The Problem for NYC Cabbies Isn't Uber. It's Government.
The New York City municipal government has spent the last 80 years claiming to protect taxi drivers’ livelihood, but has actually been waging war on their ability to earn an income. Unfortunately, it has taken the suicide of eight taxi drivers in 2018 to make the city realize that its approach isn’t working.
Since 1937, the NYC government has kept the number of taxi medallions — government permission slips to operate a yellow cab in the City — at a fixed number. Even as the city’s population jumped from around 7 million to over 8.5 million, the number of cabs remained constant at 13,587. And as demand for taxis grew ever higher, the value of a medallion reached outrageous heights. At the taxi bubble’s peak in 2014, a medallion cost $1.3 million dollars.
If a driver can’t find a way to finance this purchase, he can’t drive a taxi. Imagine having to pay $1.3 million dollars in order to begin your job. Believing that it would be a safe investment, many cabbies paid out their life savings or took out cosmic loans to secure this token.
The price for a medallion has dropped over a million dollars in the past five years. Medallions now hover around $200,000. That’s why, in late February, two Democrat members of the New York City Council, Ydanis Rodriguez and Ruben Diaz Sr. proposed their plans to bail out taxi drivers, offering drivers cash in exchange for decades of suppressing their livelihood.
Enter ride-sharing apps. If you’ve ever been in midtown on a rainy day or tried to hail a cab on a side street in Brooklyn, Queens, or the Bronx, you know why New Yorkers tired of waiting for the familiar yellow cars. Uber and Lyft found a way to answer the needs of New Yorkers in a way that an inflexible taxi system could not, and New Yorkers began to use ride-sharing apps instead.
In Uber and Lyft, taxi interests found a convenient scapegoat for the stresses of drivers $1 million in debt. New York wages war on ride-sharing apps by capping the number of cars allowed to offer rides to New Yorkers, creating a high minimum wage for app-based drivers, and heaping growing taxes and fines onto platform-based rides. Mayor de Blasio took to Twitter, blamingUber and Lyft for the taxi industry’s problems: “The unchecked growth of app-based for-hire vehicle companies has demanded action — and now we have it.” This tweet went out right after the City Council approved higher minimum wages and restrictions on the number of Ubers in NYC. He follows an unimaginative line of public figures who wrongly place the blame for taxi drivers’ plight on competition, instead of the uneven playing field that New York’s government forced taxis to play on.
Councilmen Rodriguez and Diaz sought a way to end the medallion madness — but their fix doesn’t address the root problem. By offering to buy out taxi medallion owners, they’re merely emulating the disastrous bailouts of the 2008 financial crisis which left the faults of regulators and entrenched businesses unrecognized, and taxpayers unhappy as they paid for others’ mistakes. It’s also unclear why the municipal government is considering a fund for taxi driver buyouts, when they declined a goodwill fund of $100 million that Uber, Lyft, and Via offered to create for taxi drivers late last year. The private companies wanted to help those who were struggling in the new environment, but it seems that the municipal government wants to be the only one helping taxi drivers.
Furthermore, the federal courts have already ruled on this issue in the 7th Circuit. As Justice Richard Posner said in the unanimous decision against bailing out taxi drivers, “property’ doesn’t include a right to be free from competition.” He’s right, of course. Taxi drivers are free to buy and own a medallion, but their medallion doesn’t entitle them to a monopoly.
New York City’s local government has positioned itself as an opponent to progress and innovation during what could have been an era of massive growth for taxis in New York City. Now, cab drivers and their passengers alike are hurting from regulations.
A less restrictive economic environment in New York could offer hope to future drivers. What if properly vetted drivers could pursue a low-cost way to enter the market and give rides to the millions of New Yorkers who are rushing from place to place? The past five years should have taught New York’s government a tough lesson — but they still haven’t learned. And for that, the city is paying the price.
Abigail Narbe is a contributor at Young Voices. She’s a New York native who studied economics, politics and philosophy in New York City. Abigail now lives in Washington, DC, where she works at a D.C.-based think tank.