
Chicago taxi industry sliding towards collapse - prostoalex
https://www.usatoday.com/story/news/2017/06/05/chicago-cabbies-say-industry-teetering-toward-collapse/102524634/
======
basseq
I'm left wondering... so what?

The "personal transportation" market has massively changed. Whether it's for
the better or worse simply _doesn 't matter_.

    
    
      Veteran Chicago cabbie John Aikins,67, who is facing 
      foreclosure on two medallions for which he owes more than 
      $330,0000, said he has little hope that the industry can 
      be saved.
    
      "It feels like the city is just watching us collapse," 
      Aikins said. "Right now, there are a few people, the 
      elderly and some others who refuse to take Uber because 
      they are uncomfortable with it, that keep us going. But 
      how many of those people are out there to sustain us?"
    

Chicago, by way of example, does not "owe" the cab industry anything. And, in
fact, likely needs to make their own changes to manage the quickly-
depreciating medallion model. The government in no way insured that medallions
would be a winning business investment. And, harshly, those defaults (on the
secondary market, no less) likely won't have much economic impact.

I'm firmly behind Judge Richard Posner: "Were the old deemed to have a
constitutional right to preclude the entry of the new into the markets of the
old, economic progress might grind to a halt."

~~~
tstactplsignore
>Whether it's for the better or worse simply doesn't matter

Yikes- I have only a little sympathy for the taxi industry, but it is very
scary that you do not believe we should be concerned with whether market
forces improve society or not. I think it is extremely important to the vast
majority of people that any enormous change in transportation occurs for the
benefit of society - the ideology that capitalism is an end into itself is
extreme and fringe, and we shouldn't be afraid to call it out as such.

~~~
bitJericho
We'll see what you think of the cab industry when uber raises their prices by
3 times in order to become profitable, after the cabbies all gone.

~~~
TulliusCicero
Yeah, and I bet after Borders shuts down, you'll see Amazon raise book prices
sky-high!

People always claim this will happen, and it never seems to. If Uber tripled
prices, a competitor would start up to cut into their market share.

~~~
bitJericho
VCs wont pay for rides forever.

~~~
tw04
VCs are just paying for rides until self-driving cars get to the point that
drivers are no longer needed.

I'm not concerned with the price of rides increasing, I'm concerned with the
unemployment our country is going to get punched in the face with. Between cab
drivers and OTR (truckers), we're going to have a MUCH bigger problem on our
hands than we've seen since Detroit collapsed (which was arguably less of an
issue since it occurred over a longer period of time).

~~~
sundaeofshock
VCs are needed until a self-driving car can pick an elderly passenger at the
airport and help them with their baggage when they get home.

Uber will run out of money long before we have self-driving cars.

~~~
taxicabjesus
> VCs are needed until a self-driving car can pick an elderly passenger at the
> airport and help them with their baggage when they get home.

This is a very good point. Also consider that many more people need help with
groceries than with luggage.

~~~
ojosilva
Just call the "Human Uber" service instead, which will come with a pair of
hands. I doubt that's more than 5% of their market, so it justifies having a
differentiated price for the extra help you get.

------
nserrino
I probably won't ever take a taxi again, but have some sympathy for the cab
drivers who put their life savings in medallions. The city effectively
promised them the exclusive right to give taxi rides, but didn't do anything
about a non-medallion entity doing that same thing. They put hundreds of
thousands of dollars into something meaningless.

~~~
agotterer
Its hard to even consider taking a taxi at this point. I was in Chicago last
weekend and considered taking a taxi from the airport into the city. Taxi
wanted ~$60 and Uber wanted ~$25. The same thing happened in SF a few months
back. The driver wanted $90 to goto Palo Alto and I took an Uber pool for $23.

Granted I don't believe for a second that's the actual rate and I'm confident
the driver was trying to take advantage of me. But with ride sharing I don't
need to haggle over price and I know the algorithms are ripping me off less
than the taxi driver.

~~~
spydum
It's worse than just pricing.. I've had several taxis "pretend" their meter
stopped working, to try to scam a cash ride.

~~~
pavel_lishin
Is that a problem for you, assuming that the price of the ride didn't change?
I don't particularly want to enable crime, but if a driver wants to rip off
the owner of the medallion bolted to the car he's driving, that's not
particularly my problem, any more so than the Taco Bell employee slipping my
cash into his pocket instead of the till.

~~~
agotterer
It is a problem if you the passenger don't know if you are being ripped off
and are paying a reasonable fare.

------
jostmey
I used to live in Chicago. The city taxi service was horrible--the drivers
were grumpy and sketchy. They would always try to take the expensive way
around. I hated the taxi service so much that to get around the airport
restrictions I would ride the train out to the first stop so I could order an
Uber ride.

~~~
shostack
I lived in Chicago for most of my life until somewhat recently.

Things I observed during that time: \- A driver stating, seemingly out of
nowhere to my friend and I, "we should just take all of the gays out back and
shoot them"

\- Multiple times scheduling a morning pickup for a flight, not having it
arrive, and being told by the uncaring operator the alternative was to wait so
long I'd miss my flight, or gamble with trying to find a free cab during rush
hour on Belmont (a losing proposition)

\- Too many counts to list of the CC machine "being broken" to try to force me
to pay cash, including being intimidated at one point to stop at an ATM to get
cash to pay

\- Having a driver show me the gun he kept under his seat for "driving through
the South Side"

\- The joy of not being able to ever get a cab during busy events in extreme
weather of all types because there was no way to reserve the ride

\- Various smells, ripped seats, miscellaneous fluids in the floor mats,
leftover food/alcohol/condom, etc.

\- A cab driver who picked me up at my home to go to the airport who then
kicked me out part way there because I was on the phone with my mother and he
refused to turn down his radio when I requested (which is in the friggin
'Passenger's Bill of Rights' posted in the back of the cab). He then loudly
threatened me with physical violence once I exited the vehicle. I ended up
asking the cab company to not fire him once I complained because I was so
scared that he was unhinged, and the last thing I wanted was an unemployed,
unhinged angry guy knowing where my wife and I lived

Good riddance. Uber has its own issues, but they have proven what the market
wants. And it sure as hell isn't the current cab system Chicago has.

~~~
monksy
> \- A cab driver who picked me up at my home to go to the airport who then
> kicked me out part way there because I was on the phone with my mother and
> he refused to turn down his radio when I requested (which is in the friggin
> 'Passenger's Bill of Rights' posted in the back of the cab). He then loudly
> threatened me with physical violence once I exited the vehicle. I ended up
> asking the cab company to not fire him once I complained because I was so
> scared that he was unhinged, and the last thing I wanted was an unemployed,
> unhinged angry guy knowing where my wife and I lived

I wonder how that would go since CCW permits are legal now.

~~~
pavel_lishin
Are you wondering whether the cabbie would have been more polite, knowing that
his passenger might be armed?

Or are you wondering whether _shostack_ might have been shot himself?

------
kevindong
The Uber/Lyft systems are very robust (in the sense that I have no trouble
getting drivers to take my ride requests at any time) in Chicago. That being
said, I cannot imagine the drivers are making a decent living driving.

Anecdotally: as long as I don't go during rush hour (i.e. 7-9am or 4-6pm on
weekdays), I can get from anywhere in the densely populated sections of
Chicago (basically, anywhere within 5 miles of the loop) to another section
for ~$3~5 via Uber Pool/Lyft Line. At that price point, it's competitive with
taking public transit.

I'm interning in Chicago this summer and I've already taken pool/line 10
times, each for ~$3~4 and taking ~20 minutes and going about ~3 miles.
Uber/Lyft's algorithms for matching riders up is actually pretty good in my
experience, but even then let's assume that each driver has two riders per
trip, each paying $4 and each trip taking 20 minutes. In which case, they'd
have 6 riders per hour for a total revenue of $24/hour before Uber/Lyft's cut
and accounting for their own expenses. I refuse to believe they can actually
make a living by driving this way.

------
TY
Anectodal evidence from my trip to Chicago last week. The same trip cost me
twice as much when I took a taxi vs Lyft. So guess what I'm going to take the
next time...

~~~
bitJericho
In a taxi your ride was insured if the driver got in an accident. Your cabbie
is certified, and less likely to be crazy. Also half your lyft/uber ride is
paid by a VC.

~~~
jseliger
_less likely to be crazy._

Having taken many cabs and many rides via Uber, Lyft, and Juno, I'm not sure
why you'd claim this. The drivers for ride-sharing services are far safer,
saner, and more careful than cab drivers. The reason is not hard to ascertain:
at the end of almost every trip drivers and riders rate each other.

~~~
bdalgaard
I think there are similar related downsides that could be said about ride-
sharing too. If we are giving anecdotal experience then I will say that ride-
sharing drivers in Chicago are much more likely to blow through yellow/red
lights or park in a cross-walk. The reason is not hard to ascertain: I can
easily call 311 on a taxi as a pedestrian with the taxi number.

Personally, I see a lot of people happy killing all of the problems with taxis
(particularly in Chicago) but I fear that we are "throwing the baby out with
the bathwater". Taxis in Chicago have a ton of problems, but I still have
concerns about ride-sharing too.

~~~
techsupporter
Same problem in Seattle, especially with the complete disregard for lane use.
Uber and Lyft drivers seem to think that "bus only" is secret code for "all
TNC drivers stop here for passengers, especially at peak times."

My personal favorite is how hazard lights have morphed into "I can do whatever
I want, just go around me by veering a car / this 60' bus into oncoming
traffic."

One of these days I'm going to start spending one of my days off just standing
at a random major intersection and emailing SDOT/SPD and posting on Twitter
the license plate numbers of every Uber/Lyft driver behaving badly.

------
mschuster91
A point that I have yet to see in the debate: while everyone seems to like the
"old cab industry" going downhill (which may very well be deserved, given
shady practices like racial discrimination, detours etc.), no one seems to
think about the ultimate consequence:

People without smartphones or credit cards will have no way of getting
individual point-to-point transportation any more. This especially includes
old people (who e.g. rely on cabs to transport them to doctors, grocery stores
etc), people who do not want smartphones or cellphones in general due to
privacy reasons (e.g. tracking by network operators, or not wanting everything
they do on their phone fed to Google), and minors who do not have a credit
card - when I was young I always had 50€ in cash with me so I could fetch a
cab home when public transport failed.

Also, there are many people who do not want to use Uber, Lyft etc. for ethical
or other reasons - it is unclear if the driver has proper insurance for his
vehicle, it is not regulated how long the driver has been behind the wheel
(it's easy to end up in a crash when driving tired, I speak from personal
experience), it's not regulated how much money the drivers make (owner-
operated businesses usually don't fall under minimum wage regulations) and for
what it's worth it's not guaranteed that the vehicle is technically fit to be
on the road (which cabs usually are, with yearly inspections by independent
auditors in Germany, for example).

------
sharemywin
As much as I think the taxi system needed replaced, I'm not sure how I feel
about companies breaking laws to innovate.

If we go down that path are the south american drug cartels just ahead of
their time.

~~~
ThrustVectoring
It really depends on the law. "You need to pay $300k for the right to get paid
to drive people from point A to B" is a really terrible law.

~~~
SilasX
The law was more like, "You must have a medallion to operate a cab. We only
issued 10k medallions (or whatever). The medallions are transferable. We're
not issuing new ones."

Combined with the supply of cab labor, that had the effect of, "if you want to
operate a cab, you need to buy one from an owner at the current absurd market
price".

~~~
heisenbit
Which worked as long as the prices were going up.

Isn't it ironic that taxi drivers having gone in debt to buy a medallion are
now financially destroyed by a company spending more than it takes in?
Medallion asset bubble destroyed by Uber valuation bubble.

------
degenerate
Good, it's about time we let some crappy things die.

Bailing out the banks and GM got me furious many years ago. Imagine if the
government stepped in and saved Altavisa / Pets.com, and all the other dot-com
boom companies? What good would that have done? Nothing. Let 'em burn and
innovation will rise from the ashes.

~~~
gricardo99
"Let'em burn" with respect to "the banks" has been researched and cited as
exacerbating the great depression[1].

I know there are folks legitimately concerned with moral hazard, and genuinely
believe letting it all burn down would have been the better approach. I'm just
glad they weren't in charge when everything went into a tail spin. I think it
would have been a LOT worse for everyone.

The Automaker bailout, in hindsight, seems like it was the better call than
letting them fail. If they had failed, the surviving ones would have acquired
all the valuable scrap on a fire-sale, expanded to fill the void and you'd
probably have more or less the same auto industry today. But in the interim, a
lot of people would have lost their jobs. So that's a LOT worse for some, and
I honestly can't tell who wins but on aggregate I assume it's a wash.

1 -
[https://www.federalreservehistory.org/essays/great_depressio...](https://www.federalreservehistory.org/essays/great_depression)

~~~
zanny
Except the great depression happened without FDIC insurance. It wouldn't be
pretty, but nobody would have been destitute from a banking collapse. There
are many more regulations put in place since the 30s to safeguard against the
extraordinary degree of damage a collapse can have like that.

Instead of a trillion dollar bailout that went to rich coffers (and most of
which was paid back) we could have just thrown the money, mixed, into VC to
replace the dead banks (as investment stake, that the government could have
sold back later and recouped the costs all the same) and unemployment
protection to keep the people temporarily put out of work during the
restructuring from destitution.

In that scenario, the robber baron crooks that should have been in prison
don't get to waft off on golden parachutes paid with tax money.

------
fitchjo
I do feel a bit for those individuals that bought a taxi medallion recently
and are unlikely to be able to pay it off due to the change in dynamics; on
the other hand, the only reason the price of the medallions were so high was
that the market dynamics were being manipulated (by controlling the supply).
The risk that those market dynamics could change should have been included in
the price of the medallion - if someone did not properly consider whether that
risk was appropriately priced when purchasing a medallion, that is their
fault. The only real costs they talk about that are different for a taxi
versus uber aren't significant (1,176 taxi fee and 1,000 every two years for
the medallion renewal) and do provide them a competitive advantage (being able
to pick up rides hailed on the street.

------
joejerryronnie
It appears the basic reason for a taxi medallion system is to regulate the
industry and control supply to prevent a flood of random drivers being
unleashed on an unsuspecting populous.

Uber/Lyft business model: Unleash a flood of random drivers on an unsuspecting
populous.

Not that I agree with the taxi medallion system as it's ultimately been used
to grant political favors and prop up unnatural monopolies but it is
interesting how the negative consequences supporting the argument for why the
taxi industry should be regulated are actually the competitive advantages of
the ride hailing companies. . . well, that and unfettered access to VC
subsidized fares, but who's counting?

~~~
verall
> VC subsidized fares

Although the conveniences granted by rideshare apps are a big deal, I think
this is a huge component. At this point, in a busy(er) city, ridesharing is
still very competitive, and prices are subsidized-low.

Living in Austin, right before the city vote to require fingerprinting
drivers, which Uber was heavily lobbying against, I could get an uberpool
basically anywhere within the city for between $1 and $3.

I'm just hoping that once companies start to raise prices more VCs come
swooping in, kind of like still happens with growing websites. As a consumer,
the cost of switching is very low.

------
didibus
I highly recommend people read this 2011 reuters article:
[http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-
me...](http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-medallions-
cost-1-million/)

Given the regulations, Medallions would make you 50k profit a year.

You could suspect a bubble, but the math holds up. Though that profit
calculation is dependent on the fare regulations and limits on medallions.

~~~
valuearb
So awesome that the Monopoly Medallion holders are filing for bankruptcy.

------
hammock
I have heard this from several taxi drivers. As a passenger cabs have all but
disappeared from the streets compared to a few years ago

------
webwanderings
All Chicago taxicab drivers are driving Uber, Lyft and anything else running
on the smart phones. The people who invested and saved through government
backed medallion business, are loosing.

Don't fool yourself in thinking that the stranger you're sitting in Uber with,
could potentially be your co-worker. He's your former cab driver.

~~~
jbmorgado
The difference is that when my former cab driver sits to drive an Uber/Lyft he
knows he will be rated at the end and he also knows he can't rip me off in the
fare or refuse to pass a receipt in the end.

Most of all, is the accountability I care for. The accountability that he
didn't had to care about as a taxi driver but that cares very much when he
drives an Uber.

------
wffurr
I still don't understand why taxis need a medallion from the city to operate,
but Uber and Lyft drivers don't. The quote from Judge Posner at the end of the
article is totally inane, and has to be out of context.

~~~
gmarx
according to the article the medallion allows you to roam the street and look
for someone to hail you. Uber and Lyft were ruled by the court to be more like
arranged rides (limo service). It likely makes sense if you consider the
original purpose of the medallion. I think (need to check again) that it was
not to create monopolies but to reduce the danger that ramped up in the early
days with unlimited numbers of cabs roaming the streets, zooming and cutting
each other off to get a fare. If you call for a ride that public safety
concern is gone

------
dang
Isn't it interesting how the Uber threads fill up with rage against Uber and
the taxi threads fill up with rage against taxis?

We are large we contain multitudes.

~~~
mullen
It is possible to hate both and that's why I take Lyft.

------
jmclnx
If you read the article, most medallions are owned by individuals, were it
seems at most 1 person owns 4 medallions. And the cabbies were able to make a
living wage. In this specific case we have 2 national companies paying just
above minimum wages taking over the industry in Chicago, probably incentiveing
local pols not to change regulations. So once again the little guy gets
crushed.

------
djohnston
I'm a big fan of ride sharing and I share your frustration with taxis, but I
do think they have a point here.

The judge says: "Were the old deemed to have a constitutional right to
preclude the entry of the new into the markets of the old..."

If you're willing to admit that it's the same market, the taxes and fees from
the city should be lifted. It's absolutely unfair otherwise.

------
alkonaut
How are they making so much less money than Uber? Simply by paying drivers
more?

Because if they don't have things like booking, pre-paying via apps etc then
_of course_ they are losing business - but in that case why don't they?

I don't use Uber over taxis simply because I can get the exact same service
from a taxi, but the drivers are better off in terms of pay and schedule (as
far as I know).

~~~
shapov

      I don't use Uber over taxis simply because I can get the exact same service from a taxi
    

That's just not true.

Just off the top of my head:

* 3-4 clicks and I have an Uber on its way vs. Having to talk to a dispatcher. Time saved.

* I know ahead of time how much the fair will be vs. at the end of the ride.

* I simply get out of the car once I reach my destination. I don't have to deal with paying, calculating tip, etc...

* Uber cars tend to be newer and in much better condition.

Now, I am not advocating for Uber, but lets not kid ourselves that the two
experiences are even comparable from the customer's point of view.

~~~
alkonaut
I'm talking about where I get a cab where there is app dispatch+ (pre)
payment. And no medallions.

Obviously taxi companies that still operate like it's 1990 are going to go
extinct - my question was _why_ are they operating like it's 1990?

~~~
brianwawok
As a monopoly, you usually have no reason to change. You make piles of money
with no extra work, why innovate?

Uber/Lyft is eating their lunch. Now they need to innovate or die. Very likely
they die at this point.

~~~
alkonaut
> As a monopoly, you usually have no reason to change.

But they _don 't_ have a monopoly and haven't for several years. I mean
changing from phone dispatch to apps has to be done in 6-12 months not 6-12
years otherwise yes they will go under.

So what you are saying is that they are too slow to change? What's the reason
for that? Is it that the taxi _operators_ are small businesses and they are a
too diverse group to be willing to take large risks/investmentst together such
as for improving their common dispatch? In that case - the system is almost a
perfect storm.

So would you agree that at challenges to traditional taxi in medallion-cities
include:

\- Small taxi companies (single car to maybe 100 cars) rather than large
operators (1000 cars or more) that would have the money to evolve when needed

\- Expensive medallions causing overhead compared to Uber/Lyft

\- Long history of monopoly causing an unfamiliarity with rapid changes

\- (Possibly) regulative hurdles to overcome before you could e.g. pre-charge
for a ride or dispatch with an app rather than phone?

~~~
weberc2
> I mean changing from phone dispatch to apps has to be done in 6-12 months
> not 6-12 years otherwise yes they will go under.

I think you underestimate the amount of work involved in building a rideshare
platform. How are taxi companies going to consolidate and find app developers
to build a platform to compete with Lyft and Uber in a tiny fraction of the
time, not to mention getting the word out about their platform, when Uber and
Lyft are already so good (and cheap). This is to say nothing about disparities
in investment and regulation.

~~~
alkonaut
I mostly have experience of taxi apps from where I live (Stockholm) and
basically when one operator had an app, then suddenly all the major companies
had apps. The difference is obviously that there are numerous taxi companies
(There used to be one monopoly but at that time there were no smartphones) and
the big ones are pretty big, like a 1000+ cars each.

The apps obviously look almost the same and it wouldn't surprise me if they
came from the same developer in many cases. Here are four of the largest for
comparison:

[https://itunes.apple.com/se/app/sverigetaxi/id504540989?mt=8](https://itunes.apple.com/se/app/sverigetaxi/id504540989?mt=8)

[https://itunes.apple.com/se/app/taxi-
sthlm/id375988670?l=en&...](https://itunes.apple.com/se/app/taxi-
sthlm/id375988670?l=en&mt=8)

[https://itunes.apple.com/se/app/taxi-020/id503115316?l=en&mt...](https://itunes.apple.com/se/app/taxi-020/id503115316?l=en&mt=8)

[https://itunes.apple.com/se/app/taxi-
kurir/id503098740?l=en&...](https://itunes.apple.com/se/app/taxi-
kurir/id503098740?l=en&mt=8)

You can see the last 3 just use a skinned standard taxi dispatch app! I
appreciate the effort of creating the platform from scratch, but a taxi
company shouldn't have to do that. They just license the app.

These taxi companies each had dispatches with many dozens of operators, so
they save a good amount of money on using an app and cutting back on people)
No difference from other commerce.

The main difference between Stockholm and Chicago is of course that the "taxi
companies" are the large city or nationwide companies battling for market
share. A taxi driver or group of drivers can also be a "company" but they just
operate under the umbrella of the larger brand - who handles all dispatch,
branding etc just like a city wide monopoly usually does.

So while it's understandable that a company unlike a monopoly has more
incentive to evolve, I don't see any reason why a city taxi monopoly such as
Chicago couldn't just make their product more similar to Ubers (regulations
aside). I mean - they must also be able to save a ton by getting rid of phone
dispatch staff. And anyone with a medallion obviously has an interest in their
services not becoming obsolete.

------
Jimmie_Rustle
| The union is calling on the city take several actions to provide relief for
the city’s struggling taxi industry, including changing rules so taxi drivers
aren’t required to replace their vehicles as often

Right! Let's loosen the rules and allow the cabs to be in worse condition than
they already are, that will get the customers back! /s

~~~
wavefunction
Well, we bail out banks who make shoddy investments.

That's my only counter to the idea that medallions are going to ruin some
lives soon.

~~~
criddell
Most restaurants fail and we don't bail them out.

I think the big banks are a special case because letting them fail may be more
expensive than bailing them out.

------
randyrand
Chicago taxis are some of the worst. God I hated them. I wonder why they're
not doing well?!

------
pessimizer
They should just do what Uber did: be heavily invested in by the mayor's
brother.

------
sausman
Was probably going to happen eventually since Lyft and Uber offer a better
product, but it's interesting that the big ride sharing companies aren't
profitable yet either.

------
gator-io
Just waiting for Uber to screw over their own drivers with autonomous vehicles
and see if these same arguments will be presented.

------
kylehotchkiss
"including changing rules so taxi drivers aren’t required to replace their
vehicles as often"

So.. to save this industry let's make it less enticing? I'm not saying Ubers
and Lyfts are always nice, new cars; but they usually aren't models from
before 2010 either. Call us posh, but if you can get a ride in a nicer car for
the same price, that would be a thing to consider when picking a mode of
transport?

------
spo81rty
The fact that someone would pay $300k for the right to drive a taxi blows my
mind.

------
schrags08
good riddance.

