All About Yellow Medallion Cabs

THE NEW YORK CITY
TAXICAB FACT BOOK

3rd Edition

Written by Bruce Schaller
Third edition published by the New York City Taxi and Limousine Commission
May 1994.

PREFACE

New York City's 11,787 yellow medallion taxicabs and 40,000 licensed taxi drivers serve 226 million passengers a year [in 1993]. With revenues totaling $1 billion annually, taxis are a vital part of New York City's transportation network. They transport 34% of all fare-paying bus, subway, taxi and for-hire vehicle passengers traveling within Manhattan. Manhattan adults hail cabs an average of 100 times a year. Cabs are also the primary ground carrier between Manhattan and LaGuardia Airport and provide substantial service for Kennedy International Airport.

Because of their central transportation role, their prominence in Manhattan traffic, and the fact that taxicabs are privately operated as well as closely regulated, information on New York's cabs commands a broad audience. This TAXICAB FACT BOOK profiles the taxi industry's three constituent elements -- passengers, drivers and owners.

The FACT BOOK presents comprehensive and detailed information on:

Why passengers use cabs
The role of taxis in the city's transportation network
How much passengers pay in fares
The average taxi trip
Drivers' birthplaces, native languages and how and why they come into the industry
The training and qualifications needed to become a driver
How drivers spend their days
Type and condition of cars used as cabs
Accidents involving taxis
The public's complaints about service
What affects the quality of taxicabs and drivers
How TLC has sought to upgrade service quality
The taxi industry's structure and how cabs are operated
Taxi drivers' and owners' incomes
How the economic recession affected taxi revenue and service quality
New owners' finances
Influences on the trading value of medallion licenses.

REGULATING THE TAXI INDUSTRY

The Taxi and Limousine Commission was created in 1971 by City Council legislation to regulate and improve taxi and livery service in New York City and establish an overall transportation policy governing these services.

As a city agency regulating a private industry, TLC licenses 40,000 taxicab drivers and the owners of the 11,787 taxicabs [these figures as of 1994]. TLC does not own, operate or service any cabs.

TLC has several tools to improve taxi service. TLC establishes licensing standards for drivers and owners (such as requiring that all new drivers pass an English test and training course), determines the size, age and condition of cars that may be used as taxis and adopts rules that drivers and owners must abide by. TLC staff issue licenses to qualified applicants. Taxi inspectors stop cabs on the street to check for proper licensure; a separate group of inspectors thoroughly inspect vehicle every four months. Inspectors issue summonses when they find rule violations or unsafe conditions. TLC investigates passengers' complaints, issues and adjudicates summonses for rule violations, and imposes fines, or suspends or revokes licenses, where appropriate.

Commission policies are set by nine commissioners: a salaried chairman and eight unsalaried members. Five members represent the boroughs of the city an d the others are at-large members. The Chairman is the full-time executive head of the agency.

NOTE: The TAXICAB FACT BOOK focuses on yellow medallion taxicabs, the only vehicles allowed by New York City law to pick up passengers hailing on the street. Related industries are in the category of "for-hire vehicles," which are permitted to serve passengers by prearrangement, generally through telephone calls for service. This sector includes vehicles commonly called car services, liveries, black cars and limousines. The Taxi and Limousine Commission licenses 30,000 for-hire vehicles and the 600 base stations from which they operate. See TLC's separate FOR-HIRE VEHICLE FACT BOOK for information on this industry.

QUICK FACTS

There are 40,000 licensed taxi drivers and 11,787 licensed taxicabs in New York City.
226 million people rode in taxicabs in 1993. (Details)
Passengers paid $1.0 billion in fares and tips in 1993. (Details)
On an average day, drivers serve 30 fares, travel 141 miles and gross $190 in fares and tips. (Details)
Driver take-home pay averages $6.26 to $8.24 per hour. (Details)
69% of all trips carry one passenger, compared with 24% that carry 2 passengers, 4% carry 3 passengers and 3% carry 4 passengers.
About 400 new drivers are licensed each month.
30% of driver applicants failed the English test between July 1993 and March 1994. (Details)
New drivers come from 85 countries and speak 60 languages. (Details)
1.1% of all licensed drivers are women.
3,670 taxicabs are driven by the medallion owner. 20% of these are leased to a second driver for a second shift. Most other cabs leased to two drivers on a double-shift basis. (Details)
4 years is the average age of a taxi. (Details)
13,595 taxicab licenses were outstanding when the number was capped in 1937. The number of taxicabs declined to the current 11,787 by the late 1940s as some owners let their licenses expire.
The current form of medallion number (e.g., 1A23) was adopted in 1965. Before 1965, taxicabs were assigned a new sequential number each year.
Yellow became the uniform color for all cabs in 1969 to distinguish them from "gypsy" cabs. Before 1969, cabs were painted in a variety of color schemes.
8 Checker cabs are still on the road, all between 13 and 19 years old.

TAXIS: A CRITICAL LINK

Taxis provide ready mobility for millions of New Yorkers . . .

226 million people rode in New York City yellow medallion taxicabs in 1993. [Taximeter and odometer readings taken at taxi inspection.]
With an average of 1.4 passengers per trip, there were 161 million taxi trips in 1993 and 172 million in 1996, or about 510,000 taxi trips on an average weekday.
Taxi ridership has increased by 42% since 1977.
Manhattan adults hail a cab an average of 100 times a year.

[See number of trips 1990-1999 for updated and more detailed information.]

. . . and play a major transportation role . . .

Taxis carried 13.2% of riders using taxis, for-hire vehicles, subways or buses in New York City in 1993, an increase from 12.0% in 1990. [Updated from 1993b]
Taxis play a particularly prominent role in travel within Manhattan. Cabs transported 34% of all paying passengers traveling by taxi, bus, subway or for-hire vehicle in 1993.
Cabs are the number-one means of travel from Manhattan to New York airports, carrying 39% of all airport-bound passengers from Manhattan. [1993b]

WHO TAKES CABS AND WHY

The primary riders are Manhattan residents on routine trips . . .

70% of all taxi trips transport Manhattan residents.
66% of Manhattanites' taxi trips are between home, work and/or recreational pursuits (i.e., restaurants, entertainment and shopping). Providing quick, convenient, door-to-door service, taxis function as the equivalent of the suburban family car--not surprising given that 78% of Manhattan households do not own a car. [[1993b] and 1990 U.S. Census]
Outerborough residents, suburbanites, U.S. residents from outside the New York area, and foreign visitors each account for between 5% and 10% of all trips.

. . . though cabs are equally important to visitors

There are about 38 million passenger-trips by visitors annually, representing an average of 2.5 passenger trips per overnight visitor. [1993b]
Hotel guests average one taxi trip to or from the hotel each day.
Visitors use cabs primarily to go between hotels, business appointments, entertainment spots, restaurants, bus and train stations and the airports. Trips that are both to and from these places account for 50% of all visitor taxi trips, compared with 15% of all taxi trips.
The majority of U.S. visitors who ride cabs are in New York on business, while most foreign visitors are tourists.

Trips involving home or work place predominate

34% of all taxi trips start at the passenger's home
19% of all taxi trips start at the passenger's place of work.
Other common origins and destinations are entertainment, restaurants, shopping and train or bus stations.
Between 6 a.m. and 10 a.m., at least 70% of all trips begin at the passenger's home.
Passengers using cabs during the mid day typically travel between business appointments, work, hotels and shopping.
After 8 p.m., at least 50% of all trips are bound for the passenger's home, generally originating at entertainment attractions or work places.
15% of all fares are reimbursed by the passenger's employer.

Trips center on Manhattan, especially Midtown

80% of all taxi trips began and/or ended in the Manhattan business district (60th Street to the Battery, river to river) in 1988. [1988 trip sheet sample]
42% of all trips started in Midtown Manhattan (30th to 60th Streets, river to river) in 1988.
This trip profile was essentially unchanged morning, midday, afternoon and evening in 1988.
4% of all trips began and/or ended at LaGuardia or Kennedy airports. (The number of trips to Newark airport was negligible.) [1991b]
8% of all taxi trips served the "outerboroughs" (Brooklyn, the Bronx, Queens, Staten Island or northern Manhattan) in 1988. More than one-half of the outerborough trips began in Manhattan south of 96th Street. Only 1% of all trips both began and ended in the outerboroughs.

Percent of trips by area of origin. The outerboroughs are defined as the Bronx, Brooklyn, Queens, Staten Island and Manhattan above 96th Street. Source: trip sheet sample.

Taxis are a primary way to go to the airports . . .

36% of all passengers traveling from the five boroughs to LaGuardia came by cab in 1990-91, as did 14% traveling to Kennedy International Airport. [1993b]
Cab usage was most common among those who began their trip in Manhattan; 39% of passengers traveling from Manhattan to either airport used a cab in 1990-91, outranking the 30% who used a for-hire vehicle and 31% who used all other modes combined (i.e., cars, vans or mass transit). [1993b]
Nearly one-half of all passengers going from Manhattan to LaGuardia take a cab.
Taxi ridership departing the airports is much higher--by 50%--than ridership to the airports. Presumably, many people who use other modes to the airport, such as a for-hire vehicle or private car, take advantage of the convenience of the taxi dispatch lines when leaving the airport. [The 50% figure is based on a sample of 1990 taxicab trip sheets.]

. . . though for-hire vehicles are preferred by New York residents

Local residents were more likely to take a for-hire vehicle than a cab from Manhattan to the airport in 1990-91 (39% of the trips were made by FHV, 28% by taxi and 32% by another mode). [1993b]
By contrast, visitors were much more likely to take a taxi than a for-hire vehicle from Manhattan to the airport (47% used cabs, 24% used FHVs and 30% took another mode). [1993b]

Taxi receipt

FARES

Short, quick trips are most common

HOW THE FARE IS CALCULATED: The current fare [as of 1994] for fare increased approved since this report was published] is $1.50 for the first unit and 25 cents per additional unit. A unit is composed of distance (one unit equals 1/5 mile) and/or wait time (one unit equals 75 seconds). As the cab moves at more than 9.6 mph, the meter clocks distance. When the cab is stopped or moving at less than 9.6 mph, the meter clocks time. Thus, traveling 1/10 mile, then waiting at a stop light for 37 1/2 seconds, generates one unit and a 25 cent charge. This method of calculating fares is uniform throughout the U.S. and conforms to federal standards for taximeters.

The average trip cost $5.25 in 1993. (Average fares based on odometer and taximeter readings taken at TLC inspection.Wait time is estimated based on inspection data and 1990 and 1993 trip sheet samples.)
Without any change in the rate of fare, the typical fare has declined by 25 cents since 1990, presumably reflecting a shift toward shorter trips.
The average trip traveled 2.47 miles and took 11 minutes, including 4.6 minutes charged as wait time, in 1993.
A typical short trip that stays within Midtown Manhattan averages 1.13 miles and costs $3.88.
A medium length trip, for example from Grand Central Station to Union Square or Greenwich Village, averages 2.19 miles with 5.9 minutes of waiting time, and costs $5.17.
A longer trip in medium to light traffic, for example from Tribeca to the Upper East Side, costs $6.74 for 3.75 miles and 4 minutes of waiting time.
Airport fares are sensitive to the amount of congestion, which varies widely for different airport trips, and the route chosen (i.e., taking the Triboro Bridge versus the Midtown Tunnel from LaGuardia). Using geographically direct routes, in moderate traffic, fares from LaGuardia to Midtown average $15; the cost from Kennedy to Midtown is $27.
Including different traffic conditions and routes, fares between Midtown and LaGuardia are $14 to $20; between Kennedy and Midtown from $25 to $30.

Taxi fares are near 20-year lows after adjusting for inflation

The fare for today's average trip grew from 76 cents per trip in the early 1950s to $2.12 in the early 1970s to $5.25 today.
Adjusted for inflation, the fare has varied between $4.78 and $7.50 since the consumer price index was begun in 1957.
Adjusted for inflation, the fare was slightly lower in the 1960s and much higher in the 1970s than it is today.
Compared with the public transit fare, the taxi fare is near post-World War II shows the ratio between the taxi fare for today's average trip and the bus and subway fare. (This comparison illustrates the overall relationship between taxi and transit fares.Since the two fares are charged on different bases, the ratio varies for actual trips depending on the length of the trip, number of passengers and traffic conditions.)

The taxi fare is lower in New York than in most major cities

Of the 12 American cities with 1,000 or more taxicabs, the taxi fare is higher in 6 cities (including Philadelphia, Los Angeles and Boston) and lower in 3 cities. (Aside from New York, cities with 1,000 or more cabs are Atlanta, Baltimore, Boston, Chicago, Dallas, Detroit, Houston, Los Angeles, Dade County (Miami), New Orleans and Philadelphia. Taxicabs in a 13th city, Washington, DC, charge by a zone system rather than a metered fare.)
Taxi fares in two other cities are about the same as in New York (Chicago's fare is slightly less for distance but more for waiting time; New Orleans's fare is slightly more for the drop and waiting time but less for mileage compared with New York).

WHO OWNS AND RUNS CABS

Diversity in operations developed over 30 years

A BRIEF HISTORY: While all 11,787 taxis serve passengers in basically the same way, cabs are operated in a wide variety of ways. Until the early 1970s, there were two types: (1) owner-driven cabs, operated by individuals who owned the medallion license, owned the car and drove full-time, and (2) fleet cabs. Each fleet dispatched at least 25 (and sometimes several hundred) cars twice a day from a central garage.

This division was incorporated into local law, specifying that 4,969 cabs are to be individually owned and the remaining 6,818 are to be fleet-owned. This provision still distinguishes individually-owned licenses and "corporate" licenses owned in groups. (The term "corporate medallions" is colloquial, recognizing that all of the original fleet group are owned by corporations. Most corporations own two medallion licenses to limit the exposure of each medallion to lawsuits. In a typical fleet situation, the same one or two stockholders own a number of two-cab corporations. A few individual medallions are also owned by persons who have formed personal corporations. While attractive because it limits the owner's personal liability, this step is also costly because owner-driver liability insurance rates, the least expensive rates in the industry, are not offered to personal corporations.)

This system began to change 20 years ago, first among fleets, then individuals.

What happened to fleet owners: In the early 1970s most fleets, under economic and union pressures, went out of business or sold many of their medallions to small operators, dubbed "minifleets." Many of the new owners drove former fleet medallions as owner-drivers. Minifleet cabs were also leased to drivers who worked every day and paid weekly lease fees to the medallion owner. Less than 10% of the 4,500 minifleet cabs are now driven by a stockholder or officer of the company owning the medallion, in effect, owner-driven. This figure is down from 35% in 1987. [Admin. and 1987 survey of over 7,000 taxi drivers].

Fleets converted from paying drivers commissions, typically around 50% of the take on the meter, to leasing. Under leasing, drivers pay a flat fee for use of the car and keep all fares above that amount less the cost of gasoline. TLC first allowed leasing in 1979.

Meanwhile, among individual licensees:

In the early 1980s, some individual owners began to lease out their cabs. Owner-driving of individual cabs declined from 100% in the 1970s to about 75% in 1986 and 52% in 1990. TLC rules now require that new owners drive their cabs (see below), and the figure has risen to 75%. [Data from 1987 survey of over 7,000 drivers, [1990] and Admin.]

Some individual and minifleet owners decided to remain as but turned daily operating responsibilities over to agents. Thus arose lease management companies, which run cabs on behalf of owners.

[See "Villain or Bogeyman? New York's Taxi Medallion System" for extensive discussion of the development of leasing and its impact on driver incomes and the structure of the taxi industry.]

This melange became a problem . . .

RE-TAILORING REGULATIONS: TLC rules did not keep up with the changes of the 1970s and 1980s, producing a regulatory nightmare. Service problems followed since deficiencies in regulation prevented TLC from holding taxi owners accountable for service complaints and overall quality. To rectify the problems TLC adopted landmark rule changes to hold owners accountable for service provided by their cabs. (When warranted, TLC also forces medallion owners out of the industry. See below.)The two central changes were:

A provision to increase owner-driving of individual medallions. All owners who bought an individual medallion after January 7, 1990 are required to drive the cab at least 210 nine-hour shifts every calendar year. (The owner is allowed to lease the cab for a second shift.) A total of 1,200 cabs were made permanently owner-driven between 1990 and 1993.
Rules to ensure that owners can identify the driver(s) permitted to drive each cab under an owner's or operator's control. For most cabs, drivers' names are listed on the "rate card" -- the vehicle license posted in each cab -- for ready checking by TLC enforcement inspectors. Some taxi owners, such as fleets and some management companies, want the flexibility to change drivers every day. They need not name each driver on the rate card but must operate out of an established facility in a businesslike manner, and must keep detailed records of the driver on each cab and shift. This is intended to enable TLC to follow up effectively on passenger complaints, a key to quality control.

Who runs cabs now

(This section is based on TLC driver of record information.)

Fleets operate 2,620 cabs out of 28 fleet garages, leasing each cab for 12-hour shifts. The largest fleet runs 205 taxis; 13 fleets operate at least 100 cars. The smallest fleet operates 30 cabs (25 is the minimum required to be a recognized fleet). Fleet status allows an operator to use back-up vehicles and to "sponsor" drivers (allowing drivers to drive before criminal background checks are completed).
Other shift leasing: 2,730 cabs are operated by management companies whose insurance policies (and rate card entries) allow any licensed driver to drive the cab. Management companies may lease cabs by the shift or for periods of weeks or months but lease primarily by the shift. This is the fastest-growing segment of the taxi industry. There are 29 such management companies running at least 25 cabs and 37 other companies that operate between 5 and 24 taxis.
Leased long-term: 2,370 taxis are leased to driver(s) for periods of weeks or months; these "named drivers" are on the rate card as shown above. Cabs are leased by the owner or an agent or manager for the owner. In many cases, the driver(s) provide and maintain the car. These are known as "medallion-only" leases.
Individual owner-drivers account for 3,670 taxicabs. About 20% are leased for a second shift.
Owner-drivers of minifleets account for fewer than 400 cabs. About 30% are leased for a second shift.

Form of operation of the 11,787 taxicabs, by major type, April 1994.

The pace of turnover among owners

About half of all medallion licenses have been held by their current owners for 7 or fewer years. About one-fifth have been owned for 3 or fewer years, and one-quarter have been owned for over 10 years.

Percentage of medallion licenses which have been owned by their current owners since each year, e.g., 20% of current corporate owners bought in 1980 or earlier.

Taxi receipt

TAXI FINANCES

$1 billion a year in revenues

Taxicabs generated $1.002 billion in fare revenue in 1993. (Revenue figures include the night surcharge and tips, which are assumed to be 15% of the fare. Data based on odometer and meter readings taken at inspection.)
Total industry revenue increased by 3.2% between 1992 and 1993 and by a total of 5.8% since 1990. Revenues increased primarily because a greater number of cabs operated two shifts a day rather than single shifts.
Revenue averaged $85,100 per taxicab in 1993 -- or $190 for an average shift that covers 141 miles.

[See Revenue trends through 1999 for updated and more detailed information.]

How recession, seasonality and a fare increase affect revenues

The recession reduced revenues by 4.2% between the fall of 1990 and the spring of 1992; during this period revenue for a typical shift fell from $195 to $186. Revenues rebounded, however, to $197 per shift in the fall of 1993.
Taxi revenues fluctuate with the seasons. Revenue per shift was 7% to 10% less in July and August of each of the last four years compared with the months between October and May.
Night shifts generated $23 more than daytime shifts in 1990; $10 of this difference was generated by the 50 cent per trip night surcharge. [1991a]
The 12% fare increase of January 1990 initially increased fare revenue by only 6% as half the increase was offset by a fall-off in ridership.The ridership loss was recovered by June 1990, however. [Ridership data from taximeter readings.]

[See Revenue per mile trends through 1999 for updated and more detailed information.]

Where the fare dollar goes

Each dollar of revenue generated by fares and tips is divided, on an industry-wide average, as follows: 44 cents to drivers' earnings, 17 cents to owners' net income, 19 cents to vehicle depreciation, maintenance and liability insurance, 10 cents for gasoline, 8 cents for administrative costs and workers compensation, 1 cent for the City motor vehicle tax and 0.9 cents for TLC and DMV license fees. Derived from [1994].

Derived from cost and income data; industry-wide totals.

Lease drivers' incomes: $17,200 to $21,800 per year

Netting out their payments for gasoline and lease fees, take-home earnings averaged $21,800 a year for fleet drivers in 1993, $19,600 for other shift lessors and $17,200 for long-term lessors. (For all cost, revenue and profitability data in this chapter, the "fleet" category is comprised of the long-standing fleets that are members of the Metropolitan Taxicab Board of Trade (MTBOT).The "other shift lessors" category is comprised of fleets created in the last several years and other operators who lease cabs on a shift basis. This categorization most accurately captures differences in cost structures in the two groups. See page 6 in [1994] for a further discussion of this point. Note that MTBOT fleet drivers also pay union dues of $3 per shift.)
Drivers' take-home averaged $6.26 to $8.24 per hour (based on a 10 hour work day covering the time from the start of the first trip to the end of the last trip).
Drivers' main expense is the lease fee they pay to taxi owners. Average lease fees in the fall of 1993 were $79 for fleet day shifts and $88 for fleet night shifts. Other shift lessors charged $80 for day shifts and $85 for night shifts. Lease fees for long-term lessors averaged $475 per week for each driver. A substantial number of long-term lessors lease the medallion license only, buying and maintaining the car themselves. Average lease rates were $310 per week for each driver. [1994]
Drivers also pay for gasoline, using an average of 12 gallons per shift. Most fleet drivers and other shift lessors use regular gasoline while the large majority of long-term lessors and owner-drivers use premium gasoline. Drivers use premium gasoline to keep their engines cleaner and to improve engine performance. [Survey of drivers renewing their licenses in December 1993.]
Fleet drivers and other shift lessors work an average of 5.5 days a week for 48 weeks a year; long-term lessors work an average of 5.5 days a week for 50 weeks. [Survey of drivers renewing their licenses in December 1993 and taxi odometer readings.]
Despite working more shifts each year, long-term lessors earn less than other drivers.One reason for the difference is that nearly all long-term lessors buy premium gasoline instead of regular gasoline. Also, paying a weekly lease fee, their revenue is affected by vehicle breakdown or bad weather. [1994.]

[See "Factors of Production in a Regulated Industry: New York Taxi Drivers and the Price for Better Service" for analysis of the importance of driver incomes to service quality.]

Major operating costs involve the car, maintenance and insurance

The largest operating costs are for vehicle maintenance, liability insurance, gasoline and vehicle depreciation and interest. [1994]
Other major costs are workers compensation (if the cab is leased), the City's motor vehicle tax on taxicabs and general and administrative costs.
Vehicle depreciation and interest costs decreased significantly between 1989 and 1993 because many taxi owners replaced their vehicles less frequently. Extended replacement cycles more than offset the increased cost of a new car. Annual vehicle costs for owner-drivers and long-term lessors, for example, fell by about one-third and fleet costs fell by 4%. [1994]
Workers compensation premiums doubled from 1989 to 1993 for a typical policy from the State Insurance Fund. Workers compensation is required for all taxicabs that are not driven by the medallion owner.

Owner profits average at least $15,500 for leased cabs.

Owners' net income, or profits, is the difference between their lease income and expenses. In 1993, profits averaged $16,000 for fleet owners, $15,500 for other shift lessors and $21,300 for long-term lessors. [1994]
Profits as a percentage of lease income ranged from 32% to 45% in 1993.
This level of owner profits is corroborated by the willingness of taxi management companies to pay taxi owners between $1,200 and $1,400 a month (or $14,400 to $16,800 a year) solely for the use of the license. Under this arrangement, the lease manager retains all lease fees, pays all owner operating expenses, finds drivers and manages week-to-week operations of the cab. The $1,200 to $1,400 monthly fee paid to the taxi owner thus reflects profits on taxi operations.

Owner-drivers net $36,000 a year.

The typical owner-driver works 276 shifts a year and is the only driver of the cab. [1994]
Owner-drivers averaged $54,310 in revenues in 1993 and incurred $18,335 in expenses, yielding a net income of $35,975. With no leasing arrangements between owner and driver, this income figure represents a combination of driver income and owner profits. [1994]

A market value for taxicab licenses

WHY A VALUE TO A LICENSE? City law limits the number of yellow medallion taxicabs to 11,787. The number was capped in 1937 at 13,595 and declined over the next decade as some owners let their licenses lapse. Taxicab licenses first gained value after World War II as demand for taxi service grew while the number of cabs did not. The continuing limit has produced values of over $100,000, paid by a buyer when the license is transferred from one owner to another (with TLC approval of the new owner's qualifications). These license transfers are often called "medallion" transfers, referring to the painted aluminum medallion, signifying a taxi license, that is affixed to the hood of every yellow medallion cab.

Individually-owned medallions transferred at an average value of $137,200 in 1993. The average price of corporate medallions was $170,200. See Table 1.
Medallion prices reached all-time highs in the spring of 1989, then fell $20,000 during the recession to a low of $125,000 in mid-1991 for both individually and corporately-owned licenses. Prices have risen sharply since then, however, setting new records in early 1994 of $210,000 for corporate-owned licenses and $150,000 for individually-owned licenses.
The steep recent run-up of medallion values can be attributed primarily to falling interest rates and extended loan payment schedules. For an individual buyer, loan payments were the same in early 1994 as two years earlier. For corporate, loan payments increased by 9% between mid-1992 and early 1994 but the increase would have been far greater had not financing terms become more favorable. [1994]
Like fare revenues, medallion prices fluctuate with the seasons. Prices tend to stabilize or decline mid-year, reflecting the summer drop-off in taxicab usage, and rise in the fall as cooler weather approaches.

[See "Villain or Bogeyman? New York's Taxi Medallion System" for extensive discussion of the medallion system.]

How new medallion owners turn a profit

Despite record-setting medallion prices, new taxi owners are able to turn a profit by minimizing expenses and running the cab long hours. Even after making $21,600 a year in payments on loans used to finance their medallion purchases, new corporate owners buying in the fall of 1993 could net $6,100 a year, assuming that they lease the cab year-round.
New owner-drivers can take home $27,400 a year, net of operating costs and loan payments. This income is based on a finding that individual owners who bought their medallion licenses in the last several years work 20% longer than other owner-drivers. [1994]

TWO NEW OWNERS' FIRST-YEAR FINANCES

[Source: documentation filed for medallion license transfers. Data portray two transfers in the fall of 1993 with typical financing and other terms, except that corporate buyers are more likely to purchase used cars than new cars, and the $4,400 paid by the individual buyer is below average. See [1994] for details.)

INDIVIDUAL BUYER

The purchase:

New owner-driver pays $147,000 for medallion license plus $7,350 for the City's 5% transfer tax and $5,100 for attorney's and medallion broker's fees, other transactions costs, licensing fees and insurance deposit. Buyer puts down $31,600 of his own money and obtains a 10-year, $110,000 loan at 9.9% interest and a 7-year, $18,000 loan at 14% interest. Loan payments total $1,785 a month.

Buyer purchases a '92 Chevrolet Caprice used police car with 105,774 miles for $4,400.

First-year finances:

      Revenues          $66,261
      Operating costs    17,391
      Loan payments      21,420
      Take-home net      27,450

Revenues reflect the fact that new owner-drivers drive considerably more miles than the average owner-driver. Operating costs include depreciation and interest on the vehicle, maintenance, insurance, fees, taxes and misc. expenses.

Take-home net reflects a combination of the owners' return on his investment and his "wage" from the labor of driving.

CORPORATE BUYER

The purchase:

Buyer forms a minifleet corporation which purchases two medallion licenses, paying a total of $350,000 to the seller plus $17,500 for the City's 5% transfer tax and $9,100 for attorney's and medallion broker's fees, other transactions costs, licensing fees and insurance deposit. Buyer puts down $116,000 of his own money and obtains a 10-year, $260,000 loan at 10% interest. Loan payments total $1,718 a month per medallion license.

Buyer purchases two new '92 Ford Crown Victorias for $18,618 each. He leases each cab to two drivers on a long-term basis for $490 per week for each driver. Assuming that the owner can keep his cabs leased year-round, the owners' lease income will be $50,960 annually.

First-year finances for each cab:

      Revenues          $50,960
      Operating costs    24,198
      Loan payments      20,616
      Take-home net       6,146

      Owner return on cash
        down payment      10.6%

CARS

Why cabs are the definition of high-mileage cars

New York City taxicabs traveled a total of 750 million miles in 1993, or an average of 63,200 miles per cab. [Taxi odometer readings taken at vehicle inspection]
Total industry mileage grew by 5.5% from 1990 to 1993.The growth appears to result from: (1) an increase in the number of double-shifted cabs due to the growth of taxi management companies; and (2) an increase in per-cab mileage as drivers worked longer shifts to compensate for sluggish business during the recession.
Mileage varies considerably among operators. Cabs run by fleets and other shift lessors, in service two shifts per day and 7 days per week, averaged 76,100 miles in 1993. Cabs leased long-term (usually to two drivers) averaged 66,400 miles. Owner-drivers, generally driving one shift a day, 5 or 6 days a week, averaged 42,200 miles.

[See mileage trends through 1999 for updated and more detailed information.]

Taxi owners rely on heavy-duty cars with large engines

Taxi owners use cars with body-on-frame construction to endure the city's streets. (Unibody cars have not been durable when tested by taxi fleets.) Heavy duty suspensions and brakes and larger radiators further fortify them.
The most common engine is the 5.0 liter, V-8. The 5.0L is used by 42% of all cabs including the majority of individually-owned cabs. [Admin.; April 1994 data]
36% of all taxis (and a majority of fleet cabs) are equipped with 4.3L or 4.6L engines. Fleet owners believe that larger engines lead to more accidents.
22% of all cabs are used police cars with 5.7L or 5.8L V-8 engines. These large power plants are popular primarily among lease management companies, newer fleets and long-term lessees.

The Chevrolet Caprice is the industry workhorse

87.7% of cabs on the road are Chevrolet Caprices.Most of the remainder (11.7%) are Ford Crown Victorias. (Both are body-on-frame cars.) [Admin.; April 1994 data]
There are also 8 Checker Cabs ranging in age from 13 to 19 years; 3 Peugeots remaining from a test of diesel-powered taxis that was conducted over a decade ago; 38 Dodges and 7 Plymouths.

Vehicles are becoming older

The average taxi is four years old. [1994]
The frequency with which taxi owners replace their cabs varies from two years, for MTBOT fleets, to 8 years for owner-drivers. (These figures apply to owners who buy new cars. The total age of vehicles bought used is similar.)
Nonfleet cabs are retired from service with average odometer readings of 325,000 to 345,000 miles. Fleet cabs are replaced with an average of 158,000 miles -- though they are often then sold and used with another taxi owner's medallion license.
Many taxi owners are replacing their cars less frequently than they did several years ago. Cabs leased long-term were replaced at a rate of every 5 years in 1993 compared with 3 years in 1989; owner-drivers' replacement cycles increased from 5 years to 8 years. (There is no vehicle age limit per se; TLC allows vehicles to remain in service as long as they pass inspection every four months. Vehicles cannot be put into service, however, if they are more than two years old.)
A survey of owners replacing their vehicles in 1993 found that the two main dispositions for old cars were "use for parts" and "junked." [Admin.]
Taxi owners have also switched from primarily buying new cars to relying mainly on used cars. Of all replacement cars, 43% were new cars in the 1993 fiscal year compared with 61% in 1990. [Admin.]
Vehicles have become much older as a result of owners' increasing reliance on used cars and less frequent vehicle replacement. Since 1989 the number of cabs that are four or more model years of age increased by 2,245 at the same time that the number less than 12 months old fell by 570.

Most cabs fail their thrice-annual inspection . . .

Cabs undergo a detailed safety and emissions inspection every four months at TLC's centralized inspection center. The center opened in August 1989 and represents a major commitment by the City for vehicle safety and low emissions. (Previously, cabs were inspected at decentralized service stations using much less sophisticated equipment.) Two hundred items are checked at each inspection.
71% fail the initial inspection, an increase from 57% in the 1991 fiscal year.
Older cars fail much more frequently than newer models. During inspections in mid 1993, the failure rate for leased cabs was 25% for cars in their first year of service (model year 1993) compared with 50% for MY'92 cars, 71% for MY'91 cars and 76% to 92% for earlier years.
Due to better upkeep and lower annual mileage, owner-drivers' cabs fail inspection less frequently than do leased cabs; 21% of model year '92 owner-driven cabs failed their mid 1993 inspection compared with 54% of MY'91 cars and 62% to 79% of older cars.

Initial inspections from May to August 1993.

. . . and the problems are often serious

25% of all cabs failed the brake test in mid 1993. Brake problems include worn brakes, which lead to excessive stopping distances, brake imbalance, which can cause cars to veer during a hard stop, and excessive rolling resistance, which causes premature wear on brake linings. [Admin.]
19% of all cabs failed for excessive emissions in mid 1993.
64% of all cabs failed on one or more visual inspection items, which range from torn seats to a cracked chassis.
31% of all cabs failed inspection in mid 1993 for serious structural defects, such as deteriorated or loose balljoints, cracked or bent chassis, broken shocks, floorboard cracks or holes, deteriorated drivelines, loose or missing swaybars, cracked motor mounts and/or cracks, looseness or excessive wear on the center link. These structural problems can undermine the safe operation of the car and/or the driver's control of the vehicle.In some cases, the comfort of the ride is also reduced. [1994]
Failure for these safety-related defects peaked at 50% of all leased cabs that were 6 or more model years old and 30% of owner-driven cabs that were 5 or more model years old.

Innovations in color and license plates

The ubiquitous yellow cabs were once many colors. In 1968 the City Council mandated that all cabs be painted yellow, thus standardizing their appearance and differentiating them from the rising number of illegal "gypsy" cabs. Before 1968 each taxi fleet adopted its own color scheme, as did individual owners. Only one fleet was painted yellow.
The format for cabs' license plates changed in 1990. To ease identification, the plate is now the same as the medallion number, e.g, 8Y19. A small 1, 2, etc. is placed after the medallion number when new plates are issued. Previously, the plate number began and ended with the letter T, with numerals in between.
1,800 cabs have rooftop advertising.

Liability insurance coverage dropped as costs rose

HOW CAR INSURANCE WORKS; A SHORT PRIMER ON A COMPLEX TOPIC: In New York State, liability insurance policies consist of several components. Perhaps the most important is the "no fault" provisions that cover medical expenses and lost wages. State law requires $50,000 in no fault coverage for each person injured in an accident. Starting in 1990 TLC also required an additional $50,000 in coverage for each person in the cab.

Insurance also covers "pain and suffering" losses sustained from an accident and property damage, available from insureds that are at fault for the accident. In a $10,000/$20,000/$5,000 policy (by convention, policy limits are expressed as 10/20/5 for simplicity), the minimum required under State law, the first two figures refer to the amount ($10,000 per person, $20,000 per accident if several people are involved) that injured parties can recover from the insurance policy for pain and suffering as well as medical expenses and lost wages that exceed the no fault limit of $100,000. The third amount ($5,000) refers to the maximum obtainable per accident for property damage.

The number of cabs with 100/300/50 coverage decreased from 10,150 in 1986 to 2,150 in 1993.
The number of taxis with 10/20 or 20/40 coverage rose from 1,600 in 1986 (the self-insured fleets) to 6,600 in 1993. The economic recession and cab owners' desire to cut costs precipitated this change.
Cabs operated by "management companies" account for much of the decrease in coverage to 20/40 or less. Many individual owner-drivers, however, reduced their coverage from 100/300 in 1992 to 30/60 in 1993 as one insurance company stopped offering 100/300 policies.

Accidents involving cabs have varied

There were 4,417 accidents involving taxicabs in New York City in 1990 and reported to the State Motor Vehicles Department; 82% involved personal injury to drivers, passengers, pedestrians and/or bicyclists involved in the accident.
While accurate DMV data are not available since 1990, insurance company records indicate that the number of accidents was stable from 1990 to 1993. (As a result of budget cutbacks for data input, the license plate number is often missing in DMV's computerized accident file for accidents occuring since 1991. Where no plate number is shown, the vehicle cannot be identified as a taxicab.)
1,193 taxi passengers and 1,096 taxi drivers were injured in accidents involving cabs in 1989. These figures represent one injured passenger for every 170,000 trips and one injured driver for every 3,800 work shifts. (More recent data are not available.)
Two taxi drivers and 2 taxi passengers were killed in cab accidents in 1989. In addition, 5 others (drivers or passengers in other vehicles and pedestrians) were killed in accidents involving taxicabs in 1989.
The most common accidents involve rear end collisions (35% of all taxi accidents), right angle collisions (22%) and accidents where one vehicle is overtaking another (20%). (Data for 1989.)
The most common injuries are to the head and neck. The most common complaints concern pain.

DRIVERS' WORK DAYS

10 hours, 30 trips, 141 miles a day . . .

Shifts averaged 10 hours in 1990. Most drivers worked between 8 and 12 hours a day, counting from when they pick up their first fare until they drop off their last fare of the day
The average driver spent 50 minutes a day on one or two breaks. [1991b]
Drivers averaged 30 trips per shift, serving a total of 42 passengers each shift, in 1990. [1991b]
The average cab traveled 141 miles per shift in 1990.
60% of a cab's time (and mileage) was "live" -- spent with a passenger -- in the fall of 1990. Live time was well over 80% during times of peak demand for taxicabs. [1991b]
Between 80 and 150 miles are traveled on most shifts, though some shifts cover over 200 miles.
Owner-drivers who bought their medallions in the last several years drive 20% more miles a year, and bring in 24% more in fares, than owner-drivers who bought in earlier years. [Odometer and meter readings taken at TLC inspection.]

Total miles traveled, including mileage going to and from fleet garages, home, etc.

. . . and usually just one passenger.

69% of all trips carried only one passenger, compared to 24% with 2 passengers, 4% with three passengers and 3% with four passengers. This works out to an average of 1.4 passengers per trip. [Sample of 1993 trip sheets.]
Multi-passenger trips nearly doubled in the evening compared to the morning (20% of all weekday trips between 7 a.m. and 11 a.m. compared with 36% between 10 p.m. and 1 a.m.) [Sample of November 1988 trip sheets.]

Airports and visitors are a substantial source of work for taxi drivers.

While LaGuardia and Kennedy International Airports accounted for only 4% of all taxi trips, these trips generated 14 percent of all fare revenue in 1990. [1991b]
LaGuardia trips outnumbered Kennedy trips by about four to one. [1991b]
Airport service appeared to generate the same flow of fare revenue as nonairport service in 1990. The dead time spent waiting in airport hold areas offset the high fares generated by airport service. [1991b]
The airports were served most frequently in 1990 by long-time drivers who worked shorter days and often owned their own cabs. Fleet drivers served the airports least frequently. [1991b]
Visitors are an important source of ridership for the taxi industry; one in seven taxi trips transport people hailing from outside the metropolitan area. Tending to take longer trips, visitors pay nearly $1 of every $5 in fares. [1993b]

Riders' demand for service varies during the day . . . .

An indicator of the relationship between the supply of and demand for taxi service is the amount of time that drivers spend finding the next fare-paying customer. Higher demand for service means that the next fare will be found more quickly.
On average, 6.5 minutes elapsed between dropping off one passenger and picking up the next passenger for fleet drivers in the spring and summer of 1993. (Time spent waiting in airport hold areas and dead-heading after airport drop-offs is not included in this figure.) [Fleet trip sheet sample]
Time spent finding the next fare varies considerably over the course of a day, from lows of under 6 minutes from 10 a.m. to 8 p.m. when taxi demand is most intense throughout Manhattan, to a high of 8 minutes after midnight as demand for service ebbs.
Another measure reflecting the supply of cabs and demand for taxi service is the proportion of cabs cruising with a passenger. On several average weekdays in 1988, 25% of cabs observed in Manhattan below 96th Street during were unoccupied, i.e., available for service. This figure varied from a low of 11% in midtown during the afternoon rush hour as many office workers leave work, to a high of 50% downtown in the morning rush hour. [1989a]
Taxis comprise between 20% and 60% of all vehicles in motion on Midtown avenues. The percentage is highest at mid day and tapers off as more private cars take to the streets during rush hour. [1989a]

Time spent seeking the next fare, spring and summer 1993. Time spent in airport hold areas and deadheading from the airport is excluded. Breaks of over 20 minutes also excluded. Source: fleet trip sheet sample.

. . . but fare revenues are constant . . . .

The per-hour flow of total fare income was nearly identical for day and night shifts in the fall of 1990, suggesting that the taxi industry adjusts the amount of service so that earning power is equalized across the day. [1991b]

. . . as some drivers adjust their hours to times of peak demand.

Drivers of single-shifted cars (which includes most owner-drivers and some long-term lessees) have more flexibility in their work hours than do drivers of double-shifted cars. Single shift drivers begin work at various times, with about 40% beginning between 7 a.m. and 9 a.m. Most quit between 4 p.m. and 1 a.m. [1991b]
Shift lessors set standard working hours for each shift, most commonly dispatching drivers at 5 a.m. or 5 p.m. for 12-hour shifts. Drivers control the cab for this period.

DRIVER QUALITY

Experience makes for good drivers

WHO PROVIDES "GOOD" TAXI SERVICE: A 1988 study found that "good" drivers generally worked full-time and had several years of experience driving a cab. These experienced, full-time drivers had been the subject of far fewer complaints for service problems such as refusing passengers, overcharging, treating passengers rudely or abusively or driving unsafely. Part-time, relatively novice drivers had the worst records, with violation rates 5 1/2 times greater than full-time, experienced drivers.

More-recent studies have also shown the benefits of experience and the implications for the quality of service offered by various segments of the taxi industry:

The most experienced drivers violated TLC rules 4 to 5 times less often than drivers in their first year. [Summons records for October 1990-March 1992]
Drivers with better-than-average complaint records have driven 5 or more years.
Owner-drivers, who drive full-time and are generally more experienced than lessees, violated TLC rules less than half as often as drivers working for taxi management companies.
These differences are found with respect to the most serious rule infractions as well as all infractions taken together.

Unfortunately, high turnover among drivers means that most taxi service is provided by drivers with less experience, many of whom work part-time:

53% of all taxi service is provided by drivers with fewer than 5 years of experience.
Only 34% of all taxi service is provided by full-time drivers with at least 5 years experience.

[See "Factors of Production in a Regulated Industry: New York Taxi Drivers and the Price for Better Service" for analysis of driver experience levels.]

Number of TLC rule violations per 1 million miles operated by each category of owner/operator in the 18 month period between October 1990 and March 1992. Includes summonses written by TLC inspectors only [due to data limitations] and adjudicated at TLC's Tribunal with a finding of guilt.

Turning these findings into effective policy: the owner-driver rule

Owner-drivers have long been regarded as among the best and most experienced taxi drivers. In buying a taxicab license, owner-drivers have made a commitment to the industry. Most have several years of driving experience when they purchase a license, and go on to drive for a number of years.

Based on the findings concerning the links between owner-driving, experience and good quality service, the Commission adopted policies to expand the ranks of owner-drivers. Since 1990, TLC rules have required that buyers of individual medallion licenses drive their cabs at least 210 nine-hour shifts every year. Owner-drivers who no longer wish to drive must transfer (sell) the medallion license to another driver.

The first new owners affected by this rule, the 447 drivers buying individual taxi licenses in 1990, incurred violations at the lowest rate of any group.

Strengthening training of new drivers

The public frequently complains that many drivers lack sufficient English proficiency and knowledge of the City's geography. In response, TLC has expanded and upgraded licensing standards in these areas while retailoring training courses around different drivers' needs.

In 1990 the training required for all new drivers was expanded from 20 to 40 hours with the addition of a BUS TOUR of the city and greater emphasis on geography and driver-passenger relations.

In June 1992 TLC implemented a THREE-TIERED TRAINING program for new drivers. Under this program, the English test for new drivers was upgraded and expanded, a new "advanced placement" test was created and the 40 hour course was augmented with two new courses of 14 and 80 hours in length. Applicants are placed in one of the 3 courses based on their test scores:

The ACCELERATED 14 HOUR COURSE is open to applicants who speak English well, are familiar with the city and can use maps and indexed materials readily, as shown by passing the "advanced placement" exam.The accelerated course allows well-qualifed applicants to obtain a license more readily. Only 2.4% of all applicants qualify for the 14 hour course. Many applicants choose to skip the test because they feel a need for the full 40 hours of instruction, do not want to study on their own, and/or want to take the 40 hour class with their friends.
The standard 40 HOUR COURSE is taken by 50% of all applicants.
20% of all applicants qualify for the 80 HOUR TAXI/ESL COURSE, which is designed for applicants who need to improve English skills but would otherwise make good drivers. Half of the course consists of English as a second language (ESL) instruction tailored for taxi drivers.
The remaining 30% of all applicants fail the English exam, an increase from 20% in 1992. These applicants may retake the test after 3 months (without paying a second license application fee).

Ridding the industry of "bad drivers"

In examining passenger complaints, TLC found that one percent of the 40,000 licensed drivers were the source of 10% of all serious service complaints. This small number of drivers could rack up many infractions because they could continue driving as long as fines were paid.

TLC sought to rectify this situation with the "BAD DRIVER" program. This program, begun in October 1989, ensures that drivers who persistently violate TLC rules will have their licenses suspended and, after as few as 3 serious violations, revoked. The result of this program has been a pronounced decline in passenger complaints. The worst drivers have been forced out of the industry and the existence of this program has had a potent deterrent effect on others. For example, the number of drivers persistently commiting serious rule violations dropped by 50% in the program's first year. [1990]

The decline of most service complaints

At least in part as a result of the bad driver program, passenger complaints about service refusals and rude behavior declined since 1989.
Traffic rule violations have replaced service refusals as the number one passenger complaint.
Overcharge complaints have also increased.

Leading Complaints About Taxi Service, 1985-93.

Graph Graph Graph Graph Graph Graph

Number of passenger complaints for the most frequent complaints, fiscal years 1985-93. Data for year ending in June 1994 are projected based on complaints from July 1993 through April 1994.

Revocations

TLC REVOKES DRIVERS' LICENSES because of (1) egregious behavior such as a physical assault on a passenger, (2) one overcharge of more than $10, or three service refusals and/or overcharges of any size in a 3-year period (the penalities for these cases are set by local law, and thus are called mandatories); and (3) under the bad driver program, for repeated serious violations. In 1993:

12 driver licenses were either revoked or were surrendered in the face of revocation proceedings for egregrious conduct.
12 licenses were revoked under the mandatory provisions on refusals and overcharges.
20 licenses were revoked under the bad driver program. (Fifteen of these revocations are final while 5 licenses were revoked at an "inquest" hearing at which the driver failed to appear. These cases may be reopened if the driver shows a good reason for missing the hearing but drivers in this group cannot drive until the case is cleared up.)
A total of 181 licenses were revoked, surrendered or not renewed for cause between 1990 and 1993.

TAXICAB OWNERS ARE ALSO FORCED OUT of the industry for egregious violations, such as acts of fraud. Medallion owners are typically given the opportunity to sell their licenses conditioned upon their paying fines. This approach allows lenders to be compensated for loans secured by the medallion license while having the same effect -- forcing the owner out of the industry -- as a revocation.

In 1993 and early 1994, various owners agreed to sell a total of 23 medallion licenses and pay $142,000 in fines in a series of "altered VIN" cases. These owners moved vehicle identification plates and other credentials between cars in order to send newer "show" cars to inspection while actually fielding vehicles that could not pass inspection and/or could not legally be placed in service. Altered VIN cases are pending against the owners of an additional 77 medallion licenses.
In 1993 and early 1994, the owners of two medallion licenses agreed to sell their licenses for failing to have a workers compensation policy and for providing fraudulent certificates of workers compensation to the Commission. Workers compensation fraud cases are pending against the owners of an additional 36 medallion licenses.
Cases are pending against the owners of 9 other medallion licenses for other frauds.
In other cases since mid-1991, the Commission has forced the sale of 72 medallion licenses.Owners divesting these licenses have been fined a total of $360,000.

WHO DRIVES CABS

Drivers greatly outnumber cabs . . .

There are about 40,000 licensed taxi drivers eligible to drive the 11,787 licensed taxicabs.

. . . but only a fraction work full-time

40% of all licensed drivers report having driven a cab 5 or more days in the preceding week. [Survey of drivers renewing their license in December 1993]
29% of all drivers report not having driven at all in the previous week.

It's an immigrant industry coming from all over the world . . .

89% of new drivers were immigrants, born in 84 foreign countries ranging from Afghanistan to Yugoslavia, Trinidad to Togo, in 1991. (Data on driver applicants is from [1992]. Because data were collected prior to the break up of the Soviet Union, Yugoslavia and Czechoslovakia, those country names are used in the tables.)
A few nations and regions of the world predominate. Forty-three percent of all applicants for a drivers license in 1991 were born on the Indian subcontinent, including 21% from Pakistan, 10% from Bangladesh and 10% from India. (See Table 2.)
The national origins of driver applicants has shifted dramatically since the mid-1980s. The proportion from the Indian subcontinent rose from 10% in 1984 to 43% in 1991. The proportion from Africa and the former Soviet Union also grew during this period.
The proportion of applicants born in the U.S. dropped sharply from 26% in 1984 to 10.5% in 1991. The fraction from the Caribbean fell from 27% to 8%. (See Table 3.)
The taxi industry draws a phenomenal proportion of all immigrants coming to New York City from Pakistan and Bangladesh -- more immigrants apply for a taxi driver's license than have been arriving each year from these countries over the last decade. The industry is also receiving a significant proportion of immigrants to New York City from Egypt, former Soviet republics, India and Romania.
Most applicants have spent several years in the U.S.; only 12% report having been in the U.S. for only one year and 11% report two years in the U.S. The median time here is 6 years, i.e., half the applicants have lived in the U.S. for 6 or more years.

Percent of applicants for taxi driver license born in each country, Sept.-Dec. 1991.

. . . and languages spoken reflect the diversity

60 languages are spoken among driver applicants. (See Table 4.)
24% of all applicants reported having learned English as a child. Of immigrant applicants, 16.1% reported learning English as a child, closely followed by languages from the Indian subcontinent and Africa: Urdu (15.7%), Punjabi (12.7%), Arabic (11.1%) and Bengali (10.6%).
Though most immigrant applicants learned English before or soon after arriving in the U.S., less than half (43%) said they speak English at home (even in addition to their native language).

Diverse in race and age, but not by sex

The taxi industry continues to be nearly all male. Only 1.1% of all drivers and a tiny 0.4% of new drivers are women. [Admin.]
The median age of all drivers is 38; of new drivers is 31. [Admin.]
33% of all drivers classify themselves as white, 27% as black, 19% as Indian, 11% as Asian and 10% as Hispanic. The figures for new drivers are different, reflecting changes in national origin: 29% are white, 21% black, 36% Indian, 7% Asian and 7% Hispanic. (Drivers indicate their race/ethnicity when applying for a license. The Indian category, originally meant to refer to Native Americans, is selected by most drivers born in India, Pakistan and Afghanistan, as well as some drivers born in northeastern Africa.)

Most applicants drove before or had retail jobs

44% of of those applying for driver licenses in 1991 had driven passengers for-hire before, mainly car services in New York City and/or taxis in another country. Eleven percent said they were returning to drive a NYC taxi again, having let their original license lapse.
The previous job of driver applicants was most often driving professionally (19.6%); restaurant cooks, cashiers, waiters or other jobs in food-related businesses (15.1%); store clerks, cashiers, bank tellers and other retail jobs (6.1%), or jobless (6.9%).

Why and how drivers come into the industry

Word of mouth is critical; 73% knew someone who drove a cab and 58% found the owner of the cab they would drive through a friend, relative or neighbor.
58% of all applicants in 1991 wanted to drive a cab for two simple and basic reasons: to make money or because they needed a job. One in three named attractive aspects of the job -- liking to drive or the flexibility, independence or excitement of driving.
Most applicants saw driving a cab as an opportunity to make money and advance financially. They expected to earn more driving a cab than in their previous job.
Most applicants also planned to drive "for many years" and hoped to buy a medallion license eventually. But these plans were not fulfilled for most applicants. Despite their plans, 40% were out of the industry by the end of 1993. If industry-wide patterns hold, few of the rest will eventually become medallion owners.
One in 10 of all prospective drivers in 1991 sought to drive a cab for short-term financial reasons, often reflecting setbacks in their working lives during the recession. These applicants held professional, supervisory or managerial jobs requiring high educational achievement or held skilled crafts jobs (e.g., mechanics) or used creative skills (e.g., artists, musicians and photographers). Many of these applicants expected to earn less driving a taxi than in their previous job, and planned to drive a cab for only a short while.

Turnover is high among new drivers

In 1993, 23% of first-year drivers left the industry (i.e., failed to renew their licenses), as did 18% of drivers who were licensed for 2 years and 15% of those licensed for 3 years. [Admin.]
As a result of these turnover rates, half the drivers licensed in 1989 remained licensed at the end of 1993, their fourth anniversary as taxi drivers. [Admin.]

Table 1. MEDALLION PRICES AND TRANSFER VOLUMES, 1947-1993

       # OF TRANSFERS       AVE. MEDALLION PRICE

Year   INDIV    CORP       INDIV       CORP
1947                       $2,500      $2,500
1950                       $5,000      $5,000
1952                       $7,500      $7,500
1959                      $19,500     $20,000
1960                      $20,825     $19,450
1962                      $22,000     $23,400
1963                      $24,600     $27,925
1964             290      $26,000     $34,145
1965             610      $26,000     $30,000
1966             390      $25,000     $19,000
1967             440      $25,000       n/a
1968             490      $27,000     $16,000
1969             650      $24,500       n/a
1970             670      $28,000     $14,000
1971             430      $25,000     $10,000
1972             580      $26,000     $12,000
1973             600      $30,000     $17,000
1974             590      $30,000     $17,000
1975             570      $35,000     $22,000
1976             800      $42,000     $24,000 
1977             680      $55,000     $33,000
1978             810      $63,000     $52,000
1979             830      $67,000     $53,000
1980             700      $60,000     $50,000
1981             n/a      $60,000     $50,000
1982     697     637      $57,500     $49,300
1983     723     648      $68,600     $57,900
1984     795     796      $75,900     $66,200
1985     641     703      $84,900     $79,000
1986     660     778     $101,600     $92,900
1987     527     567     $108,700     $94,600
1988     532     646     $129,700    $121,500
1989     418     408     $139,100    $141,400
1990     374     272     $128,400    $135,700
1991     357     443     $126,067    $130,360
1992     281     407     $128,600    $143,200
1993     256     248     $137,196    $170,200
[See update for prices through 1997]

Table 2. COUNTRY OF BIRTH OF TAXI DRIVER APPLICANTS 1984-91

                          1991     1984      CHANGE
Pakistan                 21.27%    3.03%    +18.23%
United States            10.48%   25.76%    -15.28%
Bangladesh               10.20%    1.07%     +9.13%
India                     9.96%    2.96%     +7.00%
Ex-Soviet Republics       6.81%    3.10%     +3.71%
Egypt                     4.77%    3.83%     +0.95%
Haiti                     4.11%   18.48%    -14.36%
Dominican Republic        1.94%    4.50%     -2.57%
Morrocco                  1.66%    0.09%     +1.57%
Romania                   1.59%    2.80%     -1.21%
Ghana                     1.56%    2.08%     -0.52%
Ivory Coast               1.35%    0.14%     +1.21%
Senegal                   1.28%    0.00%     +1.28%
Afghanistan               1.24%    2.89%     -1.65%
Nigeria                   1.07%    0.54%     +0.54%
Sudan                     0.97%    0.02%     +0.94%
Honduras                  0.97%    0.12%     +0.85%
Colombia                  0.97%    2.73%     -1.76%
Jamaica                   0.86%    1.80%     -0.93%
Ethiopia                  0.86%    0.56%     +0.30%
Korea                     0.83%    3.55%     -2.72%
Poland                    0.83%    1.82%     -0.99%
Ecuador                   0.80%    1.75%     -0.95%
Turkey                    0.73%    0.47%     +0.26%
Liberia                   0.73%    0.19%     +0.54%
Lebanon                   0.73%    0.23%     +0.49%
China                     0.69%    1.19%     -0.50%
Guinea                    0.69%    0.00%     +0.69%
Brazil                    0.66%    0.51%     +0.14%
Guyana                    0.62%    0.72%     -0.10%
Greece                    0.59%    1.24%     -0.65%
Israel                    0.59%    1.03%     -0.44%

Countries accounting for fewer than 0.5% of driver applicants: Trinidad & Tobago, Yugoslavia, Algeria, Jordan, Ireland, Philippines, Peru, Panama, El Salvador, Hong Kong, Hungary, Iran, Bulgaria, Sierra Leone, Mexico, Vietnam, Italy, Yemen, Indonesia, Argentina, Thailand, Taiwan, France, Czechoslovakia, Barbados, Cuba, Bolivia, Japan, Nepal, Portugal, Chile, Sri Lanka, Albania, Syria, Sudan, Germany, Nicaragua, Costa Rica, Guinea, Suriname, Kuwait, Burma, Saudi Arabia, Benin, Togo, United Kingdom, Uruguay, Spain, Grenada, Guatemala, Cambodia and Canada.

Source for 1984 data: Anne G. Morris, The Impact of a Mandated Training Program on New Taxicab Drivers in New York City, CUNY Graduate Center, Dec. 1985.

Table 3. REGION OF BIRTH OF TAXI DRIVER APPLICANTS 1984-91

                       1991     1984      CHANGE
Indian Subcontinent    42.8%    10.0%    +32.8%
Africa                 11.2%     4.2%     +7.0%
United States          10.5%    25.8%    -15.3%
Caribbean               7.6%    26.7%    -19.0%
Middle East             7.0%     6.3%     +0.7%
Former Soviet Republics 6.8%     3.1%     +3.7%
Europe                  5.6%     8.2%     -2.7%
South America           3.8%     7.6%     -3.8%
Asia                    2.8%     7.5%     -4.7%
Central America         1.9%     0.7%     +1.2%
TOTAL                 100.0%   100.0%

Table 4. NATIVE LANGUAGES OF DRIVER APPLICANTS BORN OUTSIDE THE U.S., 1991

LANGUAGE        PCT          Where spoken
English        16.08%        Pakistan, India, Bangladesh
Urdu           15.72%        Pakistan
Punjabi        12.71%        Pakistan, India
Arabic         11.06%        Egypt, Morrocco, Sudan
Bengali        10.57%        Bangladesh
Russian         7.44%        former Soviet republics
French          5.63%        Haiti, Ivory Coast, Senegal
Spanish         5.59%        Dominican Republic, Colombia
Creole          3.70%        Haiti
Hindi           3.38%        India
Akan            1.77%        Ghana
Romanian        1.73%        Romania
Pushtu          1.33%        Pakistan, Afghanistan
Amharic         1.09%        Ethiopia
Polish          1.05%        Poland
Chinese         1.05%        China
Korean           .97%        Korea
Turkish          .88%        Turkey
Bambara          .84%        Ivory Coast, Mali
Portugese        .80%        Brazil
Farsi            .76%        Afghanistan, Iran
Wolof            .72%        Senegal
Mandingo         .60%        Ivory Coast
Greek            .56%        Greece
Hebrew           .52%        Israel
Dari             .48%        Afghanistan
Yoruba           .40%        Nigeria
Malayalam        .36%        India
Serbo-Croatian   .36%        Yugoslavia
Cantonese        .28%        Hong Kong, China
Armenian         .28%        scattered
Ga               .28%        Ghana
Fulani           .28%        Guinea
Tamil            .28%        India

Languages spoken by fewer than 0.25% of all applicants are Kwa (Ibo), Hungarian, Italian, Gujarati, Bulgarian, Berber, Tagalog, Thai, Albanian, Vietnamese, Japanese, Indonesian, Telugu, Hausa, Fante, German, Czech, Uzbek, Estonian, Twi, Bihari, Khmer, Ibibio, Mende, Marathi, Tigrinya

Appendix: Data Sources

Sources in this report are referenced in brackets in the text. Published reports often contain more information than is summarized here, as well as a fuller description of the data source. The reference [Admin.] means that the information is derived from TLC administrative records, special projects and information from other agencies, and has not been published elsewhere. These sources are described in footnotes and in the figure and table headings.

TLC Reports:

[1994]: Should the Taxi Fare Go Up? March 31, 1994
Analysis of taxi industry petition, turned down by the Taxi and Limousine Commission, to increase the taxi fare. Report includes detailed data on industry costs, revenues and net income and analysis of vehicle conditions, vehicle age trends and insurance coverage.
[1993a]: New York City For-Hire Vehicle Fact Book, February 1993.
Description of for-hire vehicles (FHVs), cars that are permitted to respond only to prearranged calls for service. Profiles customers and operations of different industry segments, shows geographic variations, outlines development of industry, highlights key issues.
[1993b]: Hailing From New York, November 1993.
Presents results of an in-cab survey of passengers. Also includes data on taxi, bus, subway and for-hire vehicle ridership citywide, in Manhattan and to the airports.
[1992]: Who's Driving New York, April 1992.
This report profiles new taxi drivers and outlines changes in driver licensing to upgrade licensing standards and improve training of driver applicants. The new-driver profile is based on a survey of nearly 3,000 people who applied for a new taxi drivers license in the fall and winter of 1991. The survey covers applicants' national origins, native languages, work and educational backgrounds, reasons for wanting to drive a taxi, economic expectations.
[1991a]: The Taxi Industry, 1991: A Report on the Taxi Industry's Financial Condition and the Quality of Service, October 1991.
This report examines the impact of the current recession on taxi industry revenues and the quality of service as indicated by the age of vehicles used as taxis, insurance coverage and driver drop-out rates. Revenue data are based on extensive samples of trip sheets from the fall of 1990 and the fall of 1988.
[1991b]: Taxi Trip and Fare Data: A Compendium, October 1991.
This report presents an array of data on the average taxi fare, the length of drivers' working days, gross revenues and how many passengers are served. Most data are from extensive samples of trip sheets from the fall of 1990 and 1988.
[1990]: Taxicab Reportcard: An Assessment of Taxi Service Quality, November 1990.
This report presents several measures of taxi service quality, including data on a fall-off in passenger complaints, the positive impact of the "bad driver" program and a field survey of the condition of taxicabs in service.
[1989a]: Final Environmental Impact Statement on Additional Taxicab Licenses, Parsons Brinckerhoff Quade & Douglas, Inc., June 1989.
This report contains information on the taxi and for-hire vehicle industries, operations, revenues and expenses; traffic data for Manhattan; and field surveys of the demand for taxi and for-hire vehicle services.
[1989b]: Taxicab Fare Review: Staff Analysis and Recommendations, October 1989.
Presents an analysis of industry operating costs in 1987 and 1989, and recommends that the Commission adopt a 12% increase in the rate of fare. The increase took effect in January 1990.
[1988]: Taxi Drivers and Improving the Quality of Service, June 1988.
This report contains an extensive analysis of driver quality: what is it and who provides good service? It includes an in-depth analysis of driver violation records and recommends steps to improve service quality. Some data from two driver surveys (see below) are also included.