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Scott Kirsner | Innovation Economy

Uber-Lyft fee to help taxi drivers has so far funded only consultants

Under a 2016 law regulating “transportation network companies” like Uber, customers have been paying a nickel per ride into a fund designed to aid the taxi industry.Gene J. Puskar/Associated Press/File 2018/Associated Press

Did you know that every time you hop into an Uber or a Lyft in Massachusetts, you’re doing your part to support the taxi industry?

Sounds bizarre, but since Governor Charlie Baker in 2016 signed into law a bill to regulate “transportation network companies” like Uber,, you’ve been paying a nickel per ride into a fund that is supposed to aid the very companies you’re disrupting by using an app, rather than your hailing hand, to summon a vehicle.

I wrote about the law just after it was passed, suggesting some ways the money could be well spent — even if it feels odd to ask one business to subsidize one that it is supplanting. Did we require the telegraph companies to help prop up the Pony Express?


So I thought I’d check in on how much money that 2016 legislation has funneled into the taxi business to help it — what, manage to hang on? Rebound?

The first thing I learned is that MassDevelopment, the state’s economic development and finance agency, has so far collected $3.2 million from the nickel-per-ride law. That money was generated by nearly 65 million rides through Uber, Lyft, and some other smaller players.

As those millions of customers were flocking to Uber and Lyft, they were fleeing taxis. According to the Boston Police Department’s Hackney Carriage Unit, which regulates cabs in the city, rides plummeted from 8.8 million in 2017 to 4.7 million last year. (As recently as 2013, that figure was north of 14.5 million.)

Good thing we’re using that $3.2 million to stanch some of the bleeding, right?

Well, last March, MassDevelopment put out a 27-page call for consultants who might have ideas about how to spend the money constructively. In October, it contracted with one, a regional planning agency called the Metropolitan Area Planning Council.


The MAPC will be paid $49,750 to interview drivers and taxi owners and “identify industry trends and challenges,” according to language in the call for consultants. So that’s almost 1 million of your Uber and Lyft rides, at a nickel a pop, funding a study about what kind of pain your Uber and Lyft rides are causing the taxi and livery industries.

Once the study is complete, the MAPC will issue recommendations to MassDevelopment about how the rest of the nickels ought to be spent. MassDevelopment expects to get those recommendations this summer.

That will be about three years after I wrote my initial column, in which I asked entrepreneurs and professors at MIT and Harvard Business School for advice on how to spend the taxi welfare funds. I wove in some of my own, as well. That advice was available for the price of a copy of the Sunday Globe.

I rang up Jim Endicott, one of the taxi owners I spoke to back then, to see how things have been going.

“It has been devastating,” Endicott says. He operates about 30 Boston taxis. “This business is in deep trouble, and I don’t see that turning around anytime soon.”

Endicott says he recently sold one of his taxi medallions for $36,000; in the pre-Uber era, he’d paid about $400,000 for it.

Endicott lists off the various fees that taxi drivers and owners must pay in Boston, and notes that Uber and Lyft aren’t required to pay those — for instance, the cost of belonging to a radio dispatch service, so customers without smartphones can call a phone number and request a cab. There’s also an annual fee to subsidize rides for senior citizens, he says. Perhaps the money being collected by MassDevelopment could help with some of those costs of operating a cab, Endicott suggests.


“I lost $10 million to $12 million,” says Rob Raimondi, another Boston taxi owner. “They wiped me out, and a lot of other people.”

Raimondi says that he has spoken to the MAPC researchers who are conducting the study of how to spend the nickels.

“It’s still preliminary,” he says. “They really haven’t figured it out.” But when I suggested to him that the money could start flowing later in 2019, Raimondi had one response: “It’s too little, too late, as far as I’m concerned.”

“The industry is frustrated that the money is being held, for sure,” says Cheryl Horan, vice president of Green and Yellow Cab in Somerville. “These monies are critical for us to compete and mimic the model” that Uber and Lyft have created, she says.

Horan says that developing technology to create a “regional transportation network” is essential. That would mean that if a customer in Cambridge requested a cab, and none were available, a cab from Arlington or Somerville would be able to respond. (Previously, that kind of idea has been considered heresy in the taxi biz.)

“Our strength will be in the number of vehicles we can get together in a mutual fleet,” Horan says. Then, there would be a need to promote that new kind of regional transportation network. Horan says the MassDevelopment millions could be helpful on those fronts.


She notes that Green and Yellow Cab hasn’t been a technology laggard; the company launched its first mobile app in 2013 — the same year Lyft started operating in Boston.

MassDevelopment will keep collecting nickels until January 2027. It could ultimately add up to more than $30 million before the mandatory fee is phased out.

It’s probably not a realistic goal to deploy that money to keep every taxi owner in Massachusetts afloat. But what if we could ensure that those that survive the shakeout actually provide a service you’d be happy to use? That means comfortable cars, courteous drivers who know the city, and maybe even a phone charger — like you often see when you ride in an Uber or Lyft.

Those goals are not too ambitious. The key thing, as I suggested almost three years ago, is to create a system to collect feedback about the taxi drivers and fleets that are offering that kind of experience, and using the money to reward them.

We’ll see whether we get there — once MassDevelopment gets into gear.

Scott Kirsner can be reached at kirsner@pobox.com.