The Boston taxi industry is under assault from many sides. The media, some politicians and lawyers have painted a picture of an industry run by a few large cab companies, where drivers barely earn enough to keep a roof over their heads. This simply is not true. The majority of the market, 70 percent, is made up of small businesses with one or two medallions.
I am the proud owner of a taxi medallion who started out as a cab driver. I worked long hours, scrimped and saved enough money to put a downpayment toward purchasing my own cab and medallion (which allow vehicles to operate as cabs), and have invested my life savings in my cab. Now, I am worried that policymakers may rush into changes that will have unintended consequences for drivers, customers and the other small business owners like myself.
The city of Boston is currently reviewing the way it regulates taxis; before big changes are made, I urge officials to think about the many smaller taxi owners.
In line with most US cities, Boston allows a fixed number of cabs to service passengers and most cab drivers lease their vehicles from medallion owners for a 12-hour shift or on a weekly basis, although there are many owner-operators as well. The city sets maximum lease rates medallion owners can charge drivers and passenger fare rates to protect consumers and drivers alike from overcharging and assure adequate income for drivers.
Most of us medallion owners work long and hard for our medallions and still owe significant amounts on loans we took out to purchase them. Only one owner has acquired more than 100 medallions. We single medallion owners are very worried we are being overlooked when our livelihood is at stake.
The medallion system is the standard model for most major cities for good reason: it has real benefits for both cab drivers and passengers. Some have proposed ending the cap on the number of medallions, but this would result in too many cabs and reduce the amount that drivers can earn during normal shifts. While passengers might appear to benefit from more cabs, the increase could create new pressures to raise fares as each driver tries to make up for fewer passengers. Several cities did away with medallions in the 1970s and 1980s only to return to capping the number of taxis.
There is currently a “class action” lawsuit brought by a total of four plaintiffs against several medallion owners for treating cab drivers as independent contractors, not employees. I question whether these four plaintiffs represent a “class,” since the vast majority of the cab drivers I know in Boston (and in national industry studies) prefer to remain independent contractors. Under this system, drivers have greater flexibility, set their own hours, and make more money based on hard work and good customer service.
Taxi drivers know that they can make more money than they would likely earn as employees. During an average 12-hour shift, drivers nets approximately $150.00-$200.00 each after they pay their lease. This amount to $750-$1,000 a week. As paid employees, drivers could be limited to driving 5 days, 8 hours per shift. At minimum wage, they would earn $320.00 plus tips per week. An independent contractor is not limited by such a schedule and has the option to earn more if they choose to work additional hours.
As paid employees, drivers will be assured set hours and low wages, and would never again be able to earn enough to buy their own medallion — and live the American Dream — as I did.
If the city and state want to do more to help drivers and ease rush-hour cab shortages, there are some steps they could take. First, enforce existing restrictions against out-of-town drivers stealing fares from licensed Boston cab drivers. Second, allow cabs to impose a minimum $10 charge for using debit and credit cards, which benefits the drivers who pay for processing fees. Third, MassPort should eliminate the $5.25 toll they charge drivers returning to the city from Logan Airport through the Ted Williams Tunnel during rush hour; this fee encourages drivers to wait for return fares that would cover the toll, creating a surplus of drivers at the airport and shortages of cabs downtown during the busiest times of the day.
The current cab system in Boston has evolved over four decades to meet changing demands. The system has been described by transportation experts as in “the forefront of American cities” for being among the first nationwide to introduce green cabs, universal credit card capability and wheelchair-accessible taxis. The system works for passengers, drivers and cab owners alike, which should give us pause before making major changes which could put livelihoods, savings and loans at risk.
Emad Derebala is a Boston medallion owner and member of the Boston Taxi Owners Association.