The Maryland Public Policy Institute
Some regulations seem innocuous but can destroy innovative industries and throw thousands of people out of work. The Maryland Public Service Commission was considering whether transportation network companies such as Uber and Lyft must submit their employees for fingerprint-based background checks when they apply to drive.
Last last month, the commission rejected that proposal. Had the commission enacted the fingerprinting requirement, both companies might have left Maryland immediately. The incomes of 30,000 Marylanders were in the commission’s hands, and it made the right decision.
Fingerprint-based background checks bring serious problems. First is the system itself. The fingerprint search was designed for law enforcement and relies on law enforcement databases. The databases are not well maintained, and errors in the system are common. Studies have shown fingerprint-based searches retrieve complete information only about half the time. These errors in the system cost people jobs. Appealing a search error would require a lawyer, which defeats the purpose of applying to drive for a transportation network company.
Worse, people fingerprinted for a wrongful or expunged arrest could be wrongly refused the ability to work for Uber or Lyft. Disadvantaged people don’t deserve to be kicked while they’re down, and the system proposed by the Public Service Commission would have done just that. This factor alone should have made the Public Service Commission consider alternative methods to screen drivers.
The transportation network companies have fought for their alternative background check method, which uses people’s names. This method is more accurate because it doesn’t rely on databases maintained by overworked law enforcement offices. The companies have a lot on the line with background checks. They want them to be accurate and efficient. When background checks miss a driver’s disqualifying details, it is the companies that pay the cost in bad publicity, which leads to declining ridership.
Regulations on new, flexible industries are a problem, and fingerprint-based background checks are one of the most problematic. Similar mandates were forced on Uber and Lyft by Austin last year. The ride-hailing companies left the city.
Maryland already regulates transportation network companies and taxes their rides. Moreover, companies are subject to public utility regulations of the Public Service Commission. Every new form, screening, waiting period or license required means fewer people will want to drive and fewer people will have access to a popular service. With that comes less taxpayer revenue, less mobility and less growth.
Being a driver for a transportation network company is one of the lowest-cost forms of entrepreneurship available. It takes little time and little money for those who already own personal cars and can fit driving schedules around family responsibilities and other jobs. This combination of low start-up costs and flexible schedules makes driving for transportation network companies the first taste of being one’s own boss for thousands of Marylanders. People value that freedom. The Public Service Commission shouldn’t take that away from them.
Episodes such as this should prompt us all to step back and think about the goals of our government institutions. When government mandates a method that’s worse than the industry standard, costs jobs and threatens individual justice, it’s a sign that something is wrong with the state’s priorities. That it came so close to happening makes “Free State” start to sound like an empty slogan.
Nick Zaiac is a policy analyst at the Maryland Public Policy Institute.