Monday, January 3, 2011

The Need for a Universal Driver's Lease: Part 1

Speaking of exercises in Nostalgia and theory ...

As many readers know, I have no love for the leasing system and would like to see a return to employer/employee method of organizing the taxi business. There are two main reasons for this:

1. A split meter would take cab companies out of the leasing business and put them back into the taxi business where they belong. They would be forced to deal with the realities of the market place. Their incomes thus would depend upon finding better methods of giving service rather than looking for new ways of extracting money from their drivers.
2. The so-called "Independent Contract" deprived cab drivers of basic "worker's rights" and left them unable to form unions and powerless to fight abuses by the companies.

I've come to realize, however, that my dream ain't gonna happen. The only other person with a voice (the vast majority of drivers are unrepresented and have no voice) speaking in favor of "employee rights" for drivers is Christopher Fulkerson and the two of us don't a movement make.

Company owners and managers like leasing because:

 1. It reduces company expenses. They don't have to pay:
     a) Payroll taxes.
     b) Social Security Taxes.
     c) Unemployment taxes.
     d) Medical or retirement benefits.
     e) Sick pay, vacation pay, etc.
2. Companies don't have to worry about unions that might strike for all or part of the above.
3. They don't have to worry about the ups and downs of the market. In fact, they tend to do very well in mild recessions because so many unemployed people are desperate enough to fill even the worst shifts.

Medallion holders like leasing for many of the same reasons that companies do:

1. They benefit, we benefit, from reduced company expenses, and don't have to worry much about the ups and downs of the market place.
2. We're the real "Independent Contractors" in this scenario.
     a) Companies bid for our services.
     b) If we don't like one company, we can take our medallions to another.

The Municipal Transportation Agency doesn't want taxi drivers to be employees because:

1. I suspect that MTA administrators don't much like the unions they do have. They sure don't want a gang of striking cab drivers on their hands.
2. This makes it easier for them to raise fees and dream of "income streams."

The United Taxicab Workers might talk about a union but they've done precious little to bring one about.

1. I think that they're caught in a conflict of wanting "employee rights" for drivers who aren't employees and they've never quite figured out what to do about it.
2. If they demanded that all drivers should be employees, they're afraid of losing the support of drivers who want to be under a lease.
3. If they fight for the people on the lease, they lose the ones who want "employee rights."
4. In this confusion, they've been divided and conquered.

Lease drivers may not want to become employees because:

1. They like the freedom that leasing gives them. They can go anywhere they like and work any way they want.
2. They may not fully understand what they are giving up when they sign the lease.
3. What they are actually free of are all the legal rights that have been granted to employees over the last hundred and fifty years including: age, race and sex discrimination laws; the right to a minimum wage; the right not to be fired without a cause, the right to collect unemployment, etc - not to mention the right to having half their social security taxes paid as well as actually having social security benefits to collect when they get old.

To be fair, it should be said that the high number of medallion holders (probably around 20% of all drivers) has drastically cut cab company profits. According to Pre K medallion holder, Art Lempke, the money given to the medallion holders created by Prop-K have made it impossible for companies to afford paying benefits to regular drivers.

On top of this, the whole industry has been geared to leasing for over 30 years. Changing to a employee/employer system would drastically change the business in unpredictable and, possibly, destructive ways.

Yet -  the "Independent Contract," which defines the relationships in the lease, is more a fictional than a legal document in the way it's used in the taxi business. It is supposed to be a contract between parties of equal power.  While this really does describe the relationship between companies and medallion holders (see the bit about medallion holders above), it's a joke when applied to non-medallion holding drivers. They are powerless and easy prey for those who want to abuse their power at the drivers expense.

The problem is how to stop these abuses while keeping the companies solvent and improving service to the public.

Next up: Company scams.

1 comment:

  1. This is an excellent and frank survey of the lease situation. I am very happy to learn you support the revival of the drivers' and companies' sharing the meter. I think the companies would be very motivated to improve services then, they would make more money and have a more hands-on portion of the business, and the drivers would benefit from getting benefits. ...also, great photograph!