More, better taxi service would benefit visitors, residents
Written by Michael Lewis on August 22, 2013
A vital concern for Miami-Dade’s economy is whether fixes to taxi service can defeat industry pushback.
It’s a stretch to call it “service.” Taxis answer calls sporadically. Many are old and rickety. Drivers either don’t know the area or earn more by driving in circles. Courtesy is rare.
A drive by Mayor Carlos Gimenez targets these flaws. It’s about time: the last tune-up 15 years ago didn’t work. An upgrade beyond cosmetic is vital to a visitor industry that is in turn pivotal to our economy.
But as the owners of the county’s 2,121 taxi medallions rev up lobbying machines that have more pickup than their cabs, a concern is that the mayor might tap the brakes or shift into reverse, as he did when he floated a tax hike, then backed down a bit, and the third time tried full retreat.
A 1998 taxi remake was supposed to fix problems by creating medallions. Every cab must bear one. And since 1998, every new medallion was to be issued to a driver, not a fleet, to be sure drivers were the owners. Medallions were to cost $5,000 in a lottery.
The county was to have one medallion-bearing taxi for every 1,000 population, so we should have 2,600-plus cabs today.
None of that happened. We have 2,121 cabs, not 2,600-plus. The county isn’t holding lotteries. Last year it auctioned six taxi medallions at an average of $415,000 each.
Cabbies can’t pay that much. Medallion owners now lease cabs to drivers at $100 to $150 daily, meaning the owner can get up to $50,000 a year for doing nothing.
The county also set up rules to make cabs both safe and comfortable. One requires that cabs be retired after 8 years.
That hasn’t happened either. For three years, citing a bad economy, the county commission has waived the rules. With each waiver, cabs aged a year. Last year’s waiver left 351 cabs 8 to 10 years old on the road, so this year we have 351 aged 9 to 11 on the road – 17% of all cabs more than a year over the maximum.
Taxis aren’t family cars. Medallion owners try to keep them going 24 hours a day, seven days a week. How many hours do you drive to reach 15,000 miles a year? Not 168 a week.
A cab that runs 90,000 miles a year could lawfully haul passengers 1 million miles if the owner could keep it running. But do you want to ride in it?
Why does a tourist area have far too few cabs that are far too old? Because the fewer cabs, the more rent a driver pays and the more a medallion sells for. In 2011 in New York City, two medallions sold for more than $1 million each.
“These medallions are property rights,” Diego Feliciano, president of the South Florida Taxicab Association,” said last year. “People have invested in them.”
True, but government has no more duty to protect that investment than it does to hold commercial property values firm or to be sure stock prices rise.
Taxi rules the mayor is considering wouldn’t take away medallions but would probably lower their value if cab standards and driver training weren’t up to speed.
The legislation, we reported last week, would allow medallion drivers to do everything they can today except pick up at the airport, seaport or Miami Intermodal Center. To pick up there, they’d have to qualify on a higher service level with better-trained drivers and newer cabs equipped for credit cards.
The concept is solid. Medallion holders who did the right thing could pick up at the ports. Those who skipped upgrades would have second-class medallions.
We’d hope rules will also add cabs. County-mandated scarcity benefits 2,121 medallion holders but harms millions of residents and tens of millions of visitors. A higher-tier medallion would benefit mainly visitors. More cabs would benefit everyone.
How many more cabs? Commissioner Xavier Suarez, who took on the issue last year, called for a study to determine whether the county is “woefully underserved.”
“It’s a stranglehold, a monopoly that we have to put an end to,” he said last August. He called the medallion system a “violation of antitrust laws.”
That’s a stretch, but the county-ordered oligopoly that limits competition for the benefit of present medallion holders – and to the detriment of drivers who would like to become owners – should end.
The county might boost medallion numbers to the one-per-1,000 target that the commission set 15 years ago, then allow all 2,600-plus to compete for upper-level permits to serve the ports. Any top-tier slots left after six months might be sold to other drivers who could meet all the requirements at $5,000 – certainly not $415,000.
If a $5,000 county permit can be flipped for $415,000, demand far exceeds supply. Open the floodgates until $5,000 becomes the market price. That’s free market, not a government-created oligopoly.
It also would allow drivers who buy medallions at $5,000 to earn far more without raising fares, because they wouldn’t have to pay a fortune to lease a medallion.
Would this improve service? It could, with proper training.
In 1985, the county required every taxi driver to take a St. Thomas University program called Miami Nice. Soon, taxi complaints fell 80%.
But in 1998 the county commission discontinued the $311,000-a-year program because of the few lingering complaints. Now we have 100% of the complaints again.
The commission is to meet on taxis in late September. Medallion owners will march in hundreds of drivers in yellow T-shirts to protest if the county does anything but allow older and older cars on the roads, tries to improve service levels or seeks to add medallions.
Business leaders, on the other hand, will explain what harms tourists and business guests and why improved taxis are vital to preserve the livelihoods of not just hundreds of drivers but a million residents.
The mayor knows what to do. Commissioners like Xavier Suarez do too. The needs of millions of residents should trump an oligopoly that the county supports via inaction in the face of the yellow shirts. Yellow is not the color to pin on our elected officials.