Boston taxi drivers are struggling under an unfair burden. No, it isn’t Uber, Lyft, or Sidecar.
Last year, cab drivers protested outside the offices of Uber, the most conspicuous of the smartphone-based car-hail services. When Carriage News, the 45-year-old newspaper of the Boston taxi industry, shuttered its print edition recently, a front-page editorial lay the blame on Uber and similar companies, and on “the do-nothing politicians” who enable them.
But for the majority of Boston cab drivers, the anger is misplaced. Uber is giving them what they need most: a way to escape from the city’s taxi medallion system, which cheats drivers and passengers alike, and reinvent the business on fairer terms. “With Uber,” says Donna Blythe-Shaw, a Boston Taxi Drivers Association representative who’s no fan of the company, “the enemy of my enemy is my friend.’”
To drive a cab in Boston, drivers need access to one of the city’s 1,825 taxi permits, generally known as medallions. Fatefully, the city long ago let medallions trade on the open market, and only a minority of Boston cab drivers have scraped together enough money to buy their own.
Instead, most Boston cabbies are independent contractors driving taxis owned by someone else. Just to work, they have to pay a medallion owner a fee that can top $100 for a single 12-hour period, and on slow nights only the driver suffers. For the medallion owner, meanwhile, the arrangement has been rather cushy: Shift after shift, week after week, drivers’ fees far exceed the cost of buying and maintaining cabs.
Inevitably, the going rate for a medallion shot up over time, reaching $700,000 last spring. Because drivers need to cover the fees they pay to medallion owners, the inequity in this system filters down to street level in the form of some of the country’s highest cab rates.
The system was sustainable as long as passengers had no alternative. But with passengers — and even some drivers — defecting to the likes of Uber, Lyft, and Sidecar, the value of taxi medallions is in free fall. In October, a medallion changed hands for $561,000. In the last month, a medallion sold for $350,000 in a foreclosure auction. Lenders are abandoning the market, and sales have slowed to a trickle.
When prices were rising, it seemed Boston was stuck with the current medallion system forever. But now that prices are crashing anyway, the city should do what was once unthinkable: To keep up with population growth, the city should seek to lift the cap on the number of medallions, so that any qualified operator can obtain one. Boston should also ban the pay-to-work system — a change that would accelerate the decline in medallion prices but improve shift drivers’ lives immensely.
New business models are suddenly coming into view. Emerging taxi companies could take drivers on as full-fledged employees, deploy more cabs at peak hours, and improve service to outlying areas of the city. Blythe-Shaw, the taxi union official, floats the idea of a driver co-op, which would operate cabs and provide members with benefits and reliable pay.
But if Boston hopes to save the traditional taxis, it should make the necessary reforms now — before consumers get in the habit of using Uber exclusively.
Amid all the tumult, Mayor Marty Walsh has convened a Taxi Advisory Committee, but the 25-member body isn’t built to make radical changes. Christopher English, who heads the panel, notes that current rules have been gradually layered onto laws dating to 1934. Even simple changes have complex implications. The development of a common smartphone app for all Boston taxis might conflict with existing contracts for city-mandated credit-card readers.
This is the trouble with regulating industries in flux: It’s easier to make incremental changes and hope for the best than to plan carefully for a dramatic crack-up looming ahead.
Walsh faces pressure to prop up the status quo. Medallion owners have sued the city, insisting that its failure to drive out the car-hail industry has illegally devalued their investments. But federal courts rejected a similar argument when Minneapolis lifted its cap on the number of taxi medallions. Even a medallion devalued by increased competition still conveys the right to operate a cab. And every investment involves a measure of risk.
Not all the advantages in the taxi fight are on Uber’s side. If Boston taxis could offer the same value and convenience that car-hailing companies do, customers might pay a premium to ride in a well-marked, city-inspected vehicle. All else being equal, some passengers — myself included — would prefer to give their transportation dollars directly to local drivers, rather than give a piece to the sharks at Uber.
Uber is giving Boston cab drivers a way to reinvent the business on fairer terms.
But Boston can’t turn back the clock to when medallion owners could run the taxi industry on their own terms. Consumers won’t un-learn the benefits of a transportation-for-hire system devised in the 21st century, not 1934.
The $700,000 medallion is doomed. The city should recognize at least that — and give taxi drivers the freedom to chart a different route.