We’ve all heard about the millions of unfortunate workers and entrepreneurs who have been economically devastated by the pandemic. It’s no joke. We get that. But while the majority have suffered, a few secretly laugh their way to the bank. And one of those lucky guys is (get ready) the lowly New York yellow cab driver.
Now, I’m not talking about the more ambitious of the rank and file — ya know — the guys who bought medallions for over a million dollars only to have the value of that right to pick up street hails plummet by 90%.
I’m talking about the bottom of the industry: the guy who leases a taxi by the week or even one shift at a time. That is the guy who’s making the killing.
Let me give you a little perspective. Back in the early 90’s (the last time I drove a cab), the compensation worked like this: I would lease a taxi for a period of 12 hours. The cost was in the neighborhood of $80 — $90 depending on the day of the week. Then I’d gas up the beast for the shift. Generally another $25. Assuming I was driving a $90 Saturday, I’d start out $115 in the hole.
For the next 12 hours, I would bill my passengers $1.50 when they embarked from 6 AM to 8 PM, and $2 from 8 PM to 6 AM. (There was a $.50 night surcharge.) I would then add $1.25 per mile in five 1/5th mile increments and 20 cents per minute while sitting at a light or in traffic. These were the official rates.
If a passenger rode from 1st Avenue and 10th Street to 1st Avenue and 50th Street at 5 in the afternoon — and we didn’t stop in traffic or at a light (highly unlikely — but useful for our analysis), the fare would be $4, according to the fare structure in 1993.
At the end of the 12 hours, whatever I collected from my passengers — minus that $110 nut — was effectively what I earned for twelve hours’ work. Usually, if guys worked hard and were reasonably good at the job, they’d make between $100 and $150 for themselves. Most drivers were happy to make $100.
Now we move to today. Fortunately, for reference in this article, I still have friends in the cab industry. One driver I know is currently leasing a taxi weekly for $65 per day! That is apparently, the going rate! $32 per shift. Wowzers! Drivers are in short supply and as such, owners are at a distinct disadvantage. They’re happy to get anything for their cabs!
Remarkably, today’s taxis are so fuel-efficient that the cost of gas to the driver hasn’t risen much. But let’s say for the sake of argument, it’s elevated to $40 per day. My friend is paying $105 in total for a 24-hour shift.
Now let’s break down our same $4 ride from 1993. The initial charge at 4 PM is $2.50 + $.50 MTA surcharge for a New York City trip + $.30 improvement surcharge + $2.50 congestion price surcharge for any ride below 96th Street + $1 rush-hour surcharge. Add it up, folks: $6.80 when you step in. And…the traveling music has doubled since 1993 to $2.50 per mile. Waiting time (which doesn’t apply to this ride) is up 150% to 50 cents every idling minute.
Our same $4 ride from 1993 is now $11.80. If my friend works one 12 hour shift per day, his cost is still down from 1993 while his revenue has effectively almost tripled! Pretty good deal, I’d say.
But what about demand? With the new price structure and the emergence of Uber and Lyft, can he even find a fare? Guess what! Demand for yellow cabs is off the chain according to this driver. Half the fleet is lying fallow because of the driver shortage. Drivers have either migrated to Uber/Lyft — or are on unemployment compensation. And with New York reawakening from the pandemic, we’re out in droves for the summer. Every time he turns a corner? There’s another rider with his arm in the air.
The fish are jumping in the boat — metaphorically speaking.
So why are people still riding in yellow taxis? Yes, Uber and Lyft are convenient. But they have their surge times — and pricing! That’s right. When demand is high, Ubers can be hard to find. And they’re allowed to price gouge. Yellow cabs aren’t afforded that luxury. The taxi rate stays regardless of the at-the-moment demand.
While Uber drivers are held accountable for their behavior— which might make an Uber driver feel safer for the rider — that same Uber driver once drove a yellow in most cases. It’s the same guy. And often, he’s leasing that sedan from an Uber fleet owner. He doesn’t own his vehicle.
Thus, it’s not all that different. Except you have to whip out your phone, go into the app, and then hope there’s an available driver in the neighborhood who wants the fare. Compare that to simply raising your arm to summon a yellow and you get the picture. The yellow cab isn’t dead yet.
The owner of my friend’s cab sees what’s on his drivers’ meters because he cuts them a check every Sunday for what they’ve booked on the job (almost everybody pays with plastic). And he’s beside himself at the numbers. His hard-working immigrant drivers are earning $2000 per week! But the driver shortage is such that he’s afraid to rise the lease price for fear he’ll lose that driver and won’t be able to replace him.
I know. One hundred k per year isn’t really all that much in New York City. But still, 30 years ago, that same guy would be making 30k for the same work. And you can’t tell me that the price of stuff is up 300% (because it isn’t).
So there’s the best-kept secret in New York. You don’t have to feel sorry for your taxi driver. He’s making out like a bandit relatively now that the city is reawakening.
New York is alive and well. Just ask a yellow cab driver. Of course, he won’t admit it. But trust me. It’s all a big happy face for the leasing old school New York City cabby.