Explainer: The Evolving Taxi System of New York City (on Medallions, Boro Taxis and More)
[ Don’t want to read? Listen to Tom’s story here. ]
Meet Tom, an average yellow taxi driver in New York City.
Tom makes the median salary of NYC taxi drivers, which is just under $38,000 a year. He works 12 hour shifts, 6 hours a day. Like most cab drivers, Tom doesn’t own his own taxicab or medallion. He didn’t own a taxi because he didn’t have enough money to buy one. But let’s take one step back.
What is a medallion? A medallion is a piece of tin attached to the hood of a yellow cab that makes a driver legally licensed to pick up passengers.
Why doesn’t Tom own his medallion?
Because they are mind-blowingly expensive. The average market price for a medallion is over $1 million! Last month, two were auctioned off
for $2.5 million. Why? Chew on this: in 1937, facing too many taxis on the street, New York City issued 16,000 medallions to cab drivers to regulate supply – in other words, to make sure there weren’t too many taxis on the street. That system has not changed since, and the number of medallions in circulation has actually dropped
to just over 13,000 over the years. In turn, the value of those medallions, sold for the equivalent of $150 74 years ago, has skyrocketed. And the people buying those medallions aren’t drivers like Tom – they’re businessmen who buy medallions and taxi fleets to lease
to people like Tom. Many of them are billionaires - in the business, they call these guys hacks.
Tom leases from one of the biggest fleets serving NYC, Midtown Operating Corp
in Long Island City. The hack that owns Midtown is Ron Sherman
, who owns 205 medallions and is a powerful lobbyist in the City, fighting to ensure the safety of his very, very profitable business.
It’s 5PM on Saturday, shift change on a busy night, and Tom’s at Midtown hoping for a car. Because there are three licensed drivers for each available car, Tom has to hope a garage manager will get to him before running out. He leases a cab and medallion for $129, pays to fill that cab with gas, and then pays the toll into the city – starting his shift over $160 in the hole. Once on the road, he’s got a lot on his mind: picking up enough hails to bring home a profit, looking out to avoid the egregiously drunk, drinking enough coffee to stay awake but not enough to have to find a parking spot and a bathroom. He sits for 12 hours. He eats fast food in his cab. He comes out at the end of the day with about $130 to take home.
Tom is an independent contractor, so like over half of NYC drivers, he has no health insurance. Only in the past few months, following the enacted Affordable Care Act, has the Taxi & Limousine Commission (TLC) moved forward to implement a package of mandatory healthcare benefits – Tom will have to pay another $.06 per fare, but will get disability insurance and dental and vision care, as well as help navigating the Affordable Care Act options to find the best health insurance option for him.
But Tom’s life has just changed.
Last year, Tom heard word of Mayor Bloomberg’s plan for Boro Taxis, and decided to make a change. Tom was always a yellow cab driver in favor of the other option: driving a livery car in the outer boroughs.
But let’s back up a bit:
What are livery cars? Let’s say you’re at a bar in Brooklyn and want to get back to your apartment in Queens. You won’t find a yellow cab – they tend to stick to Manhattan. Instead, a friend will give you a number for a car service, and you’ll take that private car, often a black Crown Vic with a TLC license, home. The livery car has no TV in the back seat. It has no credit card machine and no medallion. Often the driver will name the price once you reach your destination, and if you’re so inclined, you can haggle it down. It is technically illegal for a livery cab to pick you up if you hail them on the street, but most of them do anyway for extra money. Police tend to turn a blind eye to this. Why? Because this is the only cab service available to most of New York City’s outer boroughs. Consider it the Great Secret of New York. Or maybe the Most Worn-Out Band-Aid of New York.
So when Tom heard rumors of a Boro Taxi system, he took a risk and put his savings into a loan for a Crown Vic so he could start working in Brooklyn for a private car service. The plan he hoped would pass was that Bloomberg would employ TLC to issue 18,000 permits to the existing 24,000 livery drivers that allowed them to pick up street-hails – the license, an alternative to the medallion, would cost just $1,500 and last three years. The Boro Taxis would service Harlem and the outer boroughs, allowed to drop off in Manhattan but not pick up. Those livery cab owners would paint their cabs green, install a credit card reader, and be good to go about $5,000 later in total – with no responsibility to the hacks.
And guess what: it passed! NY Governor Andrew Cuomo signed it into law in November, and now more than 1,000 of these green Boro Taxis are up and running, with 5,000 to be added by March. Check ‘em out:
Why is this good? According to the New York Taxi Workers’ Alliance, here’s why:
“The current plan borne of state legislation and implemented by the TLC brings the labor of thousands of livery drivers from out of the underground economy. The plan does not increase the actual number of vehicles on the streets [so it won’t increase competition]…The street hail livery permits also give a viable alternative to thousands of yellow taxicab drivers who cannot afford a $1million medallion and are tired of the daily back-breaking work of paying high leases.”
But although Tom could scrape together the money for these updates to his car, many other livery drivers cannot. So the downside of this plan sits with the guy who before could pick up a hailing passenger in Brooklyn on the sly – without spending $5,000 on the license, the paint and the card reader, those opportunities are becoming fewer and farther between. This has already led to scuffles between the green cars and existing livery cars, the latter of whom don’t like green cars imposing on their turf.
So after three quarters of a century of stagnancy, a driver like Tom has seen unprecedented change in just the past year, from healthcare to freedom from medallions. But it’s not over, for one reason only: Mayor Bloomberg is phasing out, and Mayor-to-be Bill de Blasio has a different opinion on the policy – that he will “go back to the drawing board and work towards a better plan.” Remember Ron Sherman in Long Island City and his fellow hacks? Remember when I told you they were lobbyists? They donated more than $350,000 to de Blasio’s campaign, making them his biggest backers by far. In turn, de Blasio did a few things: he joined their lawsuit to block the plan. He pledged to replace current taxi commissioner David Yassky, known as an ally to drivers. He claimed lack of oversight in the bill’s passing.
For now, Tom and other taxi drivers can enjoy their newfound representation. But the reality is, we’ll have to wait and see if it lasts.