations that we
currently see. Going forward we expect a much clearer understanding of
regulation (likely from the Uber in Edmonton issue) paving the way for better
growth.
We estimate the city of Edmonton to have over 8,200 on-demand workers –
and according to Uber close to 4,000 drivers have registered in Edmonton
making up half of all on-demand workers in the city2. On-demand employees
typically service 4 broad groups (transportation, home services & rentals,
food and all other) but transportation is currently the largest.
Uber claims drivers make $22 an hour in Toronto3. If each of the 4,000 drivers
only work a single hour at $22 an hour, the opportunity cost to the Uber driver
population of not earnings fares for a single hour is $88,000. This will clearly
change depending on how many hours a typical driver works keeping the
single trip taken by each user constant.
For reference Uber claims to have 300,000 active users and 20,000 UberX
drivers in Toronto alone as of December 2015 (a ratio of 15 users to 1 driver).
Using the same ratio, we estimate Edmonton to have approximately 60,000
active Uber users (its estimated over 90,000 riders downloaded the app in
2015).
We understand the substitution effect here, the loss of money to Uber drivers
for those trips could be a gain to traditional cab companies, however there
must be some loss of spending here…
2
http://www.cbc.ca/news/canada/edmonton/5-­things-­that-­must-­change-­before-­new-­uber-­rules-­come-­into-­effect-­1.3428167
For reference Uber claims to have 300,000 users and 20,000 UberX drivers in Toronto alone as of December. An on-­demand
worker is classified as one who offers immediate service through 1 or more 3
rd
party platforms.
2015. http://www.thestar.com/news/city_hall/2015/12/26/insurer-asks-policy-holders-are-you-driving-for-uber.html
3
http://www.huffingtonpost.ca/2015/09/15/uber-driver-earnings-canada-toronto_n_8140444.html

3.
TRADEBAIT MARKET COMMENTARY MARCH 2016
We for one are not jumping to phone a call center and be put on hold, use
below average mobile technology or pay a higher fare for less than ideal
customer service.
On-demand services such as Uber are not going away. The city of Edmonton
should consider the following:
• Approve a budget friendly insurance option for Uber drivers subject to
City of Edmonton approved background checks and vehicle inspection.
• Require monthly / yearly sharing of ride data from Uber.
• Increase the license fee charged to Uber per ride (currently $0.06 per
ride).
• Use the increase in license fees to fund city transportation projects.
We at TradeBait hope that a deal can be reached that puts Uber and other
on-demand services in compliance with local regulation but at the same time
does not discourage innovation in what we assume to be one of the most up
and coming areas of the economy – the on-demand workforce.
Thanks for reading! Please share any comments,
The TradeBait Team
www.tradebait.ca