For 100 years, New York City cab drivers have served as “encyclopedias of the city.” They drive fares from home to work, to shopping, to train stations and airports.
Along the way, they have dispensed pearls of wisdom about life, jokes, political banter and commentary on restaurants, bars, films and plays. Taxis and their drivers are synonymous with New York’s image, appearing on the covers of every guidebook; they are featured in TV shows, film and novels about our town.
It’s always been a low-esteem, heart-breaking business, but over the generations, many cab drivers eked out a living and, following the American dream, managed to make a better life for his (or her) family. A series of ethnicities from Irish, Italian, Eastern European Jews, Puerto Rican, and now South Asians and Africans have used hacking it as to attempt to ascend the social ladder.
But the cab driver is now officially a threatened species. The explosion of app-based for-hire vehicles managed by deep-pocketed companies such as Uber, Lyft and Via has severely undercut the taxi business in New York, which is by far the biggest market in the United States.
Driver incomes have plunged, yellow cabs sit idle, and the value of the medallion, the tin permits attached to the car’s hood, giving it monopoly rights to picking up and discharging fares on the streets and at airports, has plunged from a recent high of over a million dollars to a hoped-for price of around $200,000 today.
Some, especially those who work or use Uber, Lyft and Via, will say the yellow cab’s demise is a good thing. I dissent.
Yellows’ flaws are many: They’re all but impossible to hail in the outer boroughs, often averse to picking up non-whites, hard to find on rainy days or at 5 p.m., commanded by drivers whose knowledge of English and the city’s geography was often suspect, the yellow cab seemed ripe for displacement.
As smartphones soared in popularity after 2008, fares found it so easy to tap an app and have a clean, new, up-brand car appear almost immediately. No cash was exchanged; for years, tips were not even allowed. Generally, Uber passengers earn more, are better educated, and are much younger. They enjoy summoning a ride by app, a motion similar to snapping one’s fingers or ringing a bell to call a servant rather than scrambling at the curb for a taxi.
You might look at the bright side and say, look at what innovation has gained us. I have a more pessimistic interpretation.
Initially, the gig economy seemed to promise freedom of work schedule and possibly huge incomes. At one point, Uber claimed its drivers made a median income of $90,000 per year, more than twice what the earnings of full-time cabbies.
But the gains were illusory. Uber steered new drivers into contracts with predatory leasing companies. Drivers who signed up for a new car frequently found that they had to work constantly to make payments.
Meantime, with the values of medallions cratering, yellow owner-operators and speculative investors alike paid the price. Retirement plans were in shambles; drivers were burdened with crushing loan payments.
At first, led by Mayor de Blasio, the city’s Taxi & Limousine Commission tried to halt the onslaught of for-hire vehicles, but relented and since 2014 has licensed over 50,000 for-hire vehicles.
Everyone now knows the results: streets clogged with for-hire vehicles and hyper-competition that has turned the entire industry, yellow and black car alike, into a race to the bottom.
The human costs are mounting. Yellow cab and livery drivers are committing suicide over the past year in despair over their rapidly declining fortunes and inability to break even despite long hours.
Recently I hailed an elderly owner-driver. He had put two children through college but now had to drive to make ends meet. Finally, with the cat out of the bag and scratching people in the face, the City Council and Taxi & Limousine Commission have turned to addressing the core problem: We have way too many drivers and not enough money to go around.
The Council is considering freezing the number of for-hire vehicles for up to a year, and potentially capping the total going forward, as well as mandating a minimum pay scale for Uber drivers.
Uber and Lyft seem to have a sense the jig is up: These two self-interested companies, with a combined valuation north of $80 billion, have even volunteered to set up a $100 million relief fund for aggrieved medallion owners. Meantime, lobbying groups including the NAACP are already petitioning the Council, arguing that permits for Uber promote racial equality in an industry that has historically snubbed black New Yorkers.
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New York City’s most iconic industry is at a life-and-death crossroads. But to see the true roots of the conflict, we have to go further back than just a few years, when Uber and Lyft took to city streets.
The story begins in 1937, when Mayor Fiorello LaGuardia pushed through the Haas Act that created the medallion system. Cabbies who paid a $10 fee received a monopoly right to pick up and discharge fares in the city streets and transport depots, and wait in line at hack stands.
After some shakeouts, the number of medallions dropped to 11,800 and stayed there for decades. To get a medallion, fleets that employed the majority of them and the several thousand independent owner-drivers accepted city regulations governing fares, upkeep of the car and agreed to pick up anyone.
Court decisions after World War II granted owners of medallions the right to sell them for more than the original costs, as the value of a business. Returning veterans and long-term drivers made up a very stable workforce that became beloved to New Yorkers and the ever-rising numbers of tourists.
Cab drivers became the face of the average New Yorker; the medallion gave owners them a sense of security; fleet drivers saw the medallion as an aspiration.
But there were storm clouds on the horizon, as many cabbies struggled to make ends meet.
In the 1960s, sympathetic New Yorkers supported Mayor Robert Wagner, Jr.’s call for a taxi union that would help cabbies earn needed benefits. The AFL-CIO affiliate suffered immediate problems, however, when incoming Mayor John Lindsay expanded the number of part-timers in the industry.
Part-time drivers, including many students, artists and actors — you’ve seen the TV show “Taxi” — had to pay a nickel from each fare to support the union, without gaining any benefits from it. Resulting tensions undercut union strength in the turbulent 1970s.
The 1970s, widely regarded as one of New York City’s most difficult, was a time of widespread violence including violent attacks on cabbies, frequent fare increases and a serious shortage of drivers.
And so, in 1979, the City Council passed legislation allowing fleets to “lease” their cabs and medallions to drivers, who were no longer paid on a commission system used since the 1930s, but now became “independent contractors.”
That accelerated the unraveling. From that point forward, drivers consistently got the short end of the stick; many benefits accrued only to those who owned medallions. Fleets, which earned a steady flow of profits by renting their vehicles, abandoned Social Security, disability and unemployment payments and contributions into the union welfare fund.
Owner-drivers also gained the right to lease their cars and medallions, but they were the anomaly, not the norm.
By the mid-1980s leasing became the dominant method of employment, placing the onus of all costs on the driver. Drivers were allowed to increase their shifts from nine to 12 hours, a small consolation compared to the massive loss of benefits from the commission system and the union.
Within a decade, the industry experienced a nearly complete demographic turnover with new. immigrants from Asia an African replacing native-born Americans and older immigrants.
In the first decade of this century, medallion prices soared. Some regarded this increase as reflective of a secure investment, though that proved tragically false. There is also evidence of sub-prime lending underlying the purchase of many medallions.
So, long before the entry of Uber and Lyft into the marketplace, the walls were closing in on the yellows.
Today, cabbies lack any union representation and have virtually no power. Although the New York City Taxi Workers Alliance, headed by Bharavi Desai, has strived to ameliorate the plight of the cabbie, as independent contractors taxicab drivers are not eligible to bargain collectively.
No union means almost no rights for drivers. Recent studies by former city traffic commissioner Bruce Schaller and others have shown that lease hiring benefits only the fleets and other medallion owners.
Uber, Lyft, Via and the others didn’t invent their business model entirely; they have simply piggy-backed on the city’s labeling of cabbies as “independent contractors.”
Reversing the 1979 law that enabled leasing of cabs to drivers, establishing a minimum wage, or, better yet, setting a salary or set commission rate would immediately attract a more stable workforce, limit the “gig economy” and eliminate predatory operations such as Uber and Lyft.
The root of the problem is not the medallion system but lease-hiring. Do away with it and cabbies and for-hire drivers may finally begin to get back a fair shot at a living wage.
And until then, to deal with the Ubers and Lyfts and other for-hire vehicles that have accelerated the decline of a once-great industry, the city must cap the number of competitors who have flooded the streets and made the economics impossible for cabs and app-based vehicles alike. Otherwise, the chaos and human misery will only increase.
Hodges, a history professor at Colgate University, author of “Taxi! A Social History of the New York City Cabdriver.”
