With the Seattle City Council finally scheduled to vote on proposed taxi and TNC (Lyft, Sidecar, uberX) regulations today at 2 pm (really, this time), I thought it appropriate to post some comments from an actual taxi owner. Taxi owners have without a doubt been the most reviled stakeholders throughout this entire debate, cast by TNC boosters (and some for-hire drivers) as a cabal of greedy medallion-hoarders, sucking the lifeblood from immigrant drivers while assuring crappy service.
Responding to my coverage in The Stranger, one of these allegedly greedy drivers (who wishes to remain unnamed to protect his music career) emailed me with his personal story:
Just want to thank y’all for your coverage on the taxi v tnc issue. Honestly it’s where I’m getting most of my information.
Nowadays I’m temporarily making a living with music & have rented out my cab, watching in panic as my future job (can’t survive on music in the long term) and planned retirement crumble away to dust, and it’s even worse for the guy leasing my cab right now, who can’t make the payments or support his refugee family. Let’s just say it’s very personal for us.
Last time I was in Seattle I was shocked to see hipster oligarch David Mienert opining on the topic in some article, not sure if it was with y’all or the Weekly, but clearly there must be a shortage of expert opinions if someone is turning to him. If you ever need an inside perspective just holler, I’ve been in this business for a tedious eighteen years, drove for Broadway, Greytop, Orange & finally Yellow before buying my own taxi.
And if you think this cab owner’s story is an outlier, think again. “There is this myth out there that a few people own all the taxi cabs,” Green Cab general manager Chris Van Dyk tells me, “but the vast majority of taxi cabs are individually owned.” Van Dyk, a longtime industry insider, says that there is only one owner in the city who owns more than 50 cabs, and only about 25 who own more than five. At Yellow Cab—the largest taxi association in the city—Van Dyk estimates that there are about 370 owners of Yellow’s 559 cabs.
Of course, there are many more drivers than owners. The costs of owning and operating a cab are so high that they require 24/7 operation to provide a return on investment, so every owner leases out his cab for at least one 12-hour shift a day. In addition to purchasing a medallion (which went for as much as $140,000 just two years ago) and a $30,000 car, the musician/cab-owner above estimates his recurring costs to be:
- $600/month commercial taxi insurance
- $550/quarter for Labor & Industries insurance ($225 per driver)
- $170/week to be a part of a taxi association
- $1000/year in licensing & inspection fees to the city, county and state
Plus, you know, gas, maintenance and depreciation. Van Dyk says that 24/7 operation puts about 100,000 miles a year on the typical taxi, meaning the vehicle is totally depreciated after just three years. That comes to $10,000 a year in recurring depreciation costs. And that doesn’t begin to count the steadily depreciating value of taxi medallions, which are reportedly now selling for half what hey did just a couple years ago, if you can find a buyer at all.
Lyft, Sidecar, and uberX currently bear none of these costs but for some indeterminate cost for insurance coverage. The drivers do bear the cost for gas, maintenance, and depreciation, though the part-timers may not fully appreciate the total tally.
“Imagine for a moment how much we could lower the taxi leases and lower the customer fares if we had less fixed costs,” our musician/cab-owner writes. “Alternately, imagine how much the fares would rise in UberX if these same business costs were applied to them?”
It is ironic that some of the same people arguing that a $15 minimum wage would crush struggling small businesses, have absolutely no empathy for the hundreds of small business people in the taxi industry—most of them current or former drivers, and many of them immigrants—who have sunk their life savings into purchasing a medallion and a cab, only to have their livelihoods ripped out from under them by the illegal operations of the TNCs.
It is that uneven playing field that the council is expected to at least partially address this afternoon.
25 own at least 5, one of those owning 50 cabs is a concentration of ownership.
So that’s at least 25 people who control at least 174 cabs of the 650 medallions (25% of the market) ? Suppose that 10 of those 25 who own 5 or more actually own 20 cabs each, that would make it so half the medallions are owned by only 25 people.
I guess I’m an outlier in the Slog rabble in that I think the main bloodsuckers in this story are the taxi companies, particularly given how useless dispatch is and that it’s damn near impossible to get a cab in a timely fashion during peak hours.
I’d wager that most customer dissatisfaction is mainly due to poor dispatch and insufficient supply of cabs, followed closely by individual badly behaving cabbies. In the latter case, it’s still the taxi companies’ fault for not disciplining cab drivers who defraud their customers.
@1 What did I write? 370 owners to 559 cabs at Yellow. So half the medallions could not possibly be owned by 25 people.
FYI, 18 people own 153 Yellow cabs, there rest are owned individually. You want to punish the 352 individual owners to slap back at the 18 multi-medallion owners?
Your post is a great argument in favor of removing regulations on taxi owners so they can compete with Lyft, Uber, and Sidecar. It’s not, despite your presumed intentions, an argument for the city counsel to kneecap ride-shares in the name of protecting poor taxi owners. You say deregulation made the situation worse in decades past, but that was before smartphones and ride-shares existed. Today convenience, cost, and service matter. Traditional taxis come in dead last on all measures. Let’s hope in less than an hour the city does the right thing. Given Seattle’s history with policy making I’m not optimistic.
How does one spend $30k on a taxi vehicle ? Are they no longer the Crown Vics ($3k) and used Prius’ ($6k) from the former city fleet ?
http://www.seattle.gov/fleets/auction
Where does the medallion fee, the $$’s for inspection go? Into the general fund? Maybe the biggest problem is the city being in the business of shaking down the taxi companies. If they put a $50,000. “registration fee” on the ride share drivers none of them would do it, they couldn’t afford it. Drop the medallion fee, let ride share flourish, let the free market work. If they cap ride share drivers then why not cap baristas, car salesmen, bus drivers, lawyers or ditch diggers?
@4 I repeat: Not everybody has a smartphone and credit card! Some people can’t afford them.
@6 The city lotteries off medallions. It does not charge for them.
@6 The inspection money is about $1,050 annually for a vehicle licensed in the city and county. The city could reap a windfall if they created more medallions (as an investment, the NYC medallions beat gold http://www.npr.org/blogs/money.....-1-million ) but the medallions are a one time payment to buy, then licensing after.
http://clerk.seattle.gov/~publ.....314_1a.pdf
Taxi Owner Economics Example
+ Lease Payments* $49,400/year
– Dispatch ($200/wk) ($10,400)/year
– Vehicle/Equipment ($6,000)/year
– Maintenance/Repair ($8,000)/year
– Insurance ($6,000)/year
– Licenses/Fees** ($1,344)/year
Net Earnings $17,656/year
I think when Sawant says to tax the rich, she’s probably talking about the people who can buy multiple $80,000+ medallions.
I do enjoy the NPR story, which explains how the NYC medallions arose as a way to beat back the out of work people who were doing TNC-like pickups during the Great Depression. The taxi fleets of the time were upset and went on strike, beat up passengers, started fires, etc for months. The Hass Act.
http://www.nytimes.com/1996/05.....-30-s.html
However, with the large disparity between calling dispatch and actually getting a ride somewhere within 20 minutes, I think that more medallions need to be issued at the very least. The fact that so many of the TNC drivers are former/off-duty cab drivers shows that more drivers are available.
@9 200 more medallions are being issued. Plus, the 200-plus flat-rate/for-hires will be allowed to pick up hailing passengers. That’s a huge percentage increase.
@10,
100 more medallions in 2014 and 100 more in 2015 is a good step. It will still lead to your tipster’s medallion being devalued a bit, but maybe that’ll be enough to ensure a cab shows up when I’ve booked one for a ride to SeaTac next time.
Let me see if I understand – the city gives away medallions for free. A secondary market then arises (yay capitalism!) where companies/sole proprietors can sell those medallions at an infinite markup (percentage-wise) and a huge profit ($-wise). Sellers buy these medallions on this market of their own free will, knowing there is no government guarantee on them, not even something like the FDIC.
Given the above, why in the hell should the city give a fat rat’s ass about preserving the value of medallions? It isn’t the city’s (or taxpayers’) problem if people who speculate in a free market make or lose money. Let the buyer beware.
Isn’t the 15 dollar minimum wage going to screw over the cab license owners? From what I’ve read its not clear their drivers are hitting $15 an hour regularly.
And if our policy decisions are motivated by sympathy for this dude, shouldn’t we oppose releasing more licenses? His investment in government monopoly rights to extract profit from other’s labor must be protected!
@14 Why does it have to be all or nothing? Why? Why during this entire debate has it had to be a “you’re with us, or you’re against us” thing from the TNC boosters?
We’ve had a regulated, capped taxi industry competing against an unregulated (well, illegal) uncapped TNC industry, and we’re trying to fix that in a way that accommodates both industries while not destroying one or the other. You can’t leave the TNCs uncapped without lifting the cap on taxis, and our past experience deregulating and uncapping taxis was disastrous.
Jesus, what is so wrong with giving the city a couple years to figure this thing out instead of just plunging recklessly into total deregulation? And why are the TNC folks so fucking angry at anybody who refuses to embrace their line entirely?
@djw we don’t make $15/hour, and incomes is steadily dropping right now. This isn’t illegal because drivers aren’t employees but independent contractors.
To all of you, I’m not looking for the government to protect a precious monopoly. First, it’s NOT A MONOPOLY, there are many taxi companies containing hundreds owner-drivers aggregated in those companies. Our prices are all the same because the City of Seattle establishes meter rate.
1. These TNC’s and TNC drivers should have the startup costs that I faced. It’s as if Walmart plops a store downtown, but doesn’t even have to get a building permit or buy the land.
2. There must be a cap, if not there will be an unlimited number of drivers, all earning nearly nothing. The city officials (and Goldy) are right about this, total deregulation doesn’t work, there are plenty of case examples. You might wonder why they need to cap taxis but not bars or restaurants- for one thing a bar or restaurant occupy a (private) physical piece of land, taxis occupy the city streets, so there isn’t any physical limiting factor.
It seems like many of you see this is a David & Goliath story, where an entrenched power structure tries to prevent a fresh upstart. The PR machine of these new companies has done a great job!
Keep in mind: Uber has $49 million of capital, funded by lovely institutions like Goldman Sachs. I mortgaged my house to buy one taxi, after driving a cab for a dozen years.
Here is a novel idea: let’s fix the taxi industry (apps, driver ratings, accountability, reduce costs and fares) instead of making a future where more drivers work for (even) less, while billionaire investors skim their % off the top.
@12 democracy. I wasn’t speculating, I just paid the the price (at the time) to finally own my own taxi. Speculating is what Goldman Sachs and Bezos are doing with Uber. They are speculating that, like Walmart or Amazon, they can burst into a market offering more convenience or a lower price, put the old local shops out of business (while avoiding all of the regulatory costs/laws the bind the local businesses) and then reap huge the profits while the workers earn peanuts.
That, my friends, is what we call speculating.
@djw we don’t make $15/hour, and incomes is steadily dropping right now. This isn’t illegal because drivers aren’t employees but independent contractors.
This sounds like the kind of loophole the #15now crowd wants to do away with.
2. There must be a cap, if not there will be an unlimited number of drivers, all earning nearly nothing.
Up until now, there has been no cap. Why hasn’t this happened?
funded by lovely institutions like Goldman Sachs.
This is a fundamentally cynical, dishonest and frankly nasty rhetorical tactic that makes it considerably more difficult to have any sympathy for you. GS is/was run by very bad people who should be in jail, but that’s the federal government’s fault, not the fault of businesses that need investors. “Someone we don’t like invested in them!” isn’t an argument against their business model, it’s a non sequitur at best, a smear by association at worst. It’s entirely legal to let GS invest in your company. In no other instance that I’m aware of is “we should only permit companies to o funded by morally pure banks/investors” standard ever applied, and for good reason. It’s an attempt to win the political argument without actually making an argument.
I wasn’t speculating, I just paid the the price (at the time) to finally own my own taxi.
That was–obviously!–a speculative gamble. You were betting that paying whatever you paid for a $600 license would pay off because the government would continue to artificially inflate scarcity in the future as they had in the past. Not a bad bet–after all, the regulatory stranglehold your fellow license owners had was so complete that you managed to prevent the number of licenses to grow with population and demand for 30 years. But at the end of the day you placed bet on politics. It doesn’t make any sense to assume the political status quo is inevitably permanent.
@18 Yeah, he’s just like all those greedy homeowners who speculated during the housing bubble! Fuck ’em, amirite?
A crucial difference between the two: people who buy homes to live in and as investment vehicles aren’t buying that home as a vehicle to extract value from the labor of others. Not that that’s an evil thing to do, necessarily; I’m not an unreconstructed Marxist. But it’s a kind of investment that entails obvious and straightforward risks.
In general, I’m sympathetic to almost all non-wealthy people who make bad investments. Some of them might be good candidates for assistance. But people whose bad investment was a house to live in, stabilize housing costs with, put down roots and save for retirement are way, way ahead of business investments for my sympathy, for reasons that are, I think, pretty obvious and not terribly controversial for those with progressive values. The false equivalence game you’re playing here is beneath you.
Another question for the anonymous taxi owner: as a long term driver before you bought your license, you were surely aware (even if you provided quality service yourself) of how profoundly dissatisfied with the quality of service your industry provided. You’d have to have been living under a rock to be surprised by cabs’ horrible performance in last year’s customer satisfaction survey. You also surely knew that for decades your industry was uniquely situated to not lose business because of bad service, because of government-guaranteed lack of competition.
When you decided to invest in this industry’s future in a big way, rather than just do it as a job, did you give any thought to that? Did you take any steps to attempt to increase the quality/standards of your industry, above and beyond just striving to provide good service yourself? Or did you just assume that your political influence replaced the need to clean up your industry? Because if it’s just the latter, it’s difficult to have much sympathy.
@20 Jesus. How many times does it have to be repeated that he didn’t buy a taxi to extract labor value from others. He bought the taxi because he drove a taxi for a living. He was investing in himself and his own livelihood. Read his quote again:
He bought the cab because he’s a cab drive. What is so hard to understand about that?
But the economics only make sense if you also extract the value of other’s labor. He’s not going to drive it 24/7.
Why shouldn’t the new service taxi companies have to conform to all the rules and regulations of traditional taxi companies?