Death and Taxis

Why can't Hattie Neelon get to a funeral? Well, have you ever tried to get a cab in S.F.?

If the taxi initiative is the most obscure, confusing, inconclusive measure on the November ballot -- and it is -- the initiative will almost certainly be backed by the slickest ad campaign of the election season. According to a letter that the DeSoto Cab Co. sent to taxi drivers, nine taxi companies are planning to pay $500,000 to well-connected lobbyists Barnes, Mosher, Whitehurst & Partners to craft the campaign.

It will likely be a brilliant campaign, backing an initiative that purports to create a taxi riders' bill of rights, when it really just increases the profit potential of a bunch of taxi companies that have shown almost no interest whatever in anything about their customers, save for their customers' money. It's a mean piece of sentiment-milking, money-grabbing fraud, and San Franciscans should vote it down.

In opposing November's taxi referendum, I have taken the same position as most all of San Francisco's taxi drivers. They cherish their driver-only permits, and they'd hate to see the taxi companies push their way into the line to get new medallions.

But please don't get me wrong. At heart, the core interest of taxi drivers -- keeping the number of taxis on San Francisco streets as low as possible -- lies squarely against the public good. And in this, the drivers should be cut off at the knees.


For a city that claims to be the heartland of the new digital economy, San Francisco has a mighty primitive way of getting its high-tech entrepreneurs to appointments with venture capitalists.

When you pick up a phone to reserve a cab here, you're calling a dispatcher who has no formal employment relationship whatsoever with taxi drivers. The drivers may -- or may not -- pick you up, depending on how they feel. Taxi company lawyers decided long ago that it was financially beneficial to insist that drivers be "independent contractors" who are not eligible for benefits, job security, or any other amenity that employment provides. So cab companies act merely as leasing agencies, paying a few cabbies who have managed to obtain city permits for the right to use their medallions, and renting them out by the day to the lion's share of the 6,000 drivers who haven't managed to obtain a permit.

Instead of ordering cabbies to pick up customers, a taxi company dispatcher conducts the equivalent of a miniauction, sending out word along the airwaves that a "fare" wishes to be picked up; any particular driver may accept, or ignore, this offer, at his pleasure. A skipped fare doesn't hurt the driver -- there will always be more than he can handle, given the current shortage of permits (which I'll get to in just a moment). And it doesn't hurt the company, which makes its money on the $83.50 per shift a driver pays to rent a permit-adorned cab.

If there is no way of knowing the exact numbers, everyone in the cab industry admits that fares are missed all the time. That's because, by taxi-driver design, there are almost never enough taxis on the street to meet demand. Taxi drivers accomplish this artificial shortage of cabs by using politics to limit the number of taxi permits issued by the city.

It's an economist's adage that you can't put a price on anything unless it's scarce. And half-ounce or so taxi medallions are more valuable than gold in this town. So scarce are the city permits -- the waiting list is 2,600 names, with an 11-year wait -- that the lucky few drivers with permits lease medallions to the cab companies for an allowed maximum of $1,800 per month. The city, for its trouble, receives a one-time, $227 application fee. There are now 1,381 permits on the street.

The city increased that number by 100 this year. The drivers fought even this paltry number, and it's easy to see why: A house providing an $1,800-per-month revenue stream would be worth more than $200,000.

According to word on the street, drivers are frequently paid under the table much more than the maximum-allowable $1,800. Before that limit went into effect two years ago, cabbies say medallion-holders were earning between $3,000 and $3,500, a price that some observers contend now approaches $3,800. Another way permit holders get around the $1,800 lease limit is for medallion-holding drivers to "rent" their cab-company shifts directly to non-medallion-holding drivers for more than $100 per shift.

"That's between drivers. It's like pennies from heaven. The money's out there. It's a madhouse," says Phil Ferrucci, a dispatcher at Veterans Cab. "Drivers don't want to see more cabs because they're making money hand over fist. If they poor-mouth you, they're full of shit. The fares are there."

To maintain their permits, taxi drivers must, by law, work two-thirds of the shifts in a given year, assuming a five-day work week. So cabbies will work a handful of three-hour "shifts" on the weekend, keep a normal day job, and then pocket tens of thousands of dollars in fees as they lease the medallions during the rest of the week. When you see lines of cabbies lounging outside hotels, waiting for airport fares, you can bet that many of them are permit owners, "working" their obligatory shifts. And you can bet the farm -- or a taxi medallion -- that these guys aren't likely to respond to calls from elderly ladies in the Western Addition.

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