Cab Drivers Union Says Chicago Taxi Industry Is Nearing Collapse

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.”

>> The article above was written by Jeff Schuhrke, and is reprinted from In These Times.