The New York Taxi and Limousine Commission just sold two taxi licenses at auction for the record price of $705,000, according to the NY Post. An aluminium plate on the hood of a yellow cab, the taxi medallion is a licence to legally pick up passengers that informally hail cabs from the sidewalk. This privilege is reserved for the 13,237 licensed yellow-cab operators.
This system works very well for those that are in the system, much like a cartel or a medieval guild. It benefits those that are in the system at the expense of other drivers that might want to compete with them as well as passengers. This is why yellow cab drivers are so opposed to Mayor Michael Bloomberg’s plan to allow livery cabs (those without medallions) hail passengers on the street. In under-served outer-borough neighborhoods where yellow cabs are rare, passengers routinely flag down livery cabs already.
The price of a medallion has tripled since 2000, even when adjusted for inflation. The drivers that are already in the ‘guild’ have a serious interest in keeping the system intact. To start, they have paid into the system by buying the medallion, and they don’t want that solid-gold investment to be debased. Also, if there were more drivers on the road, there would be more competition for fares. As a farmer’s pension is his land, the medallion is not so much a possession as a retirement fund. One Pakistani driver worked for 26 years and sold his medallion for a profit of $570,000. Any of the taxi medallion-specific financing companies that loan money for the medallions also have an interest in keeping the system as it is.
Cab drivers contend with tickets, $4 gasoline, expensive maintenance of their cars, and fines from their garage if traffic holds them up from reporting for the end of their shift. Many drivers work as independent contractors with no benefits and no regulations on their wages and hours.