Archive | Taxi

Oregonian Editorial Board Hearts Uber

The paper-of-record-that’s-no-longer-on-my-front-step comes down squarely on the side of innovation in supporting Uber‘s case before the  Private for-Hire Transportation Board of Review.

I agree. While we continue to need regulation for passenger safety and to prevent abuses, transportation technology is evolving much more quickly than our regulatory framework, and the regulators need to put on their running shoes.

In particular the idea of a government enforced set of pricing and service tiers separating taxis and towncars seems like something out of the Victorian era…

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.

I have made my case, and now I urge anyone who is interested in this issue to email or call Mayor Adams and Commissioners Fish, Fritz, Leonard, and Saltzman to communicate your views. You can also attend the public hearing, scheduled 2pm-4:30pm this Wednesday, November 7th at City Hall. With enough public support, Portland may take the first steps toward a sane taxi policy.

Zef Wagner is pursuing a Master of Urban and Regional Planning degree at Portland State University, specializing in transportation planning.

Does Portland Need More Taxis?

Apparently so, according to a staff report (PDF, 151K) prepared for the Private for-Hire Transportation Board and City Council.

taxis

But as that report, and the accompanying recommendations for industry reform document (PDF, 39K), indicate being a taxi driver is apparently only one step up from indentured servitude. Among the challenges for drivers:

  • Drivers are treated as independent contractors rather than employees
  • Cab companies charge an exorbitant series of fees to drivers beyond the use of the vehicle
  • Hotel and restaurant valets demand to be paid by drivers for fares
  • A loophole in insurance regulation means that drivers don’t have medical coverage if injured in a crash

It sounds like change may be in the wind…

Intended Consequences of Portland’s Restrictive Taxi Policy

While we here at Portland Transport generally stick to subjects like public transit, bicycling, and walking, the taxicab is another form of transit that can allow people the freedom to travel around at will without the burden of car ownership or the need to personally drive the car.

Taxis fill an important need for those trips that transit does not serve well, especially late at night. It would be very expensive and difficult for a transit agency like TriMet to send out a bunch of buses at 2am to pick up intoxicated people coming out of bars and events who really should not be driving home. Taxis, with their flexibility to respond to areas of demand, are ideally suited to this task and any great city has a fleet of them roaming the streets ready to be hailed or sitting in designated taxi zones.

Taxis can also be valuable for elderly and disable people with mobility problems, since they can deliver people directly from home to store and back again. Transit is ill-suited to this task, and the paratransit service TriMet does offer is extremely expensive to operate. Abundant taxis paired with publicly funded taxi vouchers might be a much more effective way to serve the mobility-impaired.

Unfortunately, taxi policies in most US cities are notoriously restrictive and are designed to protect incumbent taxi businesses by limiting competition and giving them leverage over their workforce. Last year Sightline published an excellent entry on taxis as part of their “Making Sustainability Legal” series. They show that Portland has one of the most restrictive taxi policies in the country, only allowing 382 cabs to operate in the entire city, or only 0.7 cabs per 1000 residents. Washington, DC, by contrast, does not put a cap on permits and they have a much healthier 12 cabs per 1000 residents.

The Portland Revenue Bureau enforces this strict cap and any increase has to be justified by showing that any new permits will not result in “market oversaturation.” City officials are expected to somehow decide how many taxis would be too much, and new taxi companies are required to prove there is a need for more taxis. Even if city officials approve an application for new permits (which almost never happens), any change has to go through a City Council which is put under enormous pressure by existing taxi companies to restrict any new entry by competitors. In practice, it has been almost impossible for new taxi companies to enter the marketplace and get permits. Four of the five taxi companies in Portland have been around since the 1970’s.

All this is prelude to this week’s article in the Portland Mercury that highlights the real human cost to these policies, not only for the public that would benefit from more taxi availability and lower prices, but also for the people who actually drive the taxis. The article describes 50 drivers who are trying to form a new employee-owned company because they are tired of working long hours for low wages that are further reduced because have to pay a big chunk of their earnings back to the company for the right to use the car. Rather than the company simply taking a fixed cut of fares, a driver has pay for the right to drive the car, then hope to get enough fares to pay back the company and still have some left over. This is generally an exploitative business model, usually associated with shady strip clubs (where strippers have to “rent” the stage), prostitution, and sharecropping to name a few.

A recent city study found that taxi drivers in Portland on average work 6 to 7 days a week, 12 to 14 hours per day, and make well below the minimum wage. Interestingly, the study found that at the one employee-owned company, Radio Cab, drivers worked shorter shifts and made a lot more money than at the privately owned companies, bolstering these drivers’ case that they should be allowed to form their own company.

The article makes clear that it will be very difficult for these drivers to form a new company, denying them any real bargaining power with their employers and, I would argue, denying them their basic rights. When a barista at Stumptown decides he or she wants to leave and open a new coffee shop, we don’t require proof that the coffee market isn’t already “saturated.” We don’t put a cap on the number of coffee shops that are allowed to operate in the city, and each increase doesn’t have to go directly before the City Council. If this was the case, there would be huge public outcry. For most types of businesses, the city is expected to issue business permits as long as the rules are followed and there isn’t some overriding reason to deny it.

One quote from the Mercury article really jumped out at me, from the Revenue Bureau’s Kathleen Butler: “An unintended consequence of the cap on permits is that drivers are not in a good bargaining position to find a company to work for.” This quote made me laugh because this is in fact a completely intended consequence of the cap on permits. It is designed to protect existing taxi companies from new competition, including the threat of their own employees going off to form a new company or switch to a different company. I’m not sure there’s a clearer example of government and private business colluding to prevent competition with no clear public benefit.

To be clear, regulation in the form of requirements that taxis be safely operated, clean, identifiable, etc., are perfectly reasonable. Even regulations on the metered rate might have some merit to provide a measure of confidence that taxi drivers or companies won’t suddenly raise the price once you’re in the cab. But the onerous restrictions on the number of permits and companies are indefensible, and we all, drivers and passengers alike, pay the cost.

Do We Have Enough Cabs?

A post at Sightline looks at comparative taxis per capita, and taxi fares. Portland has a relatively low number of cabs per person, and relatively high fares.

Would we benefit from looser restrictions on the number of taxis in Portland? How would we arrive at the optimal number? Do we need a limit at all? How might removing the limit change the transportation picture here?