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Before feeling bad for the man you see behind the wheel, take into account that in many cases it is not the individual taxi driver who took the loan; some compa
by JorgeGT 10y ago
Before feeling bad for the man you see behind the wheel, take into account that in many cases it is not the individual taxi driver who took the loan; some companies and individuals used medallions as a mere financial product, buying them in bulk and renting them to drivers.
For actual numbers and graphs see this NYT article: https://www.washingtonpost.com/news/wonk/wp/2014/06/20/taxi-medallions-have-been-the-best-investment-in-america-for-years-now-uber-may-be-changing-that/ https://www.washingtonpost.com/news/wonk/wp/2014/06/20/taxi-...
If you don't have time to read it, two important points:
- "In New York today, there are four drivers for every medallion, all but ensuring that an investor who owns one can find drivers to lease it 100 percent of the time."
- "The threat to medallion owners isn’t that they’ll lose passengers to these services. It’s that they’ll lose drivers — who have been aggressively courted by Uber. A taxi driver who doesn’t own a cab and medallion can earn comparable fares driving UberX passengers in his private car, without paying a lease fee."
- JumpCrisscross 10y agoTo expand, "fifty-eight percent of New York City’s cabs are owned by corporate entities such as Freidman’s. Just a third are owned by the people who drive them. As a result, most taxi drivers and Uber drivers find themselves in the same boat—working as independent contractors, logging brutal hours." https://www.bloomberg.com/features/2015-taxi-medallion-king/ https://www.bloomberg.com/features/2015-taxi-medallion-king/
- Ericson2314 10y agoBut they still have a union.
- ci5er 10y agoAt that got them the same or worse deal than they would get with Uber, which doesn't have a union? That sounds like a great return on union membership fees.
- JumpCrisscross 10y agoAt least in New York, it paid for lots of union leaders, administrators and interns.
- ci5er 10y agoEven better! We should unionize everyone and use the mandatory dues to pay for ever more bureaucrats/admins/interns, so that when we reach full-robot, everyone still has a job. :-)
- bigmanwalter 10y agoWhose combined salaries barely scratch that of a CEO
- rz2k 10y agoThe argument would be that the union's negotiations established a wage floor, and uber drivers get a freerider benefit. If uber's funding dried up, and they only paid drivers from what paasengers pay, they would have a lot more pressure to lower rates. Furthermore the union probably makes the wages sticky, rather than able to be lowered if competitors exit the market. Though hailing cabs is inconvenient there probably is some socal utility to the medallion system beyond just rent seeking for the owners. For example the supply of cabs being steady at odd hours, and better compliance with ruling on serving all areas of a city.
- freditup 10y agoJust a small point of disagreement: Often, in busy parts of NYC, hailing a cab is much more convenient that calling an Uber. Ubers often take awhile to get to you whereas a yellow cab can be hailed within a few seconds. I am interested in the question you pose though - about the social utility of the medallion system. Perhaps there's some benefit in keeping the number of cabs limited in order to keep the roads emptier and thus more usable?
- leereeves 10y ago
- epc 10y agoThe New York Taxi Workers Alliance is a non–profit that acts on behalf of drivers, but is not a union in the traditional sense. There is no "contract" between drivers and owners for example, there is no defined collective bargaining unit.
- FussyZeus 10y agoOdds are decent the majority are held by companies, these things were selling for multiple times what the drivers paid for the cars themselves.
- JorgeGT 10y agoAt least in Chicago this is true, there's this data in the article: https://img.washingtonpost.com/blogs/wonkblog/files/2014/06/medallions_license-affil.png https://img.washingtonpost.com/blogs/wonkblog/files/2014/06/...
- mirimir 10y agoRight! So obviously, perhaps after some bankruptcies, new medallion owners will lease them at prices which are attractive to Uber drivers. And Uber will have more competition.
- djsumdog 10y agoIt'd be nice, but unlikely. They'll probably be snatched up by other companies buying them at a loss. Even if they drop, it probably won't be low enough for individuals to afford.
- muninn_ 10y agoThen eventually they'll just go out of business. That's how it works. It won't matter what you think the medallion is worth if market prices determine its worth something else.
- nine_k 10y agoConsidering Uber's financials, it's a good question who risks to get out of business faster.
- maverick_iceman 10y agoTo put it another way, if you think medallions are worth X but their market price is only Y (Y < X) then you should buy them for Y+1. If markets have significantly discounted their true price you'll make a windfall.
- Gustomaximus 10y agoWhat amazes me from this Washington Post article is prices were still rising in a steep incline many years past Ubers launch in 2009. You would think 4 years later it was clear for enough people where the market was going, yet medallions doubled in price during this period (almost tripled by 2015).
- wahsd 10y agoThey're used for shenanigans.
- drpgq 10y agoMaybe that effect was more due to really low interest rates?
- Gustomaximus 10y agoI was thinking the same thing but just because people get cheap money doesn't mean you throw it at anything. It still becomes an exercise of analysis and looking to maximise returns. In which case I'm still at 'WTF'
- golergka 10y agoWhy would you feel bad for a man selling you bad and overpriced service and demanding a weird monopoly on it anyway?