TAC III Part 1

The Taxi Advisory Council met for the third time under the assured and cheerful chairpersonship of Chris Sweis.

The main topics considered were a new credit card system and how to structure the long term agenda for future meetings, with the goal of making a report to the MTA Board by 12/31/2010. There was also a brief foray into the "Gate and Gas" vs "Long Term Lease" (with no other possibility considered) debate.

Credit Card Charges

Most of the discussion on credit cards revolved around a plan to put in a backseat terminal that could be operated solely by the customers. A  5% or 6% charge would be passed on to the drivers. The terminal would also include advertising with the revenues being split between the taxi companies and the drivers.

 Barry Korengold, among others, didn't like the idea of charging the drivers and suggested the costs be passed on to the customers. Jane Bolig wondered what happened to the 75 cent surcharge for the use of a credit card which was supposed to have been passed by the MTA. Barry Toranto, during public comments, pointed out that filling stations charged two sets of prices - one for credit card use and one for cash - and thought that it would be legal for cabs to do the same as long as it was posted.

 Chris Hayashi said that Visa would not okay passing on the charges to the customer due to contractual obligations that no one but she understood and that the MTA could not regulate a private contract. She added that the taxi industry could try a "kick the door down approach to Visa" (by say, refusing to accept Visa) but there's no guarantee that it would be successful.

A few people brought up the illegal fees (reputed to be as high as 10%) that some companies are allegedly charging their drivers for the use of credit cards but, for some reason, Chris Sweis didn't think further discussion of the subject would be productive. Jim Gillespie said that Yellow Cab only wanted to pass on their actual charges which amounted to about $80,000 per month. He also claimed that San Francisco was the only city he knew of that did not pass credit card charges on to the drivers.

Hansu Kim said that the Veripone system that he represents had done studies showing that customers tipped much more than normal using Veriphone, meaning that the drivers would actually get more than the 5% charge back in tips.

John Lazar gave a breakdown of the credit card charges that Luxor deals with.

• Visa and most other cards charge 3.8%
• American Express charges 5.0%
• There are also potential fraud and other problems that required staff time. 

Lazar's solution would be to raise the meter which would allow drivers to recoup the  5% and more. Athan Rebelos thought the drivers should get a 50 cent peak time surcharge along with a 50 cent surcharge for radio calls and rides with multiple stops. David Kahn pointed out that taxis in other countries charged more for picking up radio calls than for flags and suggested that we do the same here.

In short, there were many ideas but no clear agreement about what should be done.

Advertising Revenue

This was also true of the idea of splitting the advertising revenue. None of the owners liked the idea because it would be too complicated for them to figure out for each driver. No one liked the idea of audio being allowed for the advertising in the cab because, according to John Han, it would "drive me batty."

Me, too.

I don't think anyone suggested these possibilities: (1) if the revenue was large enough - to let the owners keep it and pay the 5% credit card charge themselves; or (2) To average out the amount of the advertising revenue per month and pass the driver's share back in reduced gates. But who am I to have the last word?

Part 2 tomorrow and tomorrow and tomorrow.

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

"The Lease" is a Reagan era relic that has been used primarily to bust unions and take away worker's rights. Leasing of course has existed in various forms for hundreds (thousands?) of years but the practice wasn't used in employer/employee situations until the late 1970's. The change was brought about after a Federal court judge (supposedly Supreme Court reject Robert Bork - although I've been unable to track this down) ruled that independent contractors could not legally unionize.

The ruling turned the "Independent Contract" into one of the most effective (and under-reported) political documents in American history. As one of the instruments of Vodoo Economics (The theory that giving tax breaks to the rich improves everyone's lives.), it helped transfer massive amounts of money from the middle and working classes to the rich during the Reagan era - a trend that continues today.

The Lease was introduced into the San Francisco taxicab industry by Jim Steele, the manager of Yellow Cab, in the late 1970's and was soon taken up by every other cab company in the city. When Luxor and Desoto switched to The Lease, they allowed the drivers who already belonged to the union to continue doing so until they either retired or died off, but no new drivers were permitted to join.

The Advantages of Leasing

There are two major advantages to leasing for an employer.

     1. The first is economic.

•  Without a union to deal with companies no longer have to provide: medical benefits, sick leave, maternity leave, paid vacations, retirement benefits.
• The saving go far beyond that, however, because workers are not only forbidden to unionize but are no longer employees; and thus lose the protections and benefits that 150 years of labor history and law have won for employees. There obviously is no minimum wage and the company no longer has to pay half of the driver's Social Security tax or unemployment taxes etc. When The Lease was originally morphed into an anti-labor document, companies did not have to pay for Workers Compensation either. The government forced them to start paying for this ten or fifteen years ago.
• In addition, the companies no longer need as many bookkeepers, accountants, payroll clerks, supervisors and other staff as they would if they were dealing with salaried employees.

      2. The second is power.

• I'm not going to give you a long list on this one. The simple fact that a cab company can cancel the lease with the driver at any time for any reason what-so-ever or no reason at all, the fact that there is no such thing as an unjust firing, gives the companies almost absolute power over their drivers.
• And you know the old saying, "Power corrupts and absolute power corrupts absolutely." Never truer than in the taxi business.

Taxi Company Scams

In over 25 years of attending meeting about cabs, I've never heard the hidden realities of the taxicab business seriously discussed and hardly ever even mentioned. I think it's time. We're trying to set up the business on a new footing. It's time to talk about our dirty little secrets.

I've thought of naming names but I'm already looking for motorcycle cops in my side and rearview mirrors, I don't particularly want to see a fleet of hybrids behind me. Besides, certain corrupt practices are so widespread in this industry, it would be almost rude to point out one person instead of another. Instead, I'll just take a tactic from Hansu Kim and say, "everybody knows" that what I'm saying is true.

The major corrupt practice in this business of course is enforced tipping. As far as I know the only taxi companies that don't force their lease drivers to tip are Metro and Green Cabs.

I'm not talking about the scenario where a driver slips a dispatcher a ten or twenty for a long ride but the fact that a driver has to tip five dollars in and five dollars out plus two dollars for the gas man just to be given a car to drive. In other words, if the official gate at a company is $100 per shift, the actual gate is $112 per shift.

This is the way that it has worked at every company I've worked for; and any driver who refuses to tip as required will be given bad, often dangerous, cabs to drive or won't be able get out when he or she is scheduled.

With good reason. Dispatchers, people answering the phones and other office personnel are paid minimum wage by the companies with the expectation that the rest of their pay will consist of tips from drivers. If they let one driver go without paying the whole system would eventually collapse. Drivers who persists in not tipping will often find that their leases will be cancelled for some apparently unrelated reason.

I expected to catch flak for writing this piece but I'm already getting criticism before publishing the post.  My proofreader asks, "How do cab companies force drivers to tip in and tip out? I have only known three drivers who refused to give anyone a tip ... and they got shit cabs and shifts but ... their leases were never cancelled.

How can I respond? How about with two blasts from the past? (I should point that these stories are from 15 or 20 years ago and Desoto is now under different management).  Alleged Tipping and More Alleged Tipping. If being giving bad shifts and dangerous cars to drive doesn't fit your definition of "forced", would "extorted" be more precise? In any case, two managers at two different companies told me, not only that I should tip, but how much. Their point was clear enough to me.

We're not talking chump change here. I know one dispatcher who used to clear $400 a shift. Industry wide, the lowest figure I can come up is the ridiculously, absurdly low number of $10,000,000 a year in revenue from "forced" tipping.

Over the years various other scams have been forced upon the drivers by one company or another.

• Some companies have forced their drivers to buy overpriced gas at company pumps.
• Back in the days when it was legal for cab companies to ask for insurance deposits, at least one company used to take the deposit if there was an accident regardless of whether or not their driver was at fault. If the driver complained, his or her lease would be cancelled.
• The latest scam is for companies to illegally pass credit card charges on to their drivers. At least one company is making the drivers pay 10% of the charge when it only costs the company less than 5% to process the cards. I guess you could call that a value added tax.

"We all know" that there are more scams of various kinds but I feel no need to list them all here. Corruption is part of the culture of taxi drivers under the lease and it will remain so unless, or until, drivers are given back their legal rights.

Next: Why the lease is dysfunctional.

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."

Taxi Advisory Council - Two

At the Taxi Advisory Council meeting on August 30, 2010 Chris Sweis of Royal Taxi and Big Dog City was elected as the Chair and Barry Korengold of the San Francisco Cab Driver's Association as the Vice Chair.
 
The primary emphasis of the meeting was how to decide what to study as well as how to limit the study so that they could finish a report to the SFMTA by 12-31-2010

Studying the Pilot Plan

John Lazar of Luxor Cab pointed out that the process of selling medallions was already causing problems because the companies were being given no advance warning as to when a new medallion holder might take over a taxicab. He added that many of the buyers were choosing to run their cabs as "long term" leases instead of "gates and gas"  and this was causing regular drivers to lose their shifts.

Another potential problem could be what would happen to someone who had bought a cab under a long term leasing arrangement only to have the medallion sold out from underneath him or her.

It was agreed by the council that they should deal with the above problems in future meetings as well as the more general problems of the "long term" lease vs the "gates and gas" lease.

Athan Rebelos said that they should study what effects the Pilot Plan had on:

1. Buyers
2. Sellers
3. The Riding Public

Dan Hinds thought that they should create "accountability" from future medallion holders by setting high standards for people on the list.

Jane Bolig thought that the the possibility of raising the Fixed Price might have to be explored if potential sellers held on to their medallions because they thought that the price was not high enough.

Director Chris Hayahsi said that the Pilot Plan ends when you "transition through all the buyers and sellers. Watch what happens and make recommendations."

One of Hayashi's famous visual aids (see photo) summarizes some of the things that the council will be studying.

During the public comments Mark Gruberg said that he was worried that the Driver's Fund hadn't been defined. He also said that the was offended by being left off the council. "The UTW is the oldest driver's organization," he said. "The MHA and the SFCDA both have representatives. The UTW should have one too."

MTA Board member Bruce Oka gave a short talk saying, "If the Pilot Plan fails, we're in a lot of trouble. We can't afford for that to happen ... the more input (from the Taxi Advisory Council) the better," he added, "we are listening."

Elections

For me, this was the most interesting aspect of the afternoon. After watching the last meeting, I posited the theory that TAC appeared to be controlled by an "old boys' and girls' network" of owners, stockholders and managers that outnumbered everyone else by an 8 to 7 margin.

This week my idea did not cut the mustard.

The 8 to 7 margin did hold for the election of the Chair but Chris Sweis was elected instead of one of the "old boys" like Jim Gillespie or Dan Hinds.  The real surprise, however, was that Barry Korengold was elected as Vice Chair when Athan Rebelos and Laurie Graham voted for Barry instead of Carl Macmurdo.

These people think for themselves. In fact, during the various ballots, at least five or six council members cast votes contrary to what my theory predicted. Well ... that's what trash cans are for.

Bill Mounsey said that there were a lot of talented, intelligent people on the council with contrary opinions and that, instead of belonging to one group or another, they needed to work together to evaluate the Pilot Plan and improve the industry.

Indeed, Chris Hayashi has put together a dynamic, talented and knowledgeable group of people. If they do end up working to improve the business instead of just serving themselves, no one would be happier than I.

On the Agenda

In his first real test as Chair, Chris Swies showed a little uncertainty as to how to proceed.

Athan Rebelos wanted to add the Driver's Fund to the agenda for the next meeting. Swies clearly did not want to do so. Under the rules that the council had established the week before, the TAC sets the agenda, not the Chair.  I think that Swies should have either asked Rebelos for a motion or opened the subject up for discussion. Instead he said that the Driver's Fund was something to be studied later and acted as if the matter was tabled.

However, Swies did acknowledge Barry Korengold, who also wanted to discuss the Driver's Fund, and said that they needed to determine on whom the monies in the fund were supposed to be spent. Korengold made a motion to add the matter to the agenda, it was seconded by Rebelos and the motion was overwhelming passed by the council.

TAC will also look at the new credit card plan and take on the question of whether or not a 5% charge should be passed on the drivers.

  

The Attack on the Muslim Taxi Driver

The creep in New York didn't attack a Muslim doctor, a Muslim lawyer or Muslim store clerk. He attacked a taxi driver. Of course, we make easy targets because most of what happens in cab takes place without witnesses. Nonetheless, you have to wonder if part of the hatred that Ahmed Sharif saw in the face of his assailant was directed at his means of livelihood as well as his occupation.

Cab drivers being assaulted, robbed or killed hardly ever makes the front page of a paper - certainly not as a lead story - yet it's a common event. The people who make lists shows taxi driving as only the 10th most dangerous job in America but most assaults on cab drivers and many robberies go unreported: partly because taxi drivers need to keep working in order to to earn their living and, partly, because many drivers don't think that the police can (or will) do anything anyway. It's only when a  driver is shot, stabbed or killed that taxi drivers get any attention.

During my career, I've had numerous incidents:

• There have been 3 attempted robberies.
• I've been assaulted 3 times.
• 3 people have threatened to kill me.
• I've had so many people threaten to assault me that I couldn't possibly count them all.

And, I'm a big friendly guy. You climb into my cab and you get greeted with a smile and a warm, "Hello."

Hmmm - I'm feeling myself beginning rant and I have to start my shift, so I'll make it short.

I think crimes against cab drivers should be classified as hate crimes. It's class warfare. What do you think?

Update on Francoise's Update

Julie Rosenberg, Manager of the SFMTA Hearing Secton, says that the SFMTA sent an e-mail to Francoise this afternoon informing her that her application has been approved. She can pick up her medallion on Friday.

Now that's what I call expediting.

As the Bard put it, "All's well that ends well, I suppose."

Francoise reportedly is very excited and is finally beginning to relax.

Francoise Update

I think the best thing about cab driving is the marvelous people you meet: sometimes in the cabs, sometimes behind the wheel, sometimes at meetings. For me, 2009 and 2010 have been especially good for unique, marvelous and extraordinary humans. This year, I'm getting to know Francoise Speigleman who, in her quiet way, might be more special than any of the others.

I can't imagine carrying the responsibilities that she has shouldered over the last 10 years. Nor can I imagine accomplishing what she has with the burdens she's carried. During that period, when she averaged about 1,800 hours a year of cab driving, she's raised three kids, earned a Bachelor's degree, taught art in the schools and continued working on her own art.

From 2000 to 2004, she drove taxis five days a week from 4 am to 2pm. From 2:30 pm to 6:30, she taught art to pre-schoolers. At 7 pm she'd finally get home to take care of her kids. She says that she didn't teach art for the money. She only made about $70 day doing it. She could have done just as well simply by getting a better taxi shift.

Francoise taught because she believed that children need art in order to grow into complete human beings and she did it until she became so exhausted that she couldn't do it any more.

About the only good aspect of her situation is that it should result in hearing officers becoming better trained in the future. Both Barry Korengold and Victoria Landsdown wrote to Manager of the SFMTA Hearing Section, Julie Rosenberg who said that she and the other hearing officers "would like the opportunity to ride in taxis" so that they could understand the cab business better and improve "the application process." Rosenberg also said that she had "instructed Officer Chin to expedite his review and, assuming there are no problems, we will have a decision next week."

"Expedite?" Francoise has already waited 10 days and could wait another 10 before she discovers her fate. What would truly "expedite" the situation would be a dose of common sense. Would a medallion applicant, who only needed 800 hours for proof, fake 2,300 hours worth of waybills?

This means another week of tossing and turning. Everyone, including Francoise herself, thinks she will probably get her medallion but the uncertainly is excruciating. She still feels "like a victim of an inquisition" and doesn't know if they'll claim that she's never driven a cab at all - despite the fact that she's obviously done so for 20 years.

Francsoise borrowed the $1,700 to pay for the medallion three months ago. Her kids no longer live with her but one of them just graduated from college and still needs help now and then. The medallion will cure these financial problems when it arrives.

Francoise should have had her medallion a year ago. Can you imagine her stress and disappointment? Yet she always greets you with a warm and charming little smile.