Industry Facts Industry Overview
| Industry Overview |
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The Haas Act of 1937, under Mayor La Guardia, "required that owners obtain a permit before putting a taxicab on the street. The permit took the form of a numbered medallion and could be issued only by the city. This allowed the city government to keep track of the number of cabs on the streets and to regulate their volume accordingly.
The Metropolitan Taxicab Board of Trade (MTBOT) is the fleet owners' trade association. During the sixties and seventies they controlled the medallion processes. Taxi brokers developed as an economic class in the industry during the nineteen eighties (1980's.) Brokers are middlemen who lease the medallion from an owner then sublease it to a driver. So unlike garages, brokers do not own the medallions—they only operate them. Brokers, organized under the Committee for Taxicab Safety, also finance vehicle purchases for drivers after purchasing the cars directly from the dealer. Drivers enter into two to two-and-a-half year contracts with brokers. The contracts, differing from brokerage to brokerage as there is no standard agreement, require drivers to pay for all vehicle related expenses, including insurance, maintenance, repairs, summonses, equipment and hack-up and quarterly inspections. Each trade association has their own PR firm, professional lobbyists and fight for rules and regulations that benefit their bottom line and shift the risks and expenses downward onto the drivers. The Taxi & Limousine Commission (TLC), a mayoral agency chartered in 1971, is the current NYC regulatory agency of medallions/yellow cabs (hailed on the street), liveries (dispatched private cars) and black cars (corporate limousines). TLC and the Department of Motor Vehicles ruthlessly target taxi drivers and will write two to three tickets at a time. Violations add "points" to a driver's license. Each violation increases a drivers' chance of losing their license, and hence their sole source of income. In 1979 the TLC and MTBOT introduced leasing which eliminated the commission system and the classification of drivers as "employees" under the National Labor Relations Act. Under the new classification of "independent contractors," drivers were no longer allowed to unionize and hold a collective bargaining agreement / standard contract. Under the leasing system drivers begin their shifts in the red. Drivers must pay the lease up front for the taxi and medallion. Lease rates range from $105 per day shift to $129 per weekend night shift. Gas is the other expense that comes out of the drivers pocket before s/he can make any money for themselves. On a slow night many drivers can end up making no money or barely minimum wage for a twelve hour shift. Drivers are divided into several categories: Garages are responsible for the upkeep, maintenance and all other expenses related to the cars. Generally garages have the reputation of having the cars in worst shape. Small fleet garages run 10-20 cars where larger garages have 100-250 taxis. Brokers and garages often have their own "self-insured" funds. Brokers also have contracts or agreements with car repair shops and other side businesses which the drivers are coerced into using in spite of the fact they could get more fairly priced services elsewhere. Medallions are collectively valued at about $9 trillion. The TLC gets a 5% cut from the sales tax when medallions are transferred between owners (so a $500,000 sale means $25,000 for the city.) Before the TLC, the medallion was valued at less than $30,000. Today, it's over half a million dollars. Some former TLC officials now have jobs representing the garages and GPS vendors. |