Cab Drivers Union Says Chicago Taxi Industry Is Nearing Collapse

Jeff Schuhrke

In addition to repaying loans on their medallions, taxi operators also have to pay thousands of dollars each year in city expenses, like the ground transportation tax and medallion license renewal fee—expenses that rideshare drivers are not subject to. (Cab Drivers United/ Twitter)

Ghana-born John Aikins has been a cab dri­ver in Chica­go for two decades. About 15 years ago, he decid­ed to go into busi­ness for him­self by tak­ing out a loan with his wife to pur­chase a medal­lion — a city-issued license to oper­ate a taxi — for $70,000. Pay­ing it off with­in a few years thanks to a steady stream of pas­sen­gers, they took out loan for a sec­ond medal­lion five years ago, using the first as collateral.

Watch­ing his medal­lions appre­ci­ate in val­ue over the years, Aikins planned to even­tu­al­ly sell or lease them to oth­er dri­vers, a com­mon prac­tice in the indus­try. I hoped it would be my retire­ment invest­ment, and I had planned to retire this year,” Aikins told In These Times.

But with the intro­duc­tion of Uber and oth­er rideshare com­pa­nies to the city — which can oper­ate with­out the expen­sive, city-issued medal­lions — Aikins has seen his clien­tele plum­met over the past three years, mak­ing it increas­ing­ly hard to keep up with his medal­lion loan payments.

Across the city, the num­ber of taxi rides dropped from 2.29 mil­lion in Jan­u­ary 2014 to 1.1 mil­lion in Jan­u­ary 2017, accord­ing to a report released recent­ly by Cab Dri­vers Unit­ed, AFSCME Local 2500 (CDU). As a result, the aver­age month­ly income per medal­lion has fall­en by $2,000 dur­ing the same time.

Get­ting to the end of last year, things had changed so dras­ti­cal­ly,” Aikins said. We just couldn’t make it.” After recent­ly receiv­ing a notice of fore­clo­sure on his medal­lions, his retire­ment plans are now on hold.

Aikins is hard­ly alone. In the past three years, more than 1,300 taxi medal­lions in the city have either been sur­ren­dered to the city or put into fore­clo­sure sta­tus, while anoth­er 100 or so are fac­ing repos­ses­sion through law­suits by lenders, accord­ing to the CDU report.

This fore­clo­sure cri­sis is hurt­ing small fam­i­ly busi­ness­es most of all, CDU con­tends. Of the 6,999 taxi medal­lions in the city, 39 per­cent belong to small owner/​operators, like Aikins, who own four or few­er medallions.

Because of the mis­con­cep­tion that the taxi indus­try is just big fleets, the fact that thou­sands of small busi­ness­es are dis­pro­por­tion­ate­ly being hurt by this cri­sis is too often over­looked,” said Tracey Abman, asso­ciate direc­tor of AFSCME Coun­cil 31. The taxi indus­try is real­ly about pro­vid­ing decent, full-time jobs — or was—for dri­vers.”

In addi­tion to repay­ing loans on their medal­lions, taxi oper­a­tors also have to pay thou­sands of dol­lars each year in city expens­es, like the ground trans­porta­tion tax and medal­lion license renew­al fee — expens­es that rideshare dri­vers are not sub­ject to.

CDU says the num­ber of rideshare vehi­cles in Chica­go now exceeds 227,000, while 42 per­cent of the city’s taxis didn’t pick up a sin­gle pas­sen­ger this March. The union stress­es that the decline of the taxi indus­try is a loss for the broad­er pub­lic. Unlike most rideshare vehi­cles, taxis serve peo­ple with­out bank accounts by accept­ing cash, and they also have more strin­gent require­ments on pro­vid­ing access to peo­ple with disabilities.

Aikins says he doesn’t fault the rideshare indus­try for his cur­rent predica­ment, but instead blames the city.

We are so sad­dled with rules and tax­es and renew­al fees, and the city hasn’t done any­thing to relieve us,” he said. It looks like they are just wait­ing for us to die off.”

Last sum­mer, the City Coun­cil was poised to pass new reg­u­la­tions on rideshare com­pa­nies, which CDU hoped would help cre­ate fair­er com­pe­ti­tion. The orig­i­nal ordi­nance would have required fin­ger­print back­ground checks on rideshare dri­vers and would have man­dat­ed that at least 5 per­cent of all rideshare vehi­cles be wheel­chair-acces­si­ble — rules com­pa­ra­ble to those imposed on the taxi industry.

After the last-minute inter­ven­tion of May­or Rahm Emanuel, how­ev­er, a watered-down ver­sion of the ordi­nance was passed that removed the orig­i­nal pro­vi­sions on fin­ger­print­ing and wheel­chair acces­si­bil­i­ty. While the final ver­sion requires rideshare dri­vers to obtain spe­cial chauf­feur licens­es, it allows them to com­plete the nec­es­sary train­ing online instead of through the expen­sive in-per­son class­es taxi dri­vers must attend.

Crit­ics have accused Emanuel of being biased in favor of rideshare com­pa­nies, par­tic­u­lar­ly Uber. His broth­er Ari — a Hol­ly­wood agent and the inspi­ra­tion for Jere­my Piven’s char­ac­ter on HBO’s Entourage—is an Uber investor. Also, the mayor’s for­mer chief of staff became an Uber exec­u­tive not long after pas­sage of last year’s ordi­nance. Ear­li­er this year, Emanuel’s Oba­ma admin­is­tra­tion col­league and for­mer Uber exec­u­tive David Plouffe was fined $90,000 by the Chica­go Board of Ethics after it was revealed he ille­gal­ly lob­bied the may­or on behalf of the rideshare giant in 2015.

With no help from the city, Aikins turned to Cab Dri­vers Unit­ed for assis­tance after receiv­ing his fore­clo­sure notice. Formed in 2014, CDU is a non-tra­di­tion­al union in that it does not bar­gain con­tracts, since labor laws clas­si­fy taxi dri­vers as inde­pen­dent con­trac­tors” rather than employ­ees.” Made up of hun­dreds of dues-pay­ing mem­bers and a net­work of thou­sands of activists, CDU pro­vides edu­ca­tion­al work­shops for dri­vers, con­nects them to legal ser­vices and orga­nizes them to pres­sure law­mak­ers for fair­er treatment.

Furqan Mohammed, a pri­vate attor­ney whose firm part­ners with CDU, said he has talked with over 100 owner/​operators like Aikins fac­ing fore­clo­sure in recent months.

Some of these dri­vers will owe upwards of $250,000 on these medal­lions, yet the under­ly­ing asset is worth maybe $50,000 if you can even find a will­ing buy­er,” he said.

With CDU’s help, Aikins con­tact­ed an attor­ney who recent­ly helped him file for Chap­ter 13 bank­rupt­cy in an effort to save his liveli­hood. Mohammed said his law firm is assist­ing many owner/​operators to restruc­ture their medal­lion loans, but he called it only a tem­po­rary solution.”

Longer-term, CDU is call­ing on the city to ease the finan­cial bur­dens of taxi dri­vers, includ­ing elim­i­nat­ing the medal­lion license renew­al fee and waiv­ing the ground trans­porta­tion tax for strug­gling owner/​operators.

The ground trans­porta­tion tax — paid once every two years — is due at the end of June. Aikins said the tax for two years is about $2,000.

It doesn’t make sense,” he said. The city knows we don’t have the money.”

If the city were to cre­ate a hard­ship waiv­er for the ground trans­porta­tion tax lit­er­al­ly in the next few weeks, that would send a sig­nal to these small owner/​operators that the city does care about them and is pre­pared to work on a more com­pre­hen­sive pack­age for reform,” AFSCME’s Abman said.

If relief is not pro­vid­ed [in the com­ing weeks] we will see much more dec­i­ma­tion of the indus­try,” she warned. Time is of the essence.”

Jeff Schuhrke has been a Work­ing In These Times con­trib­u­tor since 2013. He has a Ph.D. in His­to­ry from the Uni­ver­si­ty of Illi­nois at Chica­go and a Master’s in Labor Stud­ies from UMass Amherst. Fol­low him on Twit­ter: @JeffSchuhrke

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