Sunday, January 25, 2015

The One Good Thing That Happened To Taxi Drivers After Uber Invaded New York City

Passengers in my cab are always surprised when I tell them there is no taxi drivers’ union in New York City. It is assumed that with all these cabs everywhere you look there must certainly be a union, but there is not. There is a taxi drivers’ advocacy group, the Taxi Workers Alliance, whose leader, Bhairavi Desai, often appears in the media and at meetings of the Taxi and Limousine Commission to try to present the viewpoint of the drivers, but the Taxi Workers Alliance has no clout. This was painfully evident in September of 2007 when Ms. Desai called for a two-day work stoppage to protest the imposition of the high-tech “system” (GPS monitoring, credit card readers, and back seat television screens) upon the taxi industry in New York City. Her call was widely ignored by the drivers who instead opted to avail themselves of the inducement of Mayor Michael Bloomberg to pay her no mind and instead make a bundle on those days because he was allowing drivers to accept multiple passengers and charge by zones.

Although I did observe the work stoppage myself, I was not at all surprised that it fell on its face. The template upon which the taxi industry in New York operates was conceived in 1937, a time of enormous labor unrest in the United States. Intentionally or not, it has turned out to be union-proof. The number of yellow cab medallions was fixed at 11,787; about half of them were owned by numerous taxi fleets scattered around the city and the other half by independent owner-drivers, one taxi for each owner-driver. So with dozens of taxi garages and thousands of independent drivers scattered all over the city, there was no central location where drivers would ever congregate and no place to put a picket line. Attempts to unionize failed and, boy, the weakness that was the result of that failure has been evident ever since.

Just compare the difference in the way taxi drivers and members of the Transit Workers Union (subways and buses) are dealt with by the city when a strike, or even a temporary work stoppage, is threatened. Mayor Bloomberg, as mentioned, simply bribed the taxi drivers to continue working on those two days. In May of 1998 there actually was a one-day work stoppage by taxi drivers, a labor miracle engineered by Ms. Desai, in response to Mayor Guiliani’s sudden imposition of unpopular new rules upon the industry. For that one remarkable day there were virtually no yellow cabs on the streets of the city. The mayor went on television that evening and with a smile on his face said, “The streets were nice and empty today. They should do it more often.” He refused to negotiate and then for the next two years taxi drivers were continuously being pulled over by the police and ticketed for such offenses as wearing sandals or having an entry missing from their trip sheets. Some felt this was not a coincidence.

But should the president of the Transit Workers Union even be overheard at the gym using the word “deadline” in regard to the expiration of contracts with the city, the attitude from the mayor’s office is along the lines of, “Come on over, we can work it out, let’s do lunch.” Negotiations are conducted and deals are made. Why? Because the TWU is a very strong union - it can call a strike for real and cause great trouble not only for the citizens of the city but for the mayor, who will be blamed for letting it happen. That is clout. That is leverage. That is what taxi drivers have never had.

As a result they have been taken utterly for granted by owners of taxi fleets and city officials alike. Due to a steady influx of immigrant labor, garage owners have never had to particularly worry about not having enough cabbies to drive their vehicles, regardless of the working conditions these drivers were required to tolerate. And any newly-elected mayor or recently-appointed Taxi and Limousine Commission chairman soon learned that they can impose any rules they want on taxi drivers and there will be no meaningful opposition to their decrees.

The examples of this could fill a book (hey, there’s an idea!) but I’m going to give you just three, to illustrate the point.

1) After the recession hit in 2008, taxi garages were overflowing with drivers looking for work. Since it’s more convenient and more profitable for fleet owners to lease their cabs out on a weekly, rather than a daily basis, drivers were told they had no choice but to take the weekly deal. This meant a six-day work week for either a day shift (5 a.m. to 5 p.m.) or a night shift (5 p.m. to 5 a.m.). Should a personal situation or an illness or a Hurricane Sandy come along and you needed a few days off, tough, you still had to pay the full weekly lease if you wanted to continue to drive one of that fleet’s cabs.

2) The high-tech “system” was mandated by the Bloomberg administration to be in use in all taxis in January of 2008. It consists of three components: credit card readers, GPS tracking, and a television monitor in the back seat. I will leave the pros and cons of the credit card readers and the GPS tracking for another day - let’s just talk about the television monitor. Here is a glittering example, the gold standard, if you will, of just how taken for granted the taxi drivers have been. When you sit down in the back seat of a New York taxicab, a TV monitor is staring you in the face. When the driver turns on the meter it activates the TV and the canned entertainment begins. Of late this consists of clips taken from talk shows, interspersed with commercials and public-service announcements. What this means to the taxi driver is that for approximately sixty-five percent of his twelve-hour shift (the average percentage of time the meter is on) he will be forced to endure listening to the same jokes and babble over and over and over and over again. Was any kind of survey ever done of how the drivers felt about this? Of course not. Are the drivers even given a piece of the advertising revenue the Taxi TV generates? Uh, why even ask?

Aside from all this, there is a safety issue, as well. The monitor is about twenty-four inches from the driver’s head, so the noise it emits is inescapable. And to make it worse, the volume can be turned up to make it suddenly BLASTING with a quick tap-tap-tap of the passenger’s finger. Now, quite aside from the obvious annoyance this would be to the person who has to put up with it for two-thirds of his or her work day, has it occurred to no one that it is also a distraction to the driver and it therefore makes a ride in a taxi less safe than it would be if the thing simply wasn’t there at all? If anyone would dispute that point, I would invite them to answer this question: how would you like it if that monitor was twenty-four inches behind the head of your airline pilot as he’s bringing your plane in for a landing? Do you think that would be approved by the FAA? Of course not! But in a taxi, it’s okay?

3) And then there is the Nissan NV200 minivan, the so-called “Taxi of Tomorrow”. Forget about the fact that the car is not a hybrid. Forget about the peculiar and troubling deal that Mayor Bloomberg entered the city into which squelches competition in the marketplace by awarding Nissan an exclusive ten-year contract to be the sole manufacturer of all taxicabs in New York City. Let’s just talk about the feature of this vehicle which makes it so horrible that I told the manager of my garage, after driving it for only two shifts, that if he had no other types of cabs to offer me, I will quit: it comes from the manufacturer with a solid Plexiglas partition which cannot be opened. Why is this so bad? Because, although there is an intercom which permits a sentence or two to come through, it nevertheless reduces the chance of an actual conversation between the passenger and the driver to nearly zero. Like hair salons and bars, the taxicab is a business setting in which there is a potential for real human contact. For a driver like myself, this is the essence of the job, and for many New Yorkers - and for nearly all tourists - contact with taxi drivers is an important part of the “New York experience”. The partition which cannot be opened kills that, and it kills tips, too, as a consequence of the enforced disconnection from the driver.

So into this environment enters Uber, the new kid in town. After some initial wrangling the dust settles down and Uber creates a foothold in the taxi community. Its popularity with customers grows. The owners of car services are very worried because the Uber business model of getting a taxi via an app is superior to having to call for one on the phone and wait for it to show up, if it shows up at all. But the fleet owners of the yellow cabs are not worried because the business model of going out on the street and waving your hand is still superior, or at least as good as, ordering a cab via an app. So even with Uber in town, business was going along as usual… until last summer.

That’s when things began to change. And this was the huge, unforeseen consequence which is turning the New York taxi industry upside down: the drivers of the yellow cabs began to defect to Uber. Like weary soldiers who disappear from their units in the middle of the night, the drivers are deserting the fleets, and there is no sign at this point that they will be coming back. At my own garage at least twenty-five percent of the fleet’s two hundred taxis have been standing empty on most days since July.

This is a disaster scenario for the garage owners. It is quite an expensive operation to keep a fleet of taxis on the streets of New York. The owners' only source of revenue is what they receive from the leasing fees of drivers, so if too many cabs stand empty for too long, the fleet owners will be facing bankruptcy. And to make matters worse, the medallion, which had been trading in the vicinity of a million dollars, is in free-fall. It has lost over twenty percent of its value since the drivers began to shift to Uber, and right now it would be difficult, if not impossible, to sell one because potential buyers as well as lenders are shying away. There is no longer confidence in what the future may hold for the value of the medallion nor does anyone know what the bottom will be. This means that even if a fleet owner wanted to liquidate some of his medallions to help cover expenses while he rides the crisis out, he cannot. And the city, too, has suffered. The sale of 2,000 new medallions, which was included in Mayor Bloomberg’s final budget and was expected to bring in a billion dollars, has been suspended indefinitely.

What does this all mean for the drivers of the yellow cabs? It means hallelujah, leverage has arrived at last. It has arrived not through feeble threats of strikes or work stoppages, but through competition for the services of drivers. Now, for the first time ever, fleet owners and city officials will have no choice but to give serious consideration to how their actions affect the lives of the drivers. If they are wise, they will realize it’s not only a matter of whether or not a cabbie can make more money driving for Uber, although that is, of course, an important issue. It’s also about the working conditions of the drivers - the twelve-hour shifts, the six-day work week, the Taxi TV, the removal of choice in the vehicles they can drive, and so on.

Hey, Taxi and Limousine Commission - do you want the drivers to return?

How about doing some surveys?

Find out what's really needed and wanted from the drivers.

And then give them some good reasons to come back.


  1. Not only is that out the window, but garages are lowering their leasing fees. Some are even offering 24-hour shifts for the price of a 12-hour shift, which means the cabbie can drive whatever hours he wants.

  2. Hi Eugene,
    Are they trying anything to stop Uber from operating in the city? Seems like that would be the next logical step for the politicians to take.

    Bought your book. Going to start it this weekend.

  3. Hi Walled Laker,
    I believe Uber has already overcome any obstacles it intially had from preventing it from operating in NYC, and that it is here to stay. It is very popular with the Smartphone Generation as well as with livery cab drivers who use it as a supplement to the business they get via their bases. So any attempt by politicians to somehow oust it from the city altogether would cast a shadow on their motivations. It might even be political suicide.
    Thanks for buying my book - I hope you'll enjoy the ride!

  4. It's interesting that cab drivers' greatest competitor is also their greatest ally. You made many great points about the leverage that comes from being able to choose between services has allowed these drivers to have more control over their fate. This could also create better rates for potential passengers because of competition! Taxi

  5. Another great write-up. You have made the situation in New York very clear with a most interesting point of view. The world wide effect is rather confusing. We shall have to see what the future holds for the taxi business.

  6. It's actually quite interesting. If you look at pages on Facebook like 'Uber Driver's Network NYC' or places like, you'll find that some drivers have vastly different experiences with Uber, saying (I'm not a driver, so I wouldn't know first hand) how Uber takes advantage of drivers. There's certainly a "race to the bottom" in pricing, though Uber is still slightly more expensive than a yellow cab, however that's changing with concepts like UberPOOL, which permits something that yellow cabs cannot by regulation outside of a few locations - the ability for two passengers to share a ride and pay an appropriately prorated fare. Some drivers seem to believe that things like this are negative for income. Whether the majority of drivers share this opinion I'm not sure - my guess, by the constant defections that you mention, is no. The vocal minority is of course heard.

    As for Walled's question of trying to stop Uber, I think that the TLC flexed its muscle a bit and shut down 5 of the 6 Uber bases in the city for not turning over trip data to the TLC. That situation has since been resolved, however I think that was a very clear message from the TLC that Uber is expected to play by the rules or face consequences.

    Just my $0.02 :)

  7. Hi Gene,
    Here in Dublin a taxi plate (Medallion)was valued at £90.000, if you wanted one you had to buy an existing one.There had been a stalemate over the issuing of new plates. Two taxi drivers took a case against the government to Europe stating that they had created a monopoly,they won.
    The result was that licences were issued on demand pushing taxi numbers from 1,500 to over 12,000 and that is more than New York.
    Remember the story of the rabbit and the crocodile when you get into bed with Uber.

  8. In Amsterdam we have UBER too. The UBER Black is a good product but UBER POP is illegal, because you need a taxi license in the Netherlands. I order my taxi at because people drive there with more than 20 years experience, all licenses are oke and the rates are low compared to UBER .

  9. uber should be banned or start following laws and competing fairly. Kissing or not comes secondary - law abidance and lawful operation come first.

  10. I've always wondered what would happen if Uber arrived in Dubuque. There's currently two yellow cab models and one green cab model competing here. We have been contemplating whether switching to one of these automatic GPS systems and developing an application would reduce the threat of a ridesharing company. The main advantage is in the cut they provide to their drivers is 80%, while the cab company with a fleet has to pay a fortune in insurance costs and vehicle maintenance. What do you think? Should we be worried in these smaller cities and what could we do to prepare to compete against them?