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While some New Yorkers have been cutting back on taxi fares during the recession, a new study shows the value of taxi medallion is stronger than ever. The value of an average medallion continues to climb in tougher times, with a medallion now being worth $760,000 a nearly 180% increase from where it was at less than a decade ago—outperforming every asset other than gold.
The city's taxis have actually seen a boost because of companies who have cut back on hiring town cars and instead are having their employees simply save receipts from yellow cab rides instead. There's also been a spike in business since cabs were required to take credit card (but don't tell that to angry drivers who don't like the swipe). When asked about the report, TLC chariman Matthew Daus sounded like he had a cocky swagger as he told Crain's, "Strong medallion values are just a natural dividend of a healthy industry.”
The strong medallion values also come from the limited number of medallions out there—capped under 14,000 for most of the last century. The report says that the economy has even further fueled the demand to try to lease a medallion with more unemployed workers turning to driving taxis. The last time medallions went up for auction—with the addition of wheelchair-accessible taxis in 2006—one buyer was able to scoop all 54 of them up for under five hundred grand. The good news of all this for officials in Albany is that they should be able to get in on this bounty shortly with the fifty cent taxi surcharge that helped balance the state budget going into effect by the end of the year.
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You need to have a big piggy bank for a medallion.
See? All those illegal cabbies screwing tourists at JFK are just saving up for the real thing. Giuliani should tell their tale moist-eyed at the next RNC.
Worst policy ever.
Friedman was the most famous economist who pointed out that capping a trade that is low-skilled is pretty backwards thinking.
This guy claims that a negative externality of doing away with the medallion system is rampant traffic, congestion, and environmental problems.
http://firelarrysummersnow.blogspot.com/2009/07/more-on-larry-summers-hero-milton.html
I'm not sure, however, that that would be the case. An equilibrium would exist; the good drivers who drive safely would continue to get business while the bad drivers with bad cars would find it's not profitable for them and quit.
You just remove a barrier to entry that doesn't exist in many other occupations---paying $500,000 for the right to ferry people around in a car...insanity. Whatever happened to freedom and liberty? If I want to pay anyone $10 to drive me from here to there Mr. Driver should be able to.
Paying $750,000...
No really, it REALLY is to keep every Tom, Dick and Ali from flooding the streets in 500 dollar beaters with fraudulent inspections from picking up fares.
They're not lying to you.
Why do say that with disdain? This is America, right? If someone wants to make a buck, they shouldn't be faced with onerous regulation that denies them that opportunity.
Requiring an inspection sticker and special license is one thing; a medallion system is another.
the free-market control argument only really works when you have a way of evaluating the driver you're getting. In most cases, you'll just take the first driver who shows up looking at least tolerably sane without running his plates first, so I don't think people have the opportunity to select the best drivers. I suppose worse drivers would lose out on tips, but that might not be enough to drive them out of the business.
Do you really know what you're getting with a medallion yellow cab?
Not really. I'm not familiar with the process, but whatever training/pre-requisites those drivers go through can't be too arduous. Because I've been in many a cab where my driver isn't a model of safety nor is his car in ideal shape.
Again, why can't a license be $20 like the DMV. Take a class (whatever) road test for livery driving, pass, and you're set.
The high cost of a taxi medallion makes for an inferior taxi fleet.
At these prices the taxi cab must be on the road 24 hours a day to finance the debt. Forget about mechanical safety.
The driver who pays higher rental fees to rent the cab from the owner has to make more money. Just forget about safety at all and run to a high building.
The low pay for overworked drivers leads to higher turnover. Your driver will have no idea where anything is, including the Bronx nor the brake pedal.
My driver knows exactly where the Bronx is and that's why he also knows exactly where the brake pedal is.
When my grandfather retired from driving a Taxi in the late 1980's, he sold his medallion for I believe around $85k, which he used to retire on- what he really should have done was leased it out, so it could still provide a steady stream of income, but our family would still own it... oh well, at least he was able to own his own medallion-