November 4, 2012
Will Portland Finally Grant New Taxi Permits?
This Wednesday at 2pm the Portland City Council will hold a public hearing and take a vote on the contentious issue of whether or not to grant
132 78 new taxi permits, the first increase from the current 382 permits in a decade (I have learned since first publishing this post that the Revenue Bureau scaled back the number of new permits recommended to 78, with plans to reassess after the first year). As many have pointed out, Portland has one of the most restrictive taxi policies in the country. We have fewer taxis per person and pay more for them than most other cities.
50 of the new permits would go to a new company, Union Cab, an employee-owned company headed up by Kedir Wako and mostly composed of immigrants who used to drive for Broadway Cab. Several years ago they considered unionizing in response to poor working conditions, but that would have been very difficult because taxi drivers are considered "independent contractors." Instead they decided to form their own company along the lines of the employee-owned cooperative Radio Cab. A study by the city back in February confirmed the generally poor working conditions found at all the Portland taxi companies with the notable exception of Radio Cab, where drivers worked fewer hours and got better wages. We covered this issue here.
In more recent developments, the Portland Private for Hire Transportation Board voted for a recommendation to the city council to issue the 132 new permits, allow the formation of Union Cab with 50 of those permits, and institute a package of regulatory reforms meant to improve driver working conditions and customer experience. This recommendation was strongly opposed by a group of existing taxi drivers and companies led by Red Diamond, the elected taxi driver member of the Transportation Board. Diamond argues that the new permits will hurt existing drivers by increasing competition and that Union Cab owners will give jobs to out-of-town family members. Diamond has also made a number of comments about Union Cab that are hard to interpret as anything other than xenophobic and racist. From a Portland Mercury article last month:
Diamond has also repeatedly--and publicly--made the claim that Union Cab is made up of Ethiopian immigrants like Wako who want to take jobs from Portland drivers. He also mentions "persistent rumors" that Union Cab drivers have promised permits to relatives in other states.
Not true, says Wako--who accuses Diamond of racism.
"Our members are current city cab drivers and are licensed in Portland or Vancouver," says Wako. As to Union Cab's ethnic makeup, he says, "We have Russian drivers, we have people from Iran, and we have Asian drivers."
"I don't think it's a racist comment," says Diamond. "It's an observation. I don't think there are any American-born people in that union. I don't think there are any European-born people in that union. I don't think there are any white people in that union."
Now Diamond is organizing protests in advance of this Wednesday's City Council vote, accusing Mayor Adams (who supports the taxi permit increase) of "back door dealings" with Union Cab, and possibly pursuing legal action against the city. All of this is meant to intimidate the rest of the City Council enough to sway the vote, as has happened again and again for the last 10 years. It is clear that the incumbent taxi drivers and companies will do whatever they can to keep their oligopoly intact.
As I argued in my previous article, taxis should not receive special protection from competition by the city. We don't limit the number of coffee shops, or restaurants, or hair stylists, or breweries, and if employees in those industries want to quit and form their own company, we let them do it. Competition is generally seen as a positive force that not only produces innovation but also can increase the market for a product. Even in the realm of transportation, we generally allow competition, with the exception of fixed-route public transit (which is ill-suited to competition for fairly obvious reasons). We now have three car-share companies in Portland, with more to come in the future. Bike rentals can be found all over the city. Even in the realm of public transportation, we have employer shuttles and school shuttles that supplement TriMet. Why should taxis be exempt from the need to compete and innovate?
Some people like to claim that taxis are special because there is not real competition anyway. They argue that taxi customers don't care which company they use, but instead take whichever taxi they find. This may be true in the case of taxi stands at hotels and the airport--people generally just take the first one available. It would also be true of hailing a cab on the street, but let's be honest--that doesn't really happen in Portland. It is so difficult to hail a cab in Portland that many people think it is illegal! In any case, taxi stands only have so much space available, so increasing the total number of permits should not have an effect on driver wages. Basically, the city should regulate the number of taxis that can mob one spot at once, rather than restricting the total number in the city.
In the telephone dispatch market, which is how most people get cabs anyway, competition can absolutely exist, and that's a good thing. Most people have one or two favorite companies programmed in their phones. If they have a bad experience, they can switch companies, and if they have a good experience they can tell others about it. In an open taxi market, there would be a strong incentive for companies to market themselves and innovate in the areas of comfort, speed of response, and other amenities. We could see companies specialize in certain areas. I could imagine a company focusing on the young urban market by including bike racks and allowing control over the music selection, while another company focuses on longer distances by charging a flat fee rather than per-mile and making the seats more comfortable. I would also expect more creative use of phone apps than we see now. The current system, with only a few companies and only 382 cars, does not encourage such creativity.
As I see it, there are several distinct issues that lead me to support the legislation in front of the City Council on Wednesday:
- Multi-Modal Transportation: Taxis are an essential component of the multi-modal transportation system that Portland been a leader in creating over the last few decades. We are trying to transition from a system in which most people are dependent on car ownership and daily car use to a system in which people can choose a mode of transportation day-by-day based on their wants, needs, and willingness to pay. To do this, we need sidewalks, bicycle facilities, public transit, car-sharing, and taxis. Many people dismiss taxis as unimportant given new car-sharing options like Car2go, but Car2go has its limitations: it requires a sober driver; it requires a membership; cars are not always available nearby; the "home area" only covers inner neighborhoods; and the cars are very small.
- Safety: Let's admit it, drunk driving and drunk bicycling are major safety problems in our city. Taxis are one of the only ways to safely travel late at night when people are intoxicated, but anyone who has tried to call a taxi late on a Friday or Saturday night knows that we don't have enough to meet demand. When it takes forever to wait for a taxi, many people will choose to take their chances behind the wheel of a car or on a bike, with possibly deadly consequences. If more taxis are available, human lives will undoubtedly be saved.
- Economic Competition: I've already made this point, but we should not be preventing competition in order to protect existing businesses. I'm sure most businesses would love it if the government kept out competition, but that is not what government is supposed to be about. Regulations are meant to establish a level playing field and ensure safety, not support monopolies or oligopolies.
- Equity: The idea of equity has become central to what Portland aspires to be. We now have an Office of Equity, and the concept is woven throughout the Portland Plan. The city can not make a commitment to equity, even while denying a group of immigrants the chance to form their own taxi company. This is supposed to be a land of opportunity, and Portland in particular is supposed to be a place that encourages small business creation by anyone who has a skill or a product people want. We long ago realized that by making food carts legal, we would give people with few resources the chance to build a business from the ground up. We need to take the same approach with the taxi business and any other industry we regulate.
Zef Wagner is pursuing a Master of Urban and Regional Planning degree at Portland State University, specializing in transportation planning.
November 4, 2012 2:48 PM
Michael, Portland Afoot Says:
Great reporting and analysis!
November 4, 2012 3:37 PM
al m Says:
I support increasing the number of cab companies and wonder why Portland has such a restrictive market. (payoffs i imagine)
November 4, 2012 6:11 PM
Dave H Says:
Hailing cabs is legal in Portland? I've had a few taxi drivers even tell me they're not allowed to stop and pick someone up from the street.
November 4, 2012 10:05 PM
Nick theoldurbanist Says:
I only call for Radio Cab because their drivers really know the city. I've read and heard complaints about the other companies about this and problems communicating in English.
November 4, 2012 11:09 PM
You CAN hail a cab in this town?
November 5, 2012 7:53 AM
Chris I Says:
Should the city consider only giving new permits to cab companies that utilize zero-point-emission vehicles? Whether that be pedi-cabs, hydrogen, electric, or other? What is the city doing to improve air quality in the core? It seems to me that this is just going to make things worse.
November 5, 2012 8:31 AM
Nick theoldurbanist Says:
I should add that I only use cabs very occasionally as they are very expensive.
November 5, 2012 10:01 AM
The taxicab rates are set and regulated by the City of Portland:
$2.50 for the first passenger in the vehicle
$2.50 surcharge for pick up at PDX (Portland International Airport)
$1.00 for each additional passenger
$2.50 per mile (including fuel surcharge)
$30.00 per hour waiting time (.50 cents per minute)
Why do they charge $2.50/mi? maintenance + depreciation is about $.11/mi, drivers cost what like $20/hr? Add in insurance and I can see charging like $.50-.$.75/mile or like $.40/mile + $.50/minute = ~ $1/mile for highway and $2/mile for heavy city traffic.
I think if the taxi prices came down you would see a flood of new customers.
November 5, 2012 10:34 AM
Jeff F Says:
Cab prices in Portland are ridiculous. In the last couple of years I've been in Chicago, DC and New Orleans and cabs are ubiquitous and cheap. If the rates dropped and there was an increase in vehicles, we would see Allen's flood of new customers.
I'm guessing that the cab-hailing business (and I did think it was illegal) was envisioned as a means of eliminating cruising cabs back in the days when our air was really bad. Cars are a little more efficient these days aren't they?
November 5, 2012 12:07 PM
Chris I Says:
Actually, cars are not much more efficient than they were in the early 1980s; but emissions are much cleaner.
November 5, 2012 4:23 PM
Allan, that is another misconception! The City of Portland sets those rates as the MAXIMUM that taxi companies can charge--they are free to go lower if they want to. The problem is, with so little competition and a captive customer base with few choices, why would any company charge less?
To answer everybody, yes, it is perfectly legal to hail a cab in Portland. That is according to the Revenue Bureau, which regulates taxis. Again, there are so few taxis that it is difficult to find a taxi to hail anyway. If you see one that is empty, it is probably answering a dispatch.
November 5, 2012 4:25 PM
To the air quality issue, many cities are requiring taxi companies to use hybrids or electric cars in order to deal with emissions.
November 5, 2012 9:13 PM
Portland has too few taxis during peak hours, which usually and predictably occur Friday and Saturday nights between 9 pm - 3 am. This accounts for about 12 of 168 hrs or about 7% of the week. Throw in Monday morning airporters (4-7 am) and another unpredictable 12 hrs per week caused by foul weather, bad rush hour traffic, accidents, bridge lifts, or whatever and the total estimate of peak demand for taxis covers about 27 of the 168 hour work week or 16%.
While I agree that this is a problem, the way that the City has proposed to remedy it will simply create another problem. One that will be far greater in magnitude than the current and that will negatively impact operators, both current and future and will contribute to the deterioration of both customer service and consumer happiness.
By adding an additional 78 taxis to the fleet (an increase of about 20%) the city is simply ignoring the reality that demand is not constant. During non-peak hours, cab drivers struggle to make enough money to support themselves and many make far less than minimum wage as was well documented by the city’s own report published earlier this year (http://www.portlandmercury.com/images/blogimages/2012/02/08/1328736937-taxi_driver_market_review.pdf).
If the city adds these cabs, existing demand during both peak and non-peak hours will be further diluted by increased supply. This solves the problem of frustrated customers on Friday and Saturday nights, which is great. Nonetheless, the city should also consider what impacts this will have on the average Portland cab driver. During non-peak hours, the average cabbie will wait longer between fares, will drive more miles looking for flaggers, will further congest already busy downtown streets, will emit more pollution, will be forced to compete for already crowded and coveted taxi stands and at the end of the night will simply take home less money.
The declining wages of the average cab driver may be of no interest to the average taxi customer and the city (apparently), but it should be and here is why: customer service and consumer happiness with that service will both degrade. Do you know why cab companies X, Y and Z have such shitty service, why they take the “scenic route” or otherwise nickel and dime their passengers, have POS vehicles that are dirty and not well maintained and are generally not polite or are downright assholes? The answer is that poor cabbies are shitty cabbies. Because they are so poorly compensated and take so few trips during their shift, they have an incentive to get as much out of every trip that they possibly can. They aren’t thinking about service or safety or cleanliness, they are thinking about money and money only, because they aren’t making enough of it.
If the city goes ahead with this expansion, decent jobs will be replaced by shitty ones. Sure, there may be a few more of them, but the people who will hold them will not be happy about their situation. And while the consumer may find it easier to find a cab ride home, they probably won’t like it as much.
November 6, 2012 8:35 AM
Nick theoldurbanist Says:
Since I only use Radio Cabs, which are employee-owned and whose drivers make a good living, I do not expect to have the problems that you described.
November 6, 2012 9:55 AM
The fallacy in your argument is that you assume demand for taxis is constant, when in fact it is not. Many people choose to drive places rather than taking a cab precisely because it is hard to get a cab. Even in non-peak times, wait times are way too long. More supply can actually create new demand. Think about transit: increasing frequency of bus or rail service does not result in fewer passengers per vehicle. In fact, the opposite usually occurs, as more frequency induces more demand.
November 6, 2012 10:13 AM
Chris I Says:
I also know people that drive downtown because MAX and the busses stop running early in the AM. This seems like another area for improvement.