What if the Statue of Liberty disappeared overnight? Or, suddenly, there were no more bodegas, bagel shops, pizzerias? A New York icon, as thoroughly ingrained into city life as any of those, has almost vanished before our eyes this year. The taxi has been Raptured. Two-thirds of our yellow street-hail cabs are gone.
Before the pandemic, some 10,500 yellow cabs — about 80 percent of the total number of taxi medallions issued by the city — were in the streets each day. During the peak of lockdown, in April 2020, that number was 982. “Our business dropped about 90 percent in a matter of three weeks,” says one employee of a major fleet who wished to remain anonymous. “Drivers were scared about getting out there, and there was no one moving around the city anyway, so it wasn’t economically feasible.” Even as the city has begun to come back to something approximating normal, the number of cabs has not. At the end of last summer, it crept back up to around 3,500 per day, where it remains.
And taxi-fleet owners and driver representatives say the numbers are not improving. “Most fleets are running on 20 percent to 30 percent of their fleet, going out for less than cost,” says Steve Gounaris, the owner of Boulevard Management, a 180-cab fleet. “In this industry, you have to have a decent amount of cars to be able to be profitable. How are you going to make a car payment, medallion payment, insurance, workers’ comp, labor — when you’re putting them out there for less than what it costs you?”
Those costs are considerable. Although there were very few fares to be had last year, medallion owners had to keep paying a bevy of fees (per vehicle annually: $9,600 in car insurance, $2,500 workman’s compensation insurance, $400 commercial motor-vehicle tax) to keep their cars licensed as taxis. To avoid these charges, owners put their medallions “in storage,” meaning they took the license plates off their cars and handed the medallion to the TLC indefinitely. “Once the city shut down, everyone dropped the vehicles. We were forced to surrender the medallions and the plates, because the insurance companies did not agree to give us a discount,” says Savas Tsitiridis, the owner of United Taxi Management, a fleet of 253 cars (before the pandemic, he had 315). “If you wanted to stop the insurance costs, which are very expensive, you were forced to surrender everything.” Thousands of cabs therefore sit parked and plateless behind fences in Long Island City, their yellow paint baking in the sun.
They may stay there indefinitely, because, like companies across nearly every industry, many taxi fleets have simply gone out of business in the past year. (Roughly three-quarters of the city’s taxis are operated by fleets; the rest are owned by individuals.) “A number of fleets I know completely gave up,” Tsitiridis says. “I was told that there were in excess of 20 fleets that did not renew — maybe well over a thousand cars.” Gounaris has heard similarly, although he is unsure how many of the closures are permanent, “or if they just did it temporarily, and are waiting for things to turn around.”
According to that major-fleet employee, many garages “were already in trouble, and this just was the icing on the cake for them. I’m pretty sure it’s dozens that went out of business,” he says. “Fleets going out of business is going to be a huge impediment to coming back. Because instead of 60-plus fleets putting new cars on the road, now I only know of two that have a strong financial backing, and a third where the family themselves are doing pretty well.” It’s even harder on individual owner-operators, who don’t have the economies of scale or savings that larger companies have.
Making a living as a taxi driver has been growing ever more difficult for years, in large part because of the cost of entry. Because the city kept the number of medallions constant from the 1930s through the 1990s and has added only a modest number since then, their resale price rose and rose again, and about a decade ago they topped out around $1.2 million apiece. (Fleet medallions cost slightly more than individual ones.) Solo drivers were taking out huge and sometimes predatory loans to get into the business, and then spent many years of long days and nights driving to pay them off. The medallion, for many solo operators, functioned as a retirement fund: You drive for your entire working life, pay it off, then sell it to another driver and move to Florida. Then came Uber and Lyft, and the market crashed. Medallions lost three-quarters of their value in just a few years, and on top of that, there were simply fewer street hails to be had as riders switched to the apps. Drivers carrying huge loans — $500,000, on average — found themselves underwater. Nearly a dozen drivers have taken their lives in the past few years, suicides of both despair and protest.
Then the pandemic struck, and the market buckled even further. Medallions are currently going for small fractions of their recent value, according to people at several fleets. “About $75,000 cash, yeah,” says Tsitiridis. “And people owe at least ten times that.”
The city has committed $65 million of its federal-stimulus funding to bailing out owner-drivers, but the funding has yet to be formally legislated. Bhairavi Desai, of the New York Taxi Workers Alliance, says the proposed amount is far too little to actually rescue them — and is essentially a cash infusion for lenders that will leave drivers permanently indentured. “The owner-drivers have been in a desperate fight for debt forgiveness,” she says. “If they go to work, the [medallion] mortgages are so high that they’re not going to be able to keep up with their payments, but because they’re working, there will be more demand on them to make a payment,” she says. “And even if they’re able to cover the whole payment, it means that they’re working for nothing but loans. Then there goes unemployment [because they’re considered reemployed], and there’s just more pressure on them from the lenders.”
One employee of a major fleet reports that the circumstances of the pandemic have led some drivers to reevaluate whether the job is worth the time and effort. One medallion-owner he knows gave up and went to work at UPS. “It’s a fucking rough job. You know? It’s grueling,” he says. “[The medallion-owner] said, ‘I’m making just as much as I used to, but I’ve got full benefits now, and it’s a lot less stressful of a job.’ So he’s probably not coming back. He’s probably just going to give up his medallion.”
As the city attempts to stagger back to normal speed, the larger outfits that can afford to take medallions out of storage are the most well-positioned to survive. But they have encountered another problem: The Taxi and Limousine Commission, which has been operating at a significantly reduced capacity throughout the pandemic, can’t keep up. Taking medallions out of storage requires TLC inspections and paperwork approval. Usually, several owners said, these inspections can be handled immediately. Lately, you need one of a limited number of appointments, and it has to be booked three or four weeks ahead.* “I get it. Social distancing — you don’t want everybody in the office,” says Gounaris. “But now you’ve got to wait three weeks to do some paperwork and have the car registered and whatever to get back on the road. If it continues going like that, how many are gonna go out — 20 cars across the industry out every three weeks? You have over 10,000 cars parked in storage.”
Some fleet owners are optimistic that the TLC’s inspection logjam will soon improve, but all of them are frustrated. “When you put a car back on the road, it involves a pretty intensive process of physically checking the car, running it through some tests. There’s only one facility in New York that does it, in Woodside, and that facility has only been open three days a week,” the fleet employee explains. “And then there’s a second facility that you have to go to. And you have to bring original paperwork and documents. That stuff, they’ve refused to move to remote. So both of those together have been a real pain in the ass.”
Because many drivers have been unable to go out during the pandemic, the medallion lenders have been granting payment holidays. But according to Desai, the biggest lender in the industry, the hedge fund Marblegate, has been saying that the pause on payments is about to end. She also says that Medallion Financial, a large publicly traded lender, has started aggressively pursuing debts. “By July, we could see a real avalanche of foreclosures if something isn’t done about the debt,” Desai says. “Medallion Financial has been foreclosing and seizing the medallion, and then using confessions of judgment [clauses] to seek the remaining balance of the loan through equity on homes that are sold or other assets. Foreclosures seem to be their main response to the crisis — not settlements or debt forgiveness.” Multiple taxi owners confirmed Desai’s account, including one who says Medallion put a lien on his house using his signed confession of judgment. Responding through its attorney, Medallion Financial calls her description inaccurate, and vigorously disputes “any recent change in practices” along these lines.
“It’s not that we don’t want to pay,” says a fleet owner who wanted to remain anonymous to avoid potential retribution. “But it looks scary out there for us. Banks and insurance companies want their money, which I get. But forcing me to do things that I cannot do is going to not help me make any money to pay.”
Everyone seems to be hoping for city intervention, though so far, there are no indications of a sufficient rescue plan. Under the de Blasio administration’s proposal, drivers can get a $20,000 grant to be used as a down payment for debt restructuring, plus an additional $9,000 to cover the medallion mortgage for up to six months. But according to multiple industry sources, Marblegate is willing to renegotiate medallion debt only down to $275,000. (The company did not respond to requests for comment.) By Desai’s figuring, “drivers would be in arrears by $15,000 for the year, while earning $10.40 — below minimum wage — per hour. This is after working 60 hours a week,” Desai says. “The only way that you can even meet your monthly goal is because you’re working double the hours that other New Yorkers are. Without debt forgiveness, it’s just not sustainable.”
That unnamed fleet owner says he’s hoping the industry can find a way to work with the city and the banks. “Otherwise, I see it being really bad,” he says. “First you shot us in one foot with Uber, then you shot the industry in the other foot with the pandemic. Now nobody’s walking. We’re barely crawling.”
*Update, May 27, 4:35 p.m.: The TLC did not respond to prepublication requests for comment on this story, but now counters this characterization, saying it has not worked at a reduced capacity during any of the pandemic. Its spokesman says its Licensing Office has no backlog, and that owners taking their medallions out of storage can make same-day appointments with no wait.