Monday, Aug. 25, 2008 | It’s become a common story. Farmers, airplane corporations, bus companies, morning commuters — rising fuel prices have affected practically everyone.
But high fuel costs are merely the last straw for more than 650 San Diego taxicab drivers, who are now petitioning the city of San Diego to repeal the city’s cap on taxicab permits, and, they say, recognize the inequities in the city’s taxicab industry.
Petitioning drivers said abolishing the taxi permit cap would allow all drivers to own their own cabs and will bring them job security so that they do not have to work for cab owners who arbitrarily increase lease prices or terminate their drivers on a whim.
In San Diego, cab drivers typically do not own their own cabs, but lease their cars from cab owners. After paying their gas and lease expenses, drivers pocket the rest of their taxi fares as income and many said they try to save money in the hopes of purchasing a permit to own and operate their own cab in the future. Because the Metropolitan Transit System currently limits city of San Diego taxi permits to 995, drivers must purchase permits from other cab owners.
Petitioning drivers complain that lease drivers becoming upwardly mobile is virtually nonexistent. Instead of leasing and then eventually owning a car, drivers are spending more on gas and lease, while permits have become unaffordable.
“It’s a mess. It’s modern-time slavery down there,” taxi driver Godwin Ofoedu said. “The owners are punishing you for nothing and these big companies, they charge $400 to $500 a week. What happens is that drivers practically sleep in the street to break even.”
Some cab companies and transportation experts have criticized the petition, saying that a limit to permits is necessary to prevent too many cabs from flooding the streets.
The system, as is, ensures residents and visitors are served well.
“By the sheer nature of being as large as they are, [cab companies] can address a large area,” MTS Taxi Administration manager John Scott said. “If you have all individuals and they were just individual operators, they may not be able to service the region as well because they can’t coordinate.”
Whether they are coasting leisurely along the avenue in search of customers or racing down the street with passengers, cab drivers can claim a unique independence — they can take personal calls while working, lack a fixed route and have no uniform or rigid lunch hour.
But the industry has become neither flexible nor lucrative, cab drivers say. Taxicab meter rates — how much drivers charge customers per mile — are set by MTS, which also manages the city’s buses, trolleys and commuter rails.
In contrast, cab owners can sell their permits or lease their cars for however much they would like.
“Raising lease prices is a real problem,” cab driver Ted Martin wrote in his socalcabbie blog in June. “In the 3.5 years I’ve been driving (a) cab, we’ve had two meter rate increases, immediately followed by a lease increase — the cab company took our extra money from us. Nobody in our company has had a raise in 15 years or so.”
With gas prices exacerbating ever-increasing leases, drivers said they are petitioning to remove the permit cap because they see the repeal as the only solution to their dwindling wages. The cost of purchasing a permit from its owner has increased dramatically from $50,000 to $140,000 since 2005.
If the city were to allow unlimited permits, some drivers could purchase their own cabs and save at least $20,000 in annual lease payments, petitioning drivers said. Aden Yusuf, who has been a San Diego cabdriver for 10 years, said he quit his job with USA Cab two weeks ago because he could not pay off his $350 weekly lease — much less turn a profit — after spending $40 in gas every day.
Other drivers said they still make enough to pay off their leases, but in the last few years have had to extend their hours and workweeks.
After paying for his lease and gas, one Orange Cab driver said he still managed to earn $16 an hour in a 48-hour work week. But drivers with USA Cab and Yellow Cab said they regularly work 16-hour shifts, seven days a week, to bring home $25 or $30 every day after paying for gas and lease. An American Cab driver said his best net profit of the week is $60, after a Saturday night 18-hour shift.
Since 2002, the same American Cab driver’s lease has more than doubled from $200 to $420, while his company’s meter rate has increased 50 percent from $1.60 to $2.40 in the same period.
According to a 2006 UCLA study, the median monthly salary for an L.A. taxicab driver is $2,313 — about $8 an hour in a 72-hour workweek. Yacub, who led the petition drive, said 65 drivers reported a median monthly salary of $1,800 for 72-hour workweeks — $6.25 an hour.
“People have referred to the taxicab as a ‘sweatshop on wheels,’ and that’s not far from the truth,” UCLA law professor Gary Blasi said. “Sweatshops have historically been the most exploitative and people work very long hours for not much. On the other hand, [taxicab drivers] face a lot more risk.”
City traffic engineer Stephen Celniker said the drivers’ petition came as no surprise, since taxi drivers in San Diego have asked for permits for decades. But petition author Jama Yacub said drivers are also responding to recent developments in the taxi industry, as medallion attainment has become nearly impossible to accomplish in the last few years.
If a medallion-seeking driver does not want to wait for the next lottery of permits, he or she must receive a permit from a medallion-holder through a “permit transfer.” Medallion-holders often charge their transferees a “street value” fee, which can be as high as $140,000.
Twenty-three drivers interviewed for this story said most cab drivers cannot afford transferred permits unless they do not have families to support or misrepresent their income taxes by underreporting their taxi trip logs.
While MTS already generates revenue from a $3,000 surcharge for every transfer, Yacub said the city could be making a lot more by taxing every permit, instead of sitting by while millions in additional fees paid by transferees go untaxed and unaccounted for by public agencies. Scott and Celniker said they are responding to Yacub’s proposal, but did not want to comment on the specifics of the reply.
With transferred permits increasingly out of reach, focus has shifted to the 135 new permits MTS has issued since 2001 through lottery or application. Of those, 45 permits have gone to cab companies and 80 have gone to lease drivers and lease driver associations.
Although lease drivers received a majority of the new cycle of permits this decade, petition signers said it was unfair that taxicab owners could participate at all. Many drivers cited the latest lottery in 2007 as an example, where more than 400 drivers submitted applications for 20 permits, but 10 permits went to Orange Cab — which already owned six cabs and had previously transferred the rest of its permits to other drivers.
Scott said MTS is in talks with SANDAG to comprehensively evaluate San Diego’s taxicab industry and determine whether to distribute more permits.
“If I was MTS and I issued eight [medallions] to you and each [medallion] is worth $130,000, how much have I just given you?” taxi driver Salah Barwari said. “Why was that one person given over a million dollars? Why not eight drivers being given one each? The drivers are the ones out there every day serving the public.”
In addition to saving more than $20,000, drivers said they are also seeking medallions in order to avoid cab owners who don’t maintain their cars properly or fire their drivers without reason.
Although they are prohibited from putting their own numbers and names on their cabs, San Diego taxicab drivers are not considered employees and have no union. Instead, their lease contracts characterize them as independent contractors, leaving them unprotected by state labor laws.
Almost all drivers interviewed for this story declined to provide their names, fearing reprisals from their owners. Few drivers stay with the same company for the length of their careers, since companies often terminate lease contracts after an accident occurs, regardless of who was at fault and if insurance covered the accident.
Car maintenance is also a sticking point. MTS policy requires medallion-holders to maintain their own cabs, but some drivers said cab owners often do not service their cars or threaten to terminate lease contracts unless drivers pay for the work themselves. After an accident occurs, some cab owners pocket insurance payments instead of fully repairing the vehicle.
Taxi driver Abdelaziz Arr said he does not feel safe driving his own cab, which has poor shocks, a dying engine and doors that do not close completely.
“I asked my owner a couple of times again and he’d say, ‘You’re asking me for too much to fix,’” Arr said. “When the car was taken to MTS for vehicle inspection and came back, it was still the same. There’s a ‘Check Engine’ light on, always. I have a black tape over the light, not to scare the customers.”
West Coast Cab general manager Michel Anderson said the city should continue issuing permits based on the formula it established in 2001, but also said that a permit cap repeal would do nothing to address drivers’ grievances. As a business and land use consultant, Anderson led the push in the late 90s to distribute 135 more permits.
“The new group that’s saying we should just throw [the permit cap] out, they forget that there were those of us making the argument that they’re trying to make now,” he said.
Taxicab permit regulation has been debated in academic circles for decades, while studies of taxi deregulation in San Diego — which occurred between 1979 and 1983 — disagree when it comes to whether service quality and drivers’ earnings decreased or increased at the time.
Adrian Moore, vice president of research with the libertarian non-profit think-tank Reason Foundation, said that the overwhelming majority of economic studies have concluded that consumers have benefited from taxi deregulation.
“Every city that has opened up the taxi market has had lower taxi prices in the long run, more taxis and better taxi service for the people who use them,” Moore said.
For decades, the taxicab industry has had a local presence in San Diego. In 1970, San Diego Mayor Frank Curran and most of the City Council were indicted for taking bribes from Yellow Cab, which has since changed hands. In the 90s, taxicab drivers would crowd City Council meetings to ask for more permits, Celniker said.
“Considering how volatile the issue was for so many years, that petition is the first significant thing I’ve seen in a while,” Celniker said. “It’s a basic argument … certainly we are familiar with this point of view.”
Low wages, high leases, drivers demanding recognition — it’s become a common story.
Please contact Lea Yu directly at lea.yu@voiceofsandiego.org with your thoughts, ideas, personal stories or tips. Or set the tone of the debate with a letter to the editor.