In Uber era, Chicago’s taxicab industry disappearing, study finds
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Chicago cabdrivers struggling to survive in the Uber era are fighting a losing battle, with 40 percent of all medallions “inactive” and hundreds more either in foreclosure or headed there, a new study shows.
The American Federation of State, County and Municipal Employees Local 2500 represents hundreds of cabdrivers and is continuing to organize the others.
To bolster its case, the union asked statistician James Bradach of Nonprofit Data and Applications to analyze countless pieces of information disjointedly made available in on the city’s data portal.
His report, “Run Off the Road: Chicago’s Taxi Medallion Foreclosure Crisis,” shows a surge in medallion foreclosures and a precipitous drop in both taxicab trips and driver income in the three years since City Hall created an unlevel regulatory playing field between taxis and ride-hailing.
The study’s findings include:
- 227,033 ride-hailing vehicles registered with the city as of April competing with 6,999 taxi medallions.
- The number of “monthly taxi trips” on the streets of Chicago has dropped by 52 percent over the last three years — from 2.3 million to 1.1 million.
- 774 medallions have been “surrendered to the city at some point,” with 579 more receiving foreclosure notices and 107 lawsuits filed since October.
- 2,940 taxis or 42 percent of the city’s 6,999 taxi medallions were classified as “inactive” in March after having failed to pick up a single passenger in the previous month. That means those licenses face “imminent foreclosure in the coming months,” the study says. In March, 2014, 16 percent of medallions were inactive.
- Average monthly gross income for every one of the city’s active taxicab medallions has fallen over the last three years — from $5,276 to $3,206.
- Cabdrivers who were eking out a $19,000 annual living after expenses in 2013 are now operating $4,000 in the red. That’s because their $44,000 in annual expenses have remained the same while business has plummeted.
- 39 percent of the city’s taxicab medallions are owned by small business with four or fewer licenses.
To keep a shrinking taxicab industry from disappearing altogether, AFSCME Local 2500 is demanding what it calls “comprehensive reform.”
Specifically, the union wants the City Council to: Eliminate the vehicle age limit so long as the cab can pass inspection; waive the ground transportation tax for struggling drivers; and eliminate the medallion license renewal fee.
The union is further demanding that City Hall: “Enact protections for lease drivers in the event of a fleet bankruptcy; reinstate the lottery for city-owned medallions to reduce operating costs for lease drivers; strengthen foreclosure protections in the city medallion owner rules; and eliminate “regulatory barriers” standing in the way of a “driver-to-passenger taxi ehail app” that competes with Uber and Lyft.
Ald. Anthony Beale (9th), chairman of the City Council’s Transportation Committee, said the AFSCME study underscores his biggest fears.
“I’ve said all along that the system was stacked against the cab industry and that allowing Uber and Lyft to come in unregulated put the entire cab industry at a disadvantage,” Beale said.
“In five to seven years, you’re gonna have autonomous vehicles and no people working. All you’re gonna have left is driverless vehicles,” he said. “We need to fight for jobs and keep people employed. If we allow technology to put people out of work while the fat cats at the top make millions, the whole economy as we know it is gonna collapse. The road we’re going down is going to eliminate hundreds of thousands of jobs that people are out here trying to make a living. You see it happening.”
John Aikins is one of those people.
He and his wife own two medallions, one of them purchased for $330,000 just five years ago, when cab licenses were still a “hot commodity.”
When the bubble burst, they couldn’t find a dependable driver for the second medallion and fell behind on their loans. After failing in their attempts to seek a loan modification, the lender filed suit to foreclose against them. With three children, the couple had no choice but to file for bankruptcy.
“Things are really bad. If you don’t go to the airport and wait three hours to get a fare, it’s very difficult to find fares in the city because there are so many ride-share cars. I’ve driven all the way from Belmont to Chestnut downtown and nobody flags me down,” Aikins said Thursday.
“I have three college-age children. One is thinking of moving from the dorm next semester,” he said. “Once the bankruptcy goes through, it’s going to be very hard to get any student loans for him. Fortunately, his school is not too far from where he live. So he can commute until things stabilize.”
He added, “I don’t blame Uber or Lyft for coming in. But the city has been so unfair, it’s beyond belief. Ride-sharing companies come in and the city didn’t do anything [while] we are following the same stringent rules and regulations and taxes.”
Veteran cabdriver Gilbert Uranta purchased his medallion in 2006 and still owes more than $260,000. But he hasn’t been able to make a payment on the loan for six months.
While waiting for the ax to fall in the form of a foreclosure lawsuit, the father of three has finally scheduled the knee replacement surgery he has been putting off because it will sideline him for three months.
“I’m not saying they shouldn’t have Uber. But there are too many of Uber. When you have more than 200,000 Ubers competing with 7,000 cabs, it’s difficult to make money. I start work at 4 a.m. By 7 p.m, I’m still on the street. I can’t can’t make enough money if I work 10 hours,” Uranta said.
“Things are not like what they used to be. I can’t take my kids on vacation like I used to,” he said. “I just have to make sure we survive by working extra hours. My own self with my wife — there are so many things we cannot do. We have to put the kids first.”
Earlier this year, the U.S. Supreme Court dealt the struggling taxicab industry what appeared to be a final blow.
By refusing to hear the taxi industry’s appeal, the nation’s highest court let stand a federal appeals court ruling last fall that snuffed out an attempt by the cab companies to level what they called an uneven playing field that favors Uber, whose investors include Mayor Rahm Emanuel’s brother.
The appeals court ruling essentially said that the business models between taxis and ride-hailing services are different and, therefore, they can continue to operate under different sets of rules in Chicago.
That decision validated a 2014 City Council ordinance that let Uber and Lyft operate in the city without taxi medallions, city-regulated fares, fingerprinting or other standards cab companies and their drivers must follow.