Wednesday, April 29, 2009

Notes Toward A Compromise Plan

Proposition K worked well but has one major weakness.
  • The main problem is that of aging drivers who have no exit strategy or retirement.
  1. The Heidi or UTW solution would be to simply take the medallions away from medallion holders when they become too old to drive. The idea is that they should have saved their money when they had the chance. But, the fact is that most of them won't have saved enough. A certain amount of them would end up poor and homeless.
  2. The MHA solution would be to either let medallion holders hang on to the medallion until they die or enable them to sell the medallions at auctions.
  3. Allowing the medallion holders to keep their medallions until they die seems unfair to working drivers on the List because it slows the List down. 
  4. Putting the medallions up for auction is definitely unfair to the drivers on the list. Few working drivers would be able to save enough money to compete in an open auction and the medallions would end up actually being owned by people like Lazar, Yellow Cab and Tariq as well as loan companies and banks. The actual income of the new owners would be severely reduced and the average driver would have little hope of ever owning a cab.
  5. Cab service would also be hurt because the pool of profession drivers on the list would quickly disappear. Any driver who could get into another line of work would.
My compromise would be to sell the medallions at a fixed rate or a Fair Market Value instead of at an auction.
  1. The rate would be set high enough to give an incentive for owners to sell but low enough for the drivers on the List to be able to afford to buy it a medallion low interest rates.
  2. Drivers on the List would not have to show a high credit rating. In a cash business few drivers build up credit. The fact that the drivers have lived up to the Daly-Ma requirements should be enough to qualify them as good risks.
  3. Since the cab companies want to get into the banking business, why not let them? Luxor and the other companies could provide the drivers with low interest loans in exchange for keeping the cab in the respective company's fleet. There would be little risk involved. If the driver defaulted on the loan, the company could simply re-sell the medallion to the next driver on the list.
  4. The city would of course take a percentage of the sale - after all that is sole reason why we have our current cab crises. Hopefully, this percentage would be consistent with the 5% transferability rates charged in the rest of the country.
  5. Be that as it may, half of whatever rate the city does change should go toward creating benefits for the drivers.
I guess that's it. Everybody gets something: nobody gets a lot. Remember the Golden Mean.

Sunday, April 26, 2009

Et Tu Chiu?

With the dawning of the Obama era, many of us in the taxi industry looked toward our politicians filled with hope. As small business people and workers, we looked forward to relief from high gas prices, a solution to our aging driver problems and maybe a possible way to sell our medallions without harming non-owner drivers. With our business down more than 50%, we hoped that we too might qualify for a stimulus package.

And the signals coming for the politicians were positive.
Yes, we were hopeful that our politicians would bring us some relief.

Instead, they've been sizing us up like a pride of lions checking our their prey before moving in for a fresh kill.

As it turns out we're not going to get part of any stimulus package. For the city's pols, we are the stimulus package. The only subject for debate among them appears to be who gets the white meat and who gets the dark.

To summarize.

  • A month before the MTA even took over, Newsom went back on his word and came out with plan to steal the drivers medallions, sell them at an auction and "keep most to the money" for his own purposes. (See Millionaire Mayor's Plan ... and Gavin - the Sun King.)
  • Since then the MTA has seconded the Mayor's plan and come out with numerous Cab Driver gouging plans of its own - the latest being a budget item that gains the MTA $20,000 by putting 100 cabs on the street during a recession.
Then, just as we cab drivers were drafting letters of help to the Board of Supervisors, the president of the board, Supervisor David Chiu, came out with his own method of carving us up.
  • "... SFMTA has not adequately explored an alternative to generate significant revenues from the taxi industry," Chiu writes in his Resolution to the SFMTA to examine and consider taxicab medallion fees. " - a 'rental fee' on City-owned medallions ... would create a continuous, long-term revenue stream for the SFMTA, the city and the taxi industry ..."
  • "Ongoing revenue generated from a medallion rental fee structure could be used to help finance much-needed customer service improvement, such as a centralized dispatch system, and assistance to drivers who lack health and retirement benefits ..."
I really don't know ... one driver said the plan left him speechless and it has almost done the same to my huge mouth. I don't know where to start. Who are these people?

Supervisor Chiu voted against putting 1.395% sales tax on small businesses in San Francisco because he thought it would put a burden upon them during recession. Yet he has no qualms what-so-ever about taking away 50% of our incomes during the same recession.

  • Chiu and the rest of the Board appear to think that they're helping non-medallion drivers but hundreds of those drivers have been waiting up to fifteen years for a medallion that the Board's plan would render worthless.
  • They appear to think that they're going to improve cab service by significantly reducing the income of one of the lowest paid groups of people in the city. It's an idea from outer space. Maybe they think we'll work harder if they starve us half to death.
  • What will actually happen of course is that anyone with half a brain will find another job as soon as he or she can. The Board's plan would ring a death knell for the professional driver in San Francisco and leave the city with a brood of cabbies who don't speak English, don't know where they are going and won't stick around long enough to learn.
Neither Newsom nor the MTA nor the Board of Supervisors appear to think of us as small business people or labor or workers or, apparently, human beings. If we have families or children to feed and educate that's apparently our tough luck. We probably shouldn't breed so much.

I don't know who to look toward for help. About all that's left are the animal rights groups.

There is one other thing that the pols are not thinking of us as - voters. We are voters and we talk to hundreds of other voters every day. Let's start talking.

Friday, April 24, 2009

$20 Million and the Goose that Laid the Golden Egg

Taxi Medallions are like diamonds. The more there are the less they are worth.

The MTA fantasy of balancing their budget by auctioning off more and more taxicabs can only end with them holding the dead goose of the fairy tale; or, rather, leaving us with the corpse.

The very fact that they are even considering putting cabs on the street during this recession has already lowered the value of the taxis. It shows that they are erratic and don't understand the business that they want to run.
  • For instance, they set up Town Hall meetings which includes experts from all sides of the industry to study ways of improving the taxicab business under the direction of  the intelligent and open-minded Chris Hayashi.
  • Then, they come out with their half-baked plan to make themselves money before the question of transferability has really even been discussed at these meetings.
In my opinion, only a fool would buy a taxicab under these conditions.
  • There are no controls on the MTA. Unlike the Taxi Commission, they apparently can do what they like without input from anyone else - i.e. people who understand the taxi business.
  • If they do manage to raise their $20 million, the MTA will simply continue to put cabs on the street until the medallions are worthless.
The reality is that we might not be too far away from valueless medallions right now.
  1. Under the current system the medallions get their value from being leased out.
  2. As long as companies can get people to drive the cabs, the medallions make money.
  3. But, if the drivers stop making money, they stop filling their shifts and medallions loose value - sometimes to the point where they become worthless.
  4. This has repeatedly happened in numerous cities like Seattle, Oakland and Minneapolis.
  5. There are indications that this may already be happening here now. Despite the high unemployment rates, companies already have shifts that can't be filled and even more shifts where drivers hardly make any money .
No matter what your feelings are about transferability, you should oppose the MTA budget - as loudly, vigorously and frequently as possible. Being able to transfer a medallion that no one wants to buy will not secure anyone's retirement.

Beyond that I think we should start working on a ballot measure to take the cab business of the hands of the MTA. They've been in control for less than two months and they've already come up with three or fours ways to destroy our business. Let's try to stop them before they ruin us.

Thursday, April 23, 2009

The SFMTA's Plan to Breed Cab Drivers

Sorry for the title. I've been reading the Onion again. On the other hand, the MTA would hardly be stopped from harvesting cabbies by moral or humanitarian considerations.

Charged by the voters of San Francisco to take over the administration of taxicabs and help improve service, the leaders of the MTA (who owe their jobs to Gavin Newsom) have ignored the directive and have chosen instead to use taxicab drivers as "assets" to balance the MTA's bloated budget. Instead of harvesting the drivers themselves, the MTA intends to harvest their incomes.
  1. Before the MTA even officially even took over, Malcom Heinicke of the MTA Board, introduced Mayor Newsom's plan to take all the medallions away from the cab owners and sell them at an auction - with the city keeping "most of the money." (See Millionaire Mayor's Plan to Bail Out San Francisco 3/9/09.)
  2. Since then they've floated numerous back-door scenarios including one where they would charge medallion holders a $1,000 per month users fee. In other words, they would tax the medallion holders 50% of their income.
  3. Finally comes the official 2009 MTA budget where they plan to suck-up cab drivers income with a two pronged approach.
  • They would get $0.5 million in taxicab permit fees. If I understand this correctly and my math is correct this works out to about $100 per driver. The current fee is $65. I guess that's not too bad. Owner drivers already also pay an additional $1,000 per year  in medallion fees.
  • The MTA intends to raise $5 million to $20 million from a Taxicab Pilot Transferability Program. What does it mean? Well, we're not not sure and either is the MTA. Or, more likely, they are sure but they're not saying. There are two possibilities:
  1. The MTA would raise $5 million by selling the right to auction their taxicabs to 100 current drivers at a fee of $50,000 a piece. That's right! The medallion holders would pay in advance for the right to sell their cabs with no idea of how much an auction might actually bring. The MTA estimates the figure at $200,000 meaning that they want to charge the owners a 25% transfer fee. Medallion transfer fees in New York and Chicago are 5%.
  2. The MTA would raise $20 million by selling 100 new medallions themselves for an estimated $200,000 a piece. That is to say that they would put more cabs on the street during the worst recession in seventy years - a time when the cab business is down more than 50% and drivers are already having trouble making minimum wage. The MTA would also be undermining the value of the medallions already on the street.
There are many things that can be said about this but I'll restrict myself only to expressions that don't include profanity.

  1. Given what we know about the MTA, do you think that they'll go for the $5 million or the $20 million? (Hint. The $20 million balances their budget.)
  2. Then why the $5 million option? To stroke desperate, aging owner/drivers into thinking that they could finally sell their medallions so that they wouldn't protest the budget. It appears to have worked. Aside from myself, only a handful of owner drivers objected to the line-item.
  3. What this amounts to is an additional $20 million tax against cab drivers. It is mostly aimed at the owners but many of the people on The List who don't yet own cabs would be hit harder; so let's call it a $20 million tax against 5,000 people = $4,000 per head. Of course this isn't quite accurate because some people would be hit harder than others. But in one way or other the city would be getting the money from the drivers.
  4. By comparison, the city would gain:
  • $28 million from their plan to increase the muni fares of hundreds of thousands of riders.
  • $5 million from their plan to increase cable car fares to tens of thousands of tourists.
  • $11 million from their plan to increase the price of  1 day to 7 day passports effecting tens of thousands of riders.
  • $7 million by cutting overtime in half - meaning that they still intend to pay $7 million of overtime.
In short, the SFMTA wants us (some of the lowest paid workers serving the city) to pay by far the highest tax burden in order to keep muni running. To put in another way, they want us to pay the overtime of people who are already making twice as much money as we are - for starters.

Does this make sense? Is it fair? Is it moral? Do you care?

Wednesday, April 15, 2009

Who is what: Part 2

The ordinary drivers (non-medallion holders) fall into two main groups: those who may or may not be represented by the UTW and the vast majority who lack representation.

The UTW is one of the more bizarre organizations I've ever come across. They claim to represent drivers but they are not a union and appear to have no interest in what the average driver thinks or wants. In the past:
  • They talked the city into putting shields into taxis despite the fact that the drivers were overwhelming against such shields.
  • After the second largest protest in SF taxi history forced the city to remove the shields, Rua Graffis of the UTW continued and continues to push for their implementation. 
  • The UTW has spent the last several years trying to force a medical plan on the city despite a Taxi Detail poll showing that 58% of the drivers were against the plan.
  • The UTW talked the Taxi Commission into NOT putting in a meter increase during the boom years of 2004 - 2007 that almost all drivers wanted. The UTW's reasoning? The drivers couldn't have a meter increase unless they had a medical plan ... or something?
The UTW has also fought against or sabotaged all attempts to bring a real drivers union into San Francisco. Currently;
  • The UTW is with the regular drivers in wanting to protect Prop. K and not auction off the medallions.
  • At the same time, the UTW backs a plan to soak the medallion holders $10,000 a year in order (I guess) to socialize the industry.
  • Put another way: the UTW wants the drivers to get their medallions at the same time as they (the UTW) renders those medallion effectively worthless.
The UTW's motto? "Dazed and Confused."

The vast majority of drivers are not represented, period. Their motto is: "Help! I need someone. Help! Just about anyone. Help me! Wooooooo."

Naturally, they fall into two groups: those who are on The List and those who aren't.

The drivers on The List would be devastated by an auction and, the closer they are to the top, the harder they would be hit.

Drivers not on The List or toward the bottom of it might see an advantage in getting backing from the Lazars and Tariqs in order to compete in an auction. The younger the driver, the more worthwhile even a high interest loan might be.

There is some cross-over among the groups that I've mentioned during the last two posts. 
  • The SFCDA and the drivers on The List have a natural bond and they both would go along with the UTW in opposing changes in Prop K.  
  • On the other hand, neither the drivers on The List nor the SFCDA would go along with the UTW's plan to soak the medallion holders.
  • However, the SFCDA wants to end the driving requirement so they can retire someday while the The List drivers want the medallions holders to either give up the medallions the instant they stop working or die soon.
  • The MHA and the SFCCA would agree on some issues and not on others.
  • The MHA and the companies would agree on some issues and not on others.
  • etc, etc, etc
All the drivers and the companies agree on one thing: they do not want to be eaten by Newsom.

But they have an ancient motto working against them: "Divide and Conquer."

Being already so divided, how do we keep the Sun King from gobbling us up?

May I propose a new motto? "Come together - right now!"

Tuesday, April 14, 2009

Cab Drivers Swarm MTA Meeting: or Who is What

A couple hundred cab drivers, mostly medallion holders, showed up at the April 7th MTA meeting. So many showed up in fact that two extra rooms were needed to hold them all. Most of them came to protest the Sun King's plan to steal taxi drivers' rice bowls as well as to take a stand against auctioning off cabs under any circumstances.

The meeting also marked the emergence of a new group: The San Francisco Cab Driver's Association (SFCDA).

There are now so many points of view, interests and groups involved that it looks like the box score of an NBA basketball game. I think it's time to clarify the situation with a list of the various groups and what they stand for.

First the owners/medallion holders:
  • The MHA which now basically represents three groups of drivers.
  1. Pre-K owners who bought their medallions and want to sell them under almost any circumstances whatsoever. Their motto is, "Render unto Caesar what is Ceasar's and let us keep the change."
  2. Post-K medallion holders who also want to sell the medallions but want to maximize their profits. Their motto is, "Get it while you can."
  3. Post-K medallion holders who so desperately want things to stay the way they are that the drivers are willing to give up as much as 25% of their yearly income just to maintain the status quo. Their motto is, "Please don't beat me."
  • The owners and wannabe owners of companies.
  1. The actual companies like Yellow and Luxor cab who want to bust the system up so that they can buy and sell medallions at will. John Lazar of Luxor cab became the standard bearer for this group when he offered the city (i.e. Newsom) $50,000 up front just for the right to sell a medallion. Very noble of him considering that he has no intention of selling his - only buying the medallions of everybody else. The motto for the companies is, "Greed is good."
  2. Speculators and carpetbaggers like one Mr. Tariq who represents a consortium that wants to buy up taxis at auctions and pay the drivers who work for it serf's wages. Their motto is, "Greed is God."
The SFCDA, who basically agree with number 3 of the MHA above, but have an in-yo-face attitude about it. Proposition K is what got them their medallions and they want to keep the situation basically like it is. They are drawing a line in the sand and daring the city to cross it. Their motto is, "Thou shalt not pass."

Tomorrow: the non-owner drivers.

Friday, April 10, 2009

Why Do You Have to Wait for a Taxi? Part 2

The idea that you can't get a cab when you want one seems a universal theme and appears in dozens of movies and books - frequently as a major plot point.

In Manhattan, for instance, Woody Allen runs across the city to tell his jail-bait girl friend, "I'm sorry I'm late, I couldn't find a cab." In C.P. Snow's autobiographical novel, Strangers and Brothers, set in London in the 1960's, his wealthy hostess looks out of her window, sees that it's pouring rain and delivers this immortal line, "Let me lend you my driver - you shan't get a taxi tonight." Paul Veerhoven's psycho-sexual thriller , The Fourth Man, set in Amsterdam in 1983 ends with a soon-to-be victim saying to his beautiful soon-to-be killer, "Let me take you home. You'll never get a taxi out here."

In short, San Franciscans aren't the only people that experience a time lag between their desire for a cab it's appearance. If the taxi service here is really that bad, why do I regularly have people from all over the world telling me what a pleasure it is to ride in a taxi here?
  • A recent customer from Paris compared the taxi services in New York, San Francisco and his hometown. The drivers in New York scared him because they drove so fast. The Parisians let him know that they were doing him a favor for picking him up and would tell him to walk if it was a short ride. He liked the San Francisco cab drivers best because they drove "so smoooothly."
  • The general consensus is that you can get taxis faster in New York than you can in San Francisco but Manhatten drivers don't always take you where you want to go.
  • The professionalism of San Francisco's cab drivers, in fact, is known and appreciated almost everywhere ... except in San Francisco.
So that's it? It's the best of all possible worlds? Hardly ... there is often a problem with getting taxis in the neighborhoods. There are reasons for this:
  • Simple supply and demand. The farther you go from the center of the city, the less taxi business there is. It's natural for cab drivers, like people in any business, to act in ways that maximize their profits.
  • Cab drivers need to eat. Another obvious fact that often escapes people who criticize the service. If they hung out in places like the Sunset, the outer Mission, the Richmond or other outlying areas, they wouldn't be eating much - not under the current system.
  • The times when the service is bad are usually the same times when service for everything is bad - times when: it's hard to get a ticket to a show, a seat at restaurant, a place on the bus or a seat on BART.
Problems with the taxi service are also exaggerated by studies that concentrate on peak time rather than normal service.
  • Jordana Thigpen conducted her study of radio calls on the busiest nights and did not study the same areas during the slow periods.
  • A neighborhood like Noe Valley, for example, that has problems getting taxis at 8:00 pm on a Friday night gets fantastic service at 8:00 am on a Sunday morning.
  • Critics of the service, whether consciously or not, continually compare taxis to private limos. If you have to wait for a cab, that's it - SF taxis suck.
  • I recently picked up a wealthy matron in front of a beauty salon less than a minute after she called. She got in, gave me a stern look and wanted to know why she had had to wait for a cab the day before. No doubt a Gavin Newsom fan.
  • Nobody asks what is really possible from a cab service.
I've been driving in this city for 25 years. During that time San Francisco has spent hundreds of thousands of dollars on various commissions and numerous studies that purported to be finding ways to improve cab service. 800 additional cabs have been put on the street. The net result of all this has been:
  • Taxis can now legally make left turns on Market
  • Taxis can now use in buse lanes.
  • Cab companies are converting to hybrids.
  • Service is faster at conventions and hotels.
On the other hand:
  • The sevice in the neighborhoods is no better (or worse) than it was when I started.
  • It's actually harder to get a cab at ball games because the police decided to regulate the ways taxis pick-up at AT&T and whatever Candlestick is being called this year. The police being the police naturally restricted service to sides of the building where cab customers are least likely to come.
  • It's much harder for cab drivers to make money on slow nights.
Considering the time, energy and money put into the subject of improving service this doesn't seem like much of a return now does it?

Why? Politics my dears, politics.

Wednesday, April 8, 2009

Why Do You Have to Wait for a Taxi? Part 1

The short, cheeky answer is: because it's a taxi not a private limo. A fact obvious yet profound and usually ignored by people who profess to study taxicab service.
  • When Assistant Director Jordana Thigpen of the San Francisco Taxi commission reported the findings of a 2007 taxi study, she couldn't understand why cab drivers broke out laughing after she told them that a doorman of the St. Francis Hotel had complained that he sometimes had to wait for cabs.
  • The reason that they laughed was because the St. Francis has a line of cabs sitting in front of it 95% of the time - and that's a low estimate. It's like somebody complaining about the weather because it's 75 instead of 74. In the real world, the only way to improve the service at that hotel would be to eliminate the doormen. I'm not talking anything untoward here but the preening they go though as they work the passengers for tips slows everything down.
  • People also complain when they wait for cabs: during conventions, on Friday nights, when the opera breaks, when concerts get out, when the ball games are over, in out of the way places, when it rains, when the bars close.
  • I'm going to tell you right now that this never going to change no matter what you do. You could flood the city with cabs and hire The Heroes to do the driving and people are still going to wait for taxis.
  • Why? Because we're cab drivers not your private chauffeur. We can't anticipate when and from where you will call. We can't control traffic, weather or a dozen other things that affect service.
Am I saying that the cab service in San Francisco couldn't be better?
  • Given the way cabs are allocated, the system by which cab drivers earn their money and the circumstances under which they work - yes, that is indeed what I'm saying.
  • Whether medallions are sold or not would make no difference whatsoever - except that if you were to follow Newsom's plan and suddenly replace veteran drivers with newbies, the service in the neighborhoods would badly deteriorate.
More later.

Monday, April 6, 2009

Gavin - the Sun King?

Faced with a $600 million debt many politicians would consider taxing the rich since they have the most money but not California democratic gubernatorial hopeful Gavin Newsom. He's fought against a 1.395% tax that would have raised "tens of millions" but would have been imposed upon his own businesses. Instead, the Mayor wants to force cab drivers to sell their medallions and place a tax in excess of 50% upon the proceeds.

Newsom explained his reasoning for this plan by saying: "This city asset (the medallions) has been underutilized" and the cab drivers have "... underperformed."

He also wants to make a "gigantic, order-of-magnitude change" in the way things are done. He apparently plans to start with the Democratic Party. You know the party of: the Fair Deal, the New Deal, the Party of Labor, the Party of the People.

To heck with Obama, Franklin Delano Roosevelt and all the Kennedys. Gav is harking back to an more ancient tradition - one where rulers use their lower classes as "assets" to balance their budgets.
  • Czar Peter the Great of Russia used the forced labor of serfs to build the city of St. Petersburg. He also thought his peasants "underperformed" so he worked over one million of them to death.
  • The Maharajahs of India took a high percentage of their peasants' crops to fill their own coffers.
  • This practice was taken up by the British to pay their governmental expenses when they ruled India. Mahatma Ghandi grew to fame by fighting against such excessive taxes.
  • King Louis XIV of France, the Sun King, and his minister Jean Baptiste Colbert used corvee (free) labor to balance a budget depleted a lack of taxation on the nobility and his own extravagances. This practice ultimately led to the French Revolution.
All of which leads us to the question: Should Gavin Newsom be running for governor on a Democratic ticket or a Royalist one?

Friday, April 3, 2009

Gavin Newsom Tries to Shaft the Medallion Holders

Mayor Gavin Newsom, who has fought against a business tax that he himself would have to pay, seems to have the wind at his back in his attempt to force taxicab owners to auction their medallions to pay off San Francisco's debt. In fact, a local newspaper poll showed 51% voting in favor of such a measure because the "city could use the money" while only 36% thought that the "current holders need the income."

Newsom of course has the stereotype of the greedy cab owner working in his favor. But perhaps more important are innumerable newspaper articles stating that medallion holders make $70,000 per year just by leasing out their taxies

Sounds like a lot of money, doesn't it? Especially for a bunch of lowlifes.  I kept running into this figure over and over so I decided to do something that local "journalists" have clearly never done themselves: I researched the subject.
  • I asked several medallion holders about their incomes and they all said that they were coming up about $50,000 short of the factoid. When I asked them what they thought had happened to the money most of them didn't have a clue but one opined that Officer Makaveckas might somehow have gotten his hands on it.
  • Seriously ... the $70,000 figure is arrived at by simple arithmetic. The leasing rate for a shift averages about $100. There are two shifts per day and 365 days per year = +70,000.
  • The problem with simple arithmetic is that it's too simple. What is needed here is a little simple subtraction. The $70,000 is a GROSS: before the taxicab is bought, before insurance, before paying for the property on which to store the cab, before maintenance, before the property taxes, before the salaries for bookkeepers, accounts, lawyers, dispatchers, mechanics and other expenses are taken out.
  • The medallion holders usually let the cab companies take care of the above details and split the money with them for the right to lease out the cabs to other drivers. The medallion holders average about $20,000 a year from the split. I don't know the companies' share. 
Now $20,000 might be a lot of money in San Francisco Del Mar, Mexico but in San Francisco, California it's barely enough to rent a studio apartment. That's why 85% of the medallion holders also drive cabs long hours themselves, bringing their yearly total up to $30,000 to $50,000 - which might get them a one or even a two bedroom rental but will never be enough to buy a house. This after working for at least 15 years in one of the most dangerous jobs (cab drivers are more likely to die by homicide then policemen) there is. By comparison:
  • San Francisco policemen and policewomen earn  $75,868 to $101,556.
  • Firefighters base pay averages $54,000.
  • Muni bus drivers get a base salary of $56,000.
  • AC Transit drivers start at $40,560.
  • BART drivers make $64,296.
  • All these groups have medical benefits, paid vacations, sick leave and retirement benefits.
  • The benefit package at BART is worth over $29,000 per year.
  • Most of these people could also  work overtime -  at least before the eco-tsunami hit.
The medallion holders:
  • Have no benefits of any kind.
  • No retirement.
  • Pay the city one million dollars a year in a tax on the medallions.
  • Pay the same 15% self-employment tax as regular cab drivers.
  • Will have the City of San Francisco try to take their medallion away if they become old or disabled.
Mayor Gavin Newsom, to make another comparison, regularly makes in excess of $400,000 per year and has made more than $1,000,000 in a year on at least one occasion.

You can see why a man with Newsom's sense of fair play would hesitate to pay a 1.395% business tax.

Wednesday, April 1, 2009

Gavin Newsom Tries to Shaft the Ordinary Cab Drivers

Democratic governments ordinarily raise money by taxing either the rich or the middle and working classes. This usually takes the form of fairly large personal or business tax on the lucky few or a smaller sales tax on the many. Ronald Reagan thought that the state could manufacture wealth by eliminating the tax on the rich altogether but we all know how that turned out.

San Francisco Mayor Gavin Newsom recently came up with yet another strategy - creating revenue by imposing an humongous tax on a small group of the working poor. In attempting to force the auctioning of 1,500 taxicab medallions (with "most" of the proceeds going to city coffers), this in effect was exactly what Newsom was trying to do.
  • Taxicab drivers are among the lowest paid workers serving the public.
  1. They put in 50 or so hours per week for $20,000 or $30,000 year - and these figures are from before the economy tanked. Current business is down 30% to 50% or more.
  2. Drivers lease the cabs and thus are not protected by minimum wage laws. On a bad day a driver can actually lose money.
  3. As "Independent Contractors" cab drivers are required pay a 15% self-employment tax. 
  4. As "Independent Contractors" they are unprotected by labor laws and work at the whim of company managers for whom the polite euphemism might be "eccentric" - as in, "Nero was eccentric."
  5. Drivers can be fired or have their contracts cancelled for any reason or no reason at all. Numerous veteran drivers have recently lost their shifts (i.e. jobs) because the managements of Luxor and Yellow Cab decided to convert to long-term leases.
Of course Newsom's tax doesn't directly take money away from the ordinary drivers. How could it? They don't have anything worth taking. What the plan would do would be to destroy any possibility for the average driver to ever own a taxi.
  • Under Proposition K, drivers could sign up on a waiting list and eventually get a medallion transferred into their name on a first come first serve basis. The average waiting time under this system was about 15 years but at the end of that time the drivers finally had some financial security.
  • Newsom's plan to auction off taxis effectively destroys Proposition K.
  • The Mayor claims that his plan would allow drivers on The List to compete in the auctions but realistically very few drivers would be able to come up with the necessary money. Nobody knows exactly what a medallion would sell for in an auction but the estimates begin at $100,000 and I've heard numbers as high as $500,000.
  • If you figure the average time that a driver owns (or holds) a medallion at 20 years: at the current dividend rates of $20,000 per year, Newsom would in effect be taxing the drivers on the waiting list $400,000.
In other words, the average drivers lifetime income would be reduced by 50%.