In 1934, each medallion was worth $50. In 1995, they sold for $92,000. Their appreciation rate over three decades has outpaced the trading price of gold and the Standard & Poor’s 500 index.
Besides enriching owners, the other predictable side effect of the medallion cap is that there commonly are too few cabs available to accommodate more than 6,200 licensed drivers. That makes drivers feel constantly on edge about losing their livelihood, and emboldens fleet owners to act with a sense of impunity.
“It’s entirely run for the owners’ benefits,’’ said Edward Rogoff, a professor of management at Baruch College in New York who has studied the taxi industry for years. “The question is: Who does the system work for? And it works for these medallion owners. It’s a socialist system. It’s like Russian oligarchs.’’
Boston cabbies for many years were classified as employees of their taxi companies, with owners and drivers splitting the daily meter receipts and drivers keeping their tips. At some companies, drivers received an array of benefits and protections, including subsidized health care coverage, paid vacations, pensions, and worker’s compensation.
Taxi fleets gradually stopped hiring drivers as employees in the 1970s after the police commissioner lifted a decades-old ban on medallion owners leasing cabs to independent contractors. Today, behind the wheel of about half of Boston’s cabs are so-called shift drivers, who own neither the car nor its license. The shift drivers pay to work: a fixed fee of about $100 due after every 12-hour shift, not including gas and, in numerous cases, improper charges and illegal payoffs.
For the owners, there’s a steady stream of money, a vast amount of it cash. For each cab an owner rents for two shifts a day, 300 days a year, he earns about $60,000 annually.
“Regardless of how busy a day it is, regardless of how the work is . . . or whether there’s not enough passengers out there, [the owner] knows he’s going to get that shift fee from every driver, every 12 hours, rain, shine, whatever,’’ said attorney Shannon E. Liss-Riordan, who has filed a class-action lawsuit in Suffolk Superior Court challenging the independent contractor system.
In sharp contrast, it is not uncommon for drivers to spend nearly half their work day earning just enough money to break even. Some days they can’t even do that. The US Bureau of Labor Statistics puts an average Boston cabbie’s income at $27,000, just slightly lower than the city’s own estimate. With drivers often on the road for 60 hours a week or more, it can amount to minimum wage work — or less than that. Some sleep in their cars during shifts, or work 24 hours straight in what the drivers call “iron shifts.”
The system’s chief regulator is Cohen, who attended the University of Pennsylvania and has worked for the Boston police since 1985. He is credited with transforming Boston’s taxi fleet from a rag-tag collection of belching clunkers to an industry propelled by late-model vehicles, many of them gleaming new hybrids.
Cohen, who sits on the board of an international association of transportation regulators, helped usher in a requirement that all cabs accept credit cards. He also introduced 100 wheelchair-accessible taxis into Boston’s fleet of cabs.
“We are number one in some areas even in our cab industry,’’ Cohen told the Boston City Council in 2011. “I would debate that with anyone.’’
During an interview with the Spotlight Team, Cohen was alternatively expansive and brusque. And yet, on some basic topics, he seemed remarkably uninformed.
Asked his division’s budget, Cohen replied: “No idea.’’
The Police Department requires medallion holders to file annual financial reports, but Cohen said he has stopped enforcing that rule because the reports were “bogus” and a waste of time. The need for the reports, he said, has been supplanted by more reliable financial data obtained from credit card machines and modern taxi meters.
After Cohen promised to explain that data to Globe reporters, he struggled during a PowerPoint presentation at police headquarters to decipher the basic economics of his own division. He finally referred detailed questions to a city-hired consultant.
Cohen’s unit also apparently has lost track of a fund established in the late 1980s for taxi drivers who die while on duty. According to a 1988 document supplied to the Globe by the Police Department, the “bereavement fund’’ was administered by the hackney unit, whose chief uniformed officer was a member of the fund’s board. Continued...