How To Make Cab Companies And Medallion Holders Go Livid At The Same Time. My Vision Of a Near Perfect Taxi Industry. By John Han.

Photo by John Han.

The other day I contemplated a formula for how to make cab companies and medallion holders both want to run someone out of town for good.  

It involves a vision for a close to perfect taxi industry as may be possible for San Francisco.  

It goes something like this....

The City and County of San Francisco would revoke ALL traditional full-time medallions back to itself and act as the holder.  For the ones already sold, it would buy them back.  Single operators are another story.     

As holder of all 1535 full-time regular medallions, San Francisco would lease all of its medallions directly to licensed cab companies at the same rate as cab companies are currently paying out to individual holders.  

This could conceivably eliminate illegal brokering.  (You industry savvy people should be able to see why it could eliminate illegal brokering.  The brokers would have to do business with the City regulators, and not individual holders who may be out of range of regulatory resources.  If, hypothetically, a City regulator were to be caught doing unwarranted business with non-licensed brokers, the accountability could be far greater for the administrator than would be for an individual holder, because things of that nature tend to make news headlines.)  

At a loose, and rough average of $2000.00 a month per medallion, 1535 full-time medallions would generate $3,070,000.00 per month in revenue, or $36,840,000 in revenue per year.  At $2200 per medallion, that loose figure would be $40,524,000 per year.  And at $2500 per medallion, it would be $46,050,000 per year.   

The imperative part of this is that the money would first be used to provide qualified, full-time drivers with healthcare and pension industrywide.  Smart people at the MTA could do the research and determine what the actual costs would be.  (What if there was enough money in there to include part-time drivers?  Probably not, but what if?)

Some would say that this is exactly what MTA Director Malcolm Heinicke attempted to do when the MTA first took over regulation of the industry.  He wanted to take all the medallions back and turn them over for profits for the MTA.  

I think Heinicke was halfway on the right track.  But he's not a cab driver so how could he know the full story?  

The meaningful difference here is that if the City were to act as the medallion holder for all of its full-time medallions, the revenue would be reinvested into the taxi industry, mainly for driver healthcare and pension.  That's a BIG, BIG DIFFERENCE from what Heinicke proposed at first a couple of years ago. 

Any surplus gains after reinvesting into the taxi industry could go to the MTAs general fund or wherever.  

This could possibly satisfy much of the drivers' worries about their lives as cab drivers, and also allow whatever surplus gains from the revenue to benefit the City's budget. 

Also, it may or may not make drivers less resistant to issuing new medallions, if doing so meant drivers had more money going towards their pensions, or lower insurance deductibles at every hospital visit.  That's just a maybe.   

In creating municipal medallions, there could be other advantages too.  For example...

Eliminating individual medallion holders could allow the City to establish staggered, but standardized shift hours so that more drivers across the board could be offered more reasonable work hours, thus balancing out the workforce and improving overall working conditions.   

This is because medallion holders often want to work a shift like a 2pm to 12am shift, or a 2pm to 2am shift.  

They have that prerogative because they are the medallion holder.  Two o'clock in the afternoon is an excellent hour to start an evening shift, and the cab companies they work with have to give it to them.  Also, medallion holders feel they've worked crummy shifts themselves for a long time before they got their medallion and now they deserve any shift they want.  Fair enough.  

On the other hand, when a medallion holder does that, they leave difficult shifts for the people below them, like crumbs off of the table.  It's not necessarily the best hierarchical organizational structure since historically, it has divided the industry into factions, i.e., medallion holders and cab companies vs drivers.   

When a medallion holder commands a 2pm to 2am shift, the best that a company can, in turn, offer a gate and gas driver on that medallion would be a 2am to 2pm shift or a 4am to 2pm.  That's not horrible, but it certainly isn't great.  Some drivers may actually like that shift.  But anecdotally, most gate and gas drivers with a shift like that, only work it because that's what's available.  

I've also heard gate and gas drivers speak of no choice but to work a more difficult 3am to 1pm shift, because a medallion holder wants to start their shift at 1pm... or an intolerable 9pm to 9am shift, because the holder wants to get going at 11am. 

The driver who told me about his 9pm to 9am shift said he drives it, not because he prefers graveyard hours, but because that's all that the company could make available to him as part of his schedule.  

There is a small percentage of drivers who work shifts like this because they like them.  But I'd say the anecdote is most drivers work them because they have to.  (This is a significant reason why I think independent contractor status is bogus to a significant degree, and why cab drivers should always be covered under Workers Comp.  Gate and gas drivers are not necessarily proprietors because they have no control to set their own business hours.  Since the profitability of taxi service is highly dependent upon which hours are spent in service, that control is a crucial factor in determining income.)

With no individual medallion holders, the City could regulate staggered shifts at, (just as an example), 3am to 3pm, 4am to 4pm, and 5am to 5pm for days, and 3pm to 3am, 4pm to 4am, and 5pm to 5am for nights, (consideration could also be given to people who like graveyard shifts).  

These are just rough examples though.  They are not by any means perfect shifts, but they are better than 3am to 1pm, generally speaking, or a 9pm to 9am shifts.  

But a more balanced workforce, and one that could also perhaps have at least its full-time drivers receive healthcare and pensions, would be a better workforce overall.

Improving the Dispatch:

Secondly, the City could use whatever money left over from medallion revenue to help subsidize costs for a Centralized Dispatching system... not 'integrated dispatch'... but a real Centralized Dispatch... one that has no affiliation to any color scheme. 

The need for Centralized Dispatch could be principled upon the fact that cab companies have no direct financial incentive to ensure that the public receive taxi services on time, or even at all.  Cab companies are vehicle leasing businesses that view the taxi drivers as the customers to whom they provide dispatch services to, not the public.

Let me reiterate that.

In our system, the cab companies consider the taxi driver as the patron and beneficiary of the dispatch services, not the public.

In my opinion, this is a flawed system.  And this is not commonly understood by the general public.  The public believes that when calling for taxis, it is the customer.    

Since cab companies have no direct financial incentive to oblige the public rider-ship in services, then companies should not be allowed to maintain exclusive control over dispatching systems, as doing so may run contrary to the public's interests.

It is unfair to the public rider-ship to forcefully restrict it to the use of cab company dispatch systems (and their limited fleets) in order to access taxicabs, when cab companies are not directly financially dependent upon the public's patronage of those services.   

I am not an economist, but allowing this would seem contrary to the idea of free enterprise, which is highly principled upon the idea of money being paid in exchange for goods and services.

Since their is no direct relationship between the public rider-ship paying money to cab companies in exchange for services rendered by the cab companies, the cab companies should therefore not be allowed to continue in its monopolization of the dispatch systems, because the business relationship between the companies and the public rider-ship is peculiar.  

Both Centralized Dispatching (true Centralized Dispatching, not "integrated") and a municipal medallion system could dramatically change the industry's landscape, but also have the potential to drastically improve the City's taxi industry overall.

Centralized Dispatching could make some smaller companies expand and larger companies downsize, thus incurring the wrath and fury of the larger cab companies.  Municipal medallions would most likely make medallion holders and owners livid beyond description.

Hence, the recipe for successfully making cab companies and medallion holders go livid at the same time could possibly be to - VASTLY IMPROVE THE TAXI INDUSTRY!!!

If done right, both Centralized Dispatch and municipal medallions could make things better overall for the industry and for the City... perhaps even significantly better.  Passengers calling for cabs would be able to access the City's entire fleet (not a company's limited fleet) via dispatch regardless of color scheme and cab drivers could have restored dignity and feel better about their jobs with healthcare and pensions.

Best of all, San Francisco would once again have one of the most uniquely structured industries in America. 

Might as well also throw in some smart phone apps like Cabulous, Uber, or Taxi Magic being standard equipment in all taxis and there may be a functional industry.      

I must now pinch myself and wake up from this dream.