Medallions keep taxi drivers stuck in industry
Harbir Batth isn’t having a good day. Not many fares.
“It's been terrible,” he tells me.
Then finally, some hope appears: a doorman for the Parc 55 Hotel in Union Square hails the cab over. They hop in and we’re headed to North Beach.
Batth is originally from Northern India, but now lives in Berkeley with his wife and two kids. He’s been driving a cab for over 20 years.
And he has a taxi medallion - that’s a license to operate a taxi.
That medallion should mean he’s made it as a driver. It’s is on his dashboard and it looks a lot like small, red license plate, with a number punched in bold print right in the middle.
“This is the number that makes it the medallion,” he says as he pulls it out to show me: “1317.”
STUCK WITH A MEDALLION
That thin piece of metal makes this a genuine San Francisco taxi; each cab you see driving down Market Street has one. To keep from having too many cabs on the road, the city only issues about 2,000 of them. If a driver doesn’t own a medallion, they have to rent it from a driver who does. And if you do own one, you get to make extra cash. Once you have it, it’s like you’re a small business owner - it turns driving a taxi into a solid blue collar job. Batth had to take out a loan to buy his medallion; it cost him $250,000 back in 2012.
“I got a letter saying ‘If you are willing to buy this is the price, you’ve got to put 20 percent down,’” Batth says. “So I got money from my friend, family and that's how I got my down payment and got this.”
But it was right after he got the medallion that - maybe you guessed - Uber and Lyft took off, and started to nab many of the fares that Batth would have gotten. Before he got his medallion, he made around $25 or $30 an hour. Now that he has it, his income should have gone up. But the profession has changed...drastically.
“It doesn't even give you a minimum wage,” he complains. “You'll be lucky when you make $7 or $8 dollars. That's the average most of the drivers are making”
And he’s stuck. To get rid of the medallion and get out of the industry, another taxi driver has to buy it off of him. It’s like he has a mortgage on a house and he needs to move out, but he can’t find a buyer. There aren’t many people who want to drop a quarter-of-a-million dollars for a San Francisco taxi medallion right now. There used to be a waiting list to get one. Drivers would wait 10, 15, sometimes close to 20 years. Batth waited 12 years. Now drivers see them as a liability and there’s a waiting list to sell medallions. And until he gets to the top of that list, Batth has to keep staring at that medallion on his dashboard every day as he drives.
“I’d rather do anything else with my life than this run-down dying industry which there's no future,” laments Bath. “And I'm hanging in but I don't know how long I'll be able to do that. It couldn't be forever.”
Decades ago, medallions were open to the free market, and they cost whatever someone was willing to pay for them. Then in 1978, San Francisco voters made medallions free by passing Proposition K. Drivers started to earn them just by being on the waiting list. Meaning no $250,000. This was the system for over three decades, until around 2012. If Batth had gotten his medallion a few years earlier, he wouldn’t be stuck with monthly payments on this huge loan.
Frustrated with regulations
So why did the San Francisco MTA start charging for the medallions? Seemingly, the timing couldn’t have been worse - it was finalized just two months after Lyft launched. Barry Korengold is co-founder of the San Francisco Taxi Workers Alliance. Although he got his medallion in the years before they cost $250,000, he’s mad, and a lot of that anger is directed right at the city.
“All negative things that we were warning was going to happen if they start selling medallions has been happening, including (the) bottom dropping out of the industry, and now everybody owes all this money,” Korengold says.
The city wanted to start charging for medallions partially because it would bring in money. But there also wasn’t much turnover. Medallion holders would stick around, driving the minimum number of required hours, just to keep extra income coming in from renting out their medallions to other drivers.
“When people get old there’s no way to exit (the) industry,” explains Korengold. “We don’t have any kind of pension plan.”
Things went according to the city’s plan, at least at first. They brought in $60 million from selling medallions and hundreds of long time drivers got out of the business, netting $100 million by selling theirs. Korengold didn’t know that ride-hailing apps were coming, but he thought that paying to transfer medallions would not be good for drivers. He spoke up at the meeting in 2012, when the MTA finalized the medallion charges.
“It disregards drivers who put their lives into the industry,” Korengold told the MTA at the time. “They’ve been waiting 15, up to 19 years now, waiting to get their medallion. So maybe they’ve given up other careers, like I did to get my medallion.”
I spoke with over a half-dozen drivers for this story and they are all bitter. They feel burdened with decades worth of regulations by the city, and when they see an Uber or a Lyft car sailing down Market street, it’s infuriating. Korengold still drives, but says it’s not the same.
“Tell you the truth,” he pauses for a moment then continues. “It's offensive to me driving around the city and being surrounded by people doing the same thing I am doing but not having to follow the same rules. It’s offensive.”
Two different regulatory agencies
But the city actually has little control over Uber and Lyft. Those companies are regulated by the state, under the The California Public Utilities Commission. That’s one of the big challenges: two sets of drivers doing almost the same thing but under completely different agencies. The city does, of course, have control over taxis. Kate Toran is the head taxi regulator for San Francisco, and her office is ironically, just the next building over from Uber’s headquarters.
Toran says she understands driver's frustration. “When somebody purchased it, was one type of operating environment and now it's very different. So I fully acknowledge the challenges”
But she says there are lots of reasons to want to buy a medallion and drive a taxi right now: taxis can pick up people right off the street, they can use those taxi-only lanes, plus they get their own stands for special events. Uber and Lyft drivers can’t do any of those things.
To ease the pain, the MTA has started waiving some requirements like the one that medallion-holders have to drive 800 hours a year. But there are still 350 drivers on the waiting list to get rid of their medallions. Couldn’t the city just buy the medallions from those drivers?
“The way to program is set up that's not how it is structured at this time,” says Toran.
Looking for fares
Toran says that the city needs time to come up with a solution. That doesn’t help Harbir Batth today though. Back in his cab, he’s looking for fares.
“I literally never drove Saturday morning which is lousy shift to make money but here I am,” he grumbles as he drives back to Market Street from North Beach.
If he can find a way out of his medallion, he would leave the taxi industry behind.
Batth says there are few other options. “Just find a job working at a convenience store or a gas station, whatever you can do.”
We drive by the Powell street cable car turnaround. He looks to the sidewalk and asks me, “can I pick up this fare?”
Four people are waving the cab over -- that means I have to get out so they can all fit. They aren’t going far, but he has a loan to pay off, and needs to make money...one ride at a time.
Kate Toran and her department are bringing a proposal to reform the medallion program before the MTA board on November 15th. The current plan is to open up the market so that anyone, not just drivers, can buy a medallion. The plan would also let purchasers be able to buy more than one medallion.