Buyers are scarce for once-coveted taxi medallion
Harbir Batth has been driving a taxi in San Francisco for more than 20 years, but he doesn’t want to do it anymore. His son is in college, and he has a young daughter to support. He said there are too many Ubers, Lyfts and other ride sharing services for him to make a decent living.
“There’s not enough money coming at home, and I don’t see any future — income getting better,” Batth said.
It is not a great time to be a taxi driver. Companies like Uber are dismantling the industry. Cabbies are seeing fewer fares. Many are trying to get out of the business all together. But some can’t. They’re locked in by what was once considered a safe investment: the taxi medallion.
Batth’s from India and built his life driving a taxi. Three years ago he bought a medallion, the license to operate a cab. At the time he thought it was a solid investment, something that would eventually pay for retirement. Now, buying that medallion is one of his biggest regrets.
Harbir Batth has heard it could take four years to sell his medallion.
Owning a medallion used to be the dream for taxi drivers. It made you an entrepreneur. You could drive when you wanted or rent the license out. Most drivers wanted to get one, but they were hard to obtain. They cost $250,000 a pop in San Francisco, and there was a waiting list of more than 10 years.
Batth had to scrape together money to take out the loan for his medallion.
“It was very hard,” he said. “It was what little money I had. I borrowed from friends and family.”
Batth’s dream of owning a medallion has since become a nightmare. That’s because companies without medallions, like Uber and Lyft, are competing for business. As a result, Batth says his income has been cut almost in half.
Batth wants to get rid of his medallion, but now buyers are so scarce, there is a waiting list to sell. Batth was told it could take four years to sell. That means four years of making payments on his $250,000 dollar medallion while earning less and less from doing his job.
Medallions are a way to regulate the number of cabs on the road. Many major cities use them — New York, Boston, Chicago. For years, they were a great investment. Some cities allowed them to be traded in a secondary market, and their prices soared. In New York City, they were going for more than $1 million apiece.
All that changed with Uber, said Jay Hickman, an investor. Hickman, along with other investors, has positioned himself to make money if medallion prices keep falling. In New York City, the value of a medallion has already dropped several hundred thousand dollars.
“I think the medallion is going the way of the typewriter,” Hickman said.
To fight back, the taxi industry is trying to sue Uber and city governments. Lawyer Edward Feldman is leading a lawsuit for taxis against Chicago.
“Overnight, they flipped a switch and changed the rules, and they essentially destroyed the medallion,” Feldman said.
A U.S. District Court in Illinois ruled Tuesday partly in favor of Feldman and the taxis. The court rejected some of the taxi drivers’ claims. But it found it unfair to regulate taxis and Uber cars differently, ruling that the two provide essentially the same service.
“It’s basic fairness, it’s something you learn in kindergarten, that if you are playing a game, everyone that is playing the game should play by the same rules,” Feldman said.
Uber’s position is that it merits different regulation because of its technology — basically, hailing a ride with an app instead of a hand. Uber didn’t make anybody available to interview for this story.
In an email, Uber spokeswoman Natalia Montalvo said that medallions restrict competition and aren’t great for consumers. Those are points cab driver Batth debated. He doesn’t think medallions are perfect, but they are part the regulatory system he had to work with. Now Batth said, he is being punished for playing by the rules.
“We put all our lives into this career,” Batth said, “and no one seems to give a damn about it.”
Batth says he’s got no choice but to keep driving; he has to continue making payments on that medallion. It’s right up there on his dashboard, a little metal plate that stares him in the face every time he gets behind the wheel.
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