New York City taxicab issues have fascinated the public while bedeviling politicians and policy-makers for decades. The prominance of taxi issues stems from the ubiquity of yellow cabs in the nation's largest city, the many tales of woe spread by passengers and the belief of many that the taxi industry represents a monopoly run amok.
The public clearly feels that taxi service needs fixing. In a recent poll of 3,000 New York City residents, taxi service ranked last in New Yorkers' ratings of taxis, private autos, the subway and local bus service. (See this footnote.) Cab service received particularly poor ratings on "value for the money," underscoring the public's desire for improved service.
This series of three papers uses a wealth of recently compiled information to plum the service issues and evaluate possible solutions.
"Factors of Production in a Regulated Industry: Improving the Proficiency of NYC Taxicab Drivers" looks at the key to service quality--the drivers. The paper analyzes how the quality of taxi service is shaped by drivers' personal and employment backgrounds, drivers' motivations for joining the industry, the system of taxicab leasing and drivers' daily working conditions.
The analysis finds that drivers' pay and working conditions produce a low level of commitment to the job, much part-time driving and rapid turnover. These conditions have serious consequences for service quality because experienced and full-time drivers provide much better taxi service than unseasoned and part-time drivers. The implication is that policy-makers should focus on economic forces within the industry if they wish to enhance the quality of taxi service.
"Villain or Bogeyman? New York's Taxi Medallion System" evaluates the widespread notion that the medallion system is at the root of service problems. This notion shaped the public debate about taxi issues through the 1980s and led influential observers to advocate reform or abolition of the medallion system.
This paper examines the key assertions of critics of the medallion system. Their critique is shown to be contradicted by a substantial body of experience, calling into question their faith in an open-entry system. A different diagnosis is proposed to replace the popular critique of the medallion system. Based on the first detailed financial analysis of how leasing profoundly altered the relationships and relative incomes of taxi drivers and owners in the early to mid 1980s, the paper argues that the growth of taxicab leasing had a far more pernicious effect on service quality than the medallion system per se. Any serious attempt to improve taxi service and address financial inequities in the taxi industry, therefore, must address leasing rather than simply focusing on the deficiencies of the medallion system.
"Fixing New York City Taxi Service" looks to the future, analyzing nine strategies for improving service, evaluating the likely efficacy of recent city regulations and the potential for market-based policies to improve service. The paper commends TLC for recent actions regulating lease fees and raising licensing standards. The paper concludes, however, that additional strategies to improve service will be needed. The most promising strategies are to abolish leasing altogether; to test the English-speaking skills of drivers (supplementing current checks of their reading and comprehension skills); to change the ratio of individual to corporate medallion licenses; to enlist methods of bringing customers' influence to bear more directly on taxi owners; and to institute a continuing process for a demand-based review of the need for additional taxicab licenses.
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2. THE JOB: DRIVING A NEW YORK CITY TAXICAB
3. THE DRIVERS
4. HOPES MEET REALITY ON NEW YORK'S STREETS
5. IMPACTS ON SERVICE QUALITY
6. THE TASK FOR REGULATORS
Table 1. Driver Income, 1993 Table 2. Prevalence of Part-Time and Inexperienced Drivers, 1993-94 Table 3. Driver Quality and Amount of Driver Experience
1. INTRODUCTION: THE MEDALLION SYSTEM AS
2. THE MEDALLION SYSTEM'S PRIMARY FEATURES
3. THE MEDALLION SYSTEM AND DRIVER WAGES
.....Where Does the Money From Fare Increases
.....The Promise of Competition
.....The First Wave: Fleets Convert to Leasing
.....The Second Wave: Minifleets Convert to Leasing
.....The Third Wave: Individually-owned Cabs and Leasing
.....Summary: the Impact of Leasing on Taxi Driver Incomes
5. CONCLUSION: THE MEDALLION SYSTEM AS BOGEYMAN
Table 1. Effect of Fare Increases on Fleet Driver
Table 2. Effect of 1987 Fare Increase on Income of Drivers Who Lease by the Week
Table 3. Fleet Driver and Owner Income, 1981 and 1986.
Table 4. Fleet Driver Income, 1986 and 1993
1. A CHALLENGE TO PUBLIC POLICY
2. THE MAJOR SERVICE ISSUES
3. STRATEGIES FOR IMPROVING TAXI SERVICE
.....Continue the Status Quo
.....More Effectively Enforce Rules
.....Adopt New Regulatory Programs
.....Establish Stricter Driver Licensing and Training Requirements
.....Lift Cap on Number of Taxicabs
.....Legalize Street Hail for FHVs
.....Hold Medallion Owners More Responsible for Service Quality
.....Regulate Driver Working Conditions
.....Restructure Taxi Medallion Ownership
4. GETTING FROM HERE TO THERE