New York taxi drivers win big, finally, with a fare hike and limits on agent fees

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Bhairavi Desai at City Hall. (Dana Rubinstein)
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An alliance representing taxi drivers won a series of victories, some unexpected, in its ongoing battle for better working conditions.

In the Taxi and Limousine Commission vote, drivers got a 17 percent fare increase, which was widely expected, and tighter regulation of a major industry sector, which was not.

Starting in September, the average fare for a three-mile trip will rise from around $13 to $14. And the flat rate from JFK to Manhattan will rise from $45 to $52.

Taxi drivers wanted more than that. And, somewhat surprisingly, they got it.

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"We not only need the fares to go up and a health and disability fund," said Bhairavi Desai, the head of the New York Taxi Workers Alliance, the closest thing the city's 50,000 taxi drivers, as independent contractors, have to a union, at a Wednesday afternoon rally. "But we also need them to vote yes on eliminating the 5 percent credit card fee and on stopping the rampant overcharges that have gone on far too long in this industry on the lease amount that the drivers pay to the companies."

There was never much doubt about the need for a fare hike, or the need for a health and disability fund—to be derived from a six-cent surcharge per taxi trip—or that they would pass when the Taxi and Limousine Commission board voted on Thursday.

One Times writer recently described the industry's practices as "feudal," while another said it is, "as politically connected and oligarchical a regulated industry as you’ll find in the city."

The Alliance says drivers average between $85 and $130 in take-home pay for every 12-hour shift, while New York City's taxi and limousine commissioner, David Yassky, puts the average at $130.

"On some shifts they're averaging below minimum wage," said Desai. "On all shifts, they're averaging below a living wage."

"It's a hard life," said Mohan Singh, a 57-year-old driver with a family, no health insurance and back pain. "It's a hard life."

The plan that was approved today hewed closely to the one initially proposed by the Bloomberg administration.

First, the city sought the replacement of the five-percent credit-card transaction fee, which was deducted from the take-home pay of taxi drivers, with  a flat $9 fee, also to be paid by the driver.

Today the commission voted for a $10 flat fee instead.

The Alliance was never particularly enamored of the size of the proposed flat number, but on Wednesday Desai said that at the very least, it would reduce the fluctuation in drivers' incomes.

"We're still willing to live with it because we see this as way to get out of the grip of the 5 percent," she said.

From the city's standpoint, the idea to remove the incentive drivers now have to claim their credit-card readers are broken and make their passengers pay cash.

Secondly, drivers sought tighter regulation of their transactions with leasing agents.

As the industry now stands, 40 percent of New York city taxi medallions are managed by agents, who pay medallion owners a stipend for the privilege of leasing out those medallions to drivers.

Until today, the city forbade leasing agents from charging drivers more than $800 per week for so-called DOV (driver owned vehicle) medallions.

But in reality, drivers operating in that system have paid much more.

Agents routinely lease them not only medallions, but also vehicles, in a lease-to-own model that the Alliance and city describe as usurious, and that the agents describe as fair, given the drivers' lack of credit histories.

"It's a $30,000 car, but just your car payments alone are $60,000," said Desai.

Agents also tack on lots of fees, say $100 a week for hiring a secondary driver, $150 a week for maintenance contracts, maybe $26 a week for vague sounding "vehicle expenses."

Once all the ancillary fees are tacked on, the total cost for the drivers comes to closer to $1,400, according to Yassky.

By contrast, the big taxi fleets, which generally run their own medallions, are governed by a separate, higher lease cap, one that takes into account both the lease of the medallion and the lease of the vehicle, and the fact that the garages are one-stop shops that service vehicles, employ mechanics and dispatchers, and are open 24 hours a day.

The fleet's operations are heavily regulated. The agents' are not.

The city and alliance sought to protect drivers from the whims of agents and ever escalating costs by basically formalizing the existing cost structure. 

"I would rather have a clear set of rules that people can be held to than a system that exists outside the rules," said Yassky, on Wednesday. "That way, people know what's fair and what's not fair."

David Pollack, the executive director of the Committee for Taxi Safety, a group that represents such agents, countered that the new lease cap would kill the businesses of agents like Basil Messados, the Queens Medallion Leasing owner who's switching to a fleet model, by putting them at a competitive disadvantage with big garages that can charge more.

But Desai says that, "If the TLC doesn't regulate [the drivers' fees], those numbers will keep going up higher and higher."

In a phone interview Wednesday evening, Yassky said he was not particularly optimistic the rules would pass, saying, "It means we're going to have to undertake a huge enforcment effort against the DOV agents that are operating outside the rules."

Pollack, meanwhile, described himself as "cautiously optimistic" that the proposal would fail.

As it turned out, it succeeded.

Today, the commission passed a version of those lease caps, according to TLC spokesman Allan Fromberg: Agents will be able to charge $1,114 for medallions, and $1,347 for the whole package.

Desai and Yassky could not be immediately reached for comment.

Pollack answered his phone, but would only say, "It's not a good time right now."