Leasing: An Idea Whose Time has Come ... and Gone?

Whether or not you can solve a problem often depends upon what questions you ask ... or fail to ask. The questions define, and limit, the possible answers.

I was thinking of this during the last TAC meeting when Chris Hayashi said that the council would be debating the question of "gates and gas vs long term leasing." The way she phrased it didn't allow for any other possible industry model. No one in the room, except me, appeared to think that there might be another way to put the question.

Leasing, in one form or another, is like a given in this business. Everyone accepts it. Even those opposed to the powers-that-be form their alternative ideas in terms of leasing.

Yet, leasing has only been used in the taxi industry for about 30 years. Furthermore, the lease was never intended to be used in a business like this one and, in my opinion, is a very bad fit.

Before rambling on, I think it's fair to tell you where I'm coming from.

Most of my large, extended American-Irish family were (and still are) in the plumbing and heating contracting business in St. Paul, Minnesota. Some of them owned companies. Most worked out of the unions. Those who owned the shops had all been trained by the unions. My father was on both sides of the equation at one time or another and I worked as a pipe-fitter apprentice for my uncle, who was the most successful contractor in town.

It wasn't an idyllic world. The guys in the unions were always complaining about those "greedy SOBs" who wouldn't pay them enough; and the owners bitched that they couldn't make any money because of those "damn unions." But, they did make money and the workers were very well paid. Just about everybody owned a boat or a cabin on a lake, sent their kids to college and retired at 62.

My upbringing has given me an insiders view of both management and labor.  Unlike Mike Spain, I don't think that running a successful business makes one morally superior; and, unlike Mark Gruberg, I don't think that owning a company makes one evil. Nor do I think that a person necessarily achieves nobility by being a worker.

With that in mind, let's glance at the current state of the taxi business under the lease.

Nobody makes much money.

• The profit margins for the companies are extremely small. At least one company is on the brink of bankruptcy and at least one other needs enforced tipping to end up in the black each month.
• Non-medallion drivers, who already are among the lowest paid workers in any profession, have been losing their shifts en-masse as long term leasing has been taking over.
• Even the apparent winners of the system - medallion holders like myself - make comparatively little. If you tried to pay union plumbers or bus drivers the money I make, they'd strike.

Furthermore the public service that everyone gives lip service to is spotty. 

• If you could create a system more inefficient then that of sending 1,398 cabs out every shift with 1,398 different ideas as to how to work and where to go, I don't know what it would be.
• Of course the drivers don't really act independently but instead tend to swarm to areas of high taxi demand like downtown, SFO, North Beach, Moscone, the Mission, Union Street and the Castro.
• This leaves the outer neighborhoods of the city under-serviced.
• In over 30 years of leasing, no one has yet to figure out how to pick up either a radio call in the Sunset on a busy night or a person in wheelchair at any time anywhere in San Francisco.

And we act as if "The Lease" was the Eucharist placed inside the Koran laying on the Holy Grail wrapped by the Torah.

I think it's time to step outside the "gates and gas vs long term lease" box and look at the business with fresh eyes. With that in mind I'll be devoting several posts over the next month or so to examining leasing, its various effects and its consequences.

Next: A micro-history of "The Lease" and the "Independent Contract."