Don't Fear The Meter

Mayor Fenty's plan to replace the crazy zone fare system in DC with a normal meter one seems to be meeting with some resistance from cab drivers. The oddest thing about it, though, is the specific nature of the objection:

Wegen Tadesse said the 900 members of the Ethiopian Ethio-American United Cab Owner Association plan to strike. "It's not just about the meters now," he said. "There are no guarantees for any of our jobs. The big companies are going to take over the business."

What he's referring to is DC's unusual system of independent-proprietor taxicabs. Most cities face sharp limits on the number of cabs allowed to roam the streets. Consequently, the licenses become very valuable, which is to say very expensive, and cab driving thus becomes a capital intensive business in which firms own multiple cabs (with the license rather than the cab itself being the valuable commodity here) and employ drivers to drive them. In DC, by contrast, it's much cheaper and easier to get a cab up and running so they're mostly owner-operated. Tadesse and many other cab drivers feel that letting the mayor impose the meter will somehow undue this system. But it's not clear exactly why they think that, so it's hard to know what kind of policies could assuage those fears while simultaneously letting us enjoy the bounty of the meter.

Comments

You spelled "undo" wrong.

Posted by Cryptic Ned | October 29, 2007 10:23 PM

I liked the zone system a lot when I was in DC this year, but then, I never left the zone that 9th and K is in (at least not in a cab).

Posted by Aaron S. Veenstra | October 29, 2007 10:32 PM

I can't tell you how refreshing it is that your response is "how we can address the cab druivers' concerns?" and not "why are these ignorant cabbies worrying their silly heads about this?" There's hope for punditry yet...

Posted by lemuel pitkin | October 29, 2007 10:33 PM

I've asked two cab drivers about the meters and both were mad, but not really able to explain what the problem was.

If the dynamics of the cab industry are correctly explained by Matt then I really don't see how they could succeed with a strike, won't other cab just fill the void.

Posted by Christopher Colaninno | October 29, 2007 10:38 PM

If I were a cab driver and could charge higher prices to anyone who couldn't decode the zones system, I also would not want to move to a meter system.

It seems far preferebale to bump up a zone or two each day rather than work an extra hour. With all the visitors DC attracts, zone appreciation must be massive.

I am generally pro-taxi driver and have no objection to adjusting the system so it lets them keep a profit level similar to what they currently earn. However, a license to cheat is not something the government should be printing.

Posted by Jack | October 29, 2007 11:02 PM

I think one of the objections is that purchasing and installing a meter adds to the expense of purchasing a taxi as an owner-operator.

Posted by Horaceco | October 29, 2007 11:29 PM

I live in NYC, but didn't actually grow up here, or know a lot about its cabs, so maybe Matt or some other native New Yorker can answer this:

How does it work in NYC? Outside of Manhattan, there are a lot of different cab companies. Like they Manhattan yellow cabs, they're under the Taxi and Limousine commission, but there doesn't seem to be a shortage of competing cab companies. I don't actually know how this compares to DC, though. Is NYC the kind of environment the DC cabbies don't want, and if so, maybe someone can explain to me why (and what, exactly, the NYC non-yellow cab environment is)?

Posted by Peter Bautista | October 29, 2007 11:49 PM

But it's not clear exactly why they think that, so it's hard to know what kind of policies could assuage those fears while simultaneously letting us enjoy the bounty of the meter.

Here's what I think-- the advantage of a large cab company is that it can create economies of scale that allow it to become more profitable than an individual cab driver is. As a result, the large cab company can offer larger and large sums for a cab license (I assume that in DC, somehow licenses are limited-- they're just cheap at the moment).

Why hasn't this happened now? Well, under the zone system, it's impossible for a large company to audit the cab drivers. A cab company is free to own a bunch of its own cabs and hire drivers, but the drivers can skim as many fares as they want without allowing the cab company to detect this. That makes it a poor economic proposition to run a cab company, since it becomes easy for the drivers to skim. Sure, a cab company can add a GPS/zone meter to their cabs, but that makes them more expensive to operate than the independent cab drivers, eliminating their advantage.

However, when the city requires meters, then all cabs, independent and corporate, will be required to buy them, putting both parties on equal standing in terms of capital outlays. THEN, cab companies will be able to audit their cab drivers, making it economically viable for a cab company to operate. Suddenly a cab company is in a position to raise capital, buy up a bunch of cab licenses for high prices, and start keeping a large chunk of business for themselves.

Posted by Tyro | October 30, 2007 12:33 AM

In most cities, "Yellow Cab" is a cab company that competes with various other cab companies with different paint schemes. In Manhattan, there are lots of different cab companies, but all the cabs are painted yellow by law (to distinguish them from gypsy cabs). However, taxi medallions in Manhattan are incredibly expensive and so the right to drive a cab (if not the actual car) is mostly owned by companies and leased to drivers at relatively onerous terms.

It's at least possible the DC taxi drivers are worried that the taxi licensing authority will make it more expensive to operate a cab, with meters just being the present manifestation of this. It's also possible that they have much uncertainty about how their incomes will change once fares are metered. One hopes that the Taxicab Commission knows how many miles cabs cover on average and has set the meter fares so that the drivers still make about the same amount of money, but if I were a cabbie, I might not trust the commission to get this right.

Posted by Ben | October 30, 2007 12:42 AM

At the very least, the zone system replaces a potentially expensive mechanical meter with a cheap sticker.

That cost gets passed to the customer in a competitive market according to economics 101.

I'm not sure how broke DCs cab system is that it has to be fixed. Half-decently chosen zones end up costing about the same as the meter, except that nobody has to pay to install meters.

Some people take short trips from the close end of one zone to the close end of another.

Other people go from the far end of one zone to the far end of another and get a bargain.

Overall, its not a big deal either way compared to a system with low entry costs and plenty of competition which would be reduced by nearly any other scheme.

Posted by anonymous | October 30, 2007 12:59 AM

Any system that allows private parties to profit from a publicly issued license is wrong. Wrong in theory and the real world results tell the tale, higher prices a fewer and worse service to the public. Any such license, liquor, cab or whatever should be non transferable.

A rather sloppy alternative would be for government entities to auction such non transferable licenses, so at least they get the revenue benefit. Letting private parties profit from public licenses instead fo the public is pretty dumb.

Posted by rapier | October 30, 2007 1:21 AM

To those wondering how broken the DC cab system is: insanely broken. DC is the only city I've ever lived in in which people frequently get into fights with cab drivers. Sometimes fistfights. I know this sounds ludicrous, but the zone system is so inscrutable that it seems to lead inevitably to trouble. Please let it die...

Posted by Adam | October 30, 2007 1:25 AM

The zone system's difficult to decipher but drivers seem to cheat less than in the past. What's mainly wrong with the DC cabs is that these one-cab operators drive *really* run-down equipment and are answerable to nobody for either its condition or their attitude. Drivers are particularly loathe to run their A/C in the summer, and will actually roll around with their windows up to trick you into thinking that they've got it. At night they refuse -- in violation of the law -- to allow you into a cab unless they've already agreed to your destination; and they're increasingly choosy about single parties going to locations where they don't feel they'll get a return fare. As independent operators they're answerable to nobody except the DC Taxicab Commission, which is the same as being answerable to nobody at all. And since you'll never, ever see their cab again, your negative opinion won't have any consequence for them whatsoever.

I wouldn't say District cabbies have an easy life, exactly, but I can see why they don't want to give it up.

Posted by mark | October 30, 2007 1:28 AM

Wait.... yo mean... they've DELIBERATELY made it harder for me to get a cab?

Municipal government sucks.

Posted by Anthony Damiani | October 30, 2007 2:25 AM

I imagine meters will allow the IRS to keep closer tabs on cabbies' revenues.

Posted by maynardGkeynes | October 30, 2007 3:53 AM

How expensive do meters really HAVE to be? A bit of extra software on a GPS setup, and you're there. Are they a regulated monopoly, too?

In reality, if you don't license cabs, it's the private cabs that are economically ahead of the cab companies, because the private cab is also the driver's private car. All the private cab is out is the incremental cost of driving around, the capital expense, except for the meter, is a sunk cost most people are going to pay anyway. That's why the cab companies need licensing to dominate the market; They'd be driven out of it by jitneys, otherwise. That IS what happens in countries that don't license cabs, and radically restrict their number, you know: Moving other people around becomes a low entry barrier business people engage in if they can't find a day job. Very good for people who need to get around but who don't have a car, but not so good for somebody who wants to make a good living driving a cab.

Which I suppose the DC cab drivers know, and that's why they don't want a genuinely unregulated market.

Posted by Brett Bellmore | October 30, 2007 7:02 AM

My cab driver on Saturday night said that the cabbies are most upset because there is a proposal to sell the entire DC cab concession to a single company (ala Barwood in Maryland). He also said that there's a strike planned for Halloween.

Posted by Joe | October 30, 2007 8:28 AM

You know all of those studies about how this, that or the other thing costs America X billion dollars per year in lost productivity? Video gaming at work, traffic jams, unseasonable weather, you name it. I suspect that the time and productivity wasted on trying to understand and address objections raised in bad faith would trump all of those.

The cabbies can't articulate the link between meters and big-company takeovers because it's entirely spurious. They don't want the meters because they believe they will make less money with them. They are sophisticated enough to know that this isn't a very compelling argument for cab users--which is a shame, because the economic viability of cab-driving should be a concern to users, because it impacts availability and quality of service--so they latch onto something else that they suspect will have wider appeal.

Congratulations to them on their rapid assimilation into the vapidity of US political discourse, but let's not spend time trying to make sense of something that isn't even remotely plausible.

Posted by Rich | October 30, 2007 8:53 AM

Is this really so hard? Cab drivers are suspicious of any change that's imposed on them. Just talking to them and their representatives would probably go a long way.

Oh, and Matt is wrong to think that NYC's taxi system is the norm in the US. It isn't. In most of the country cab licenses don't cost $100s of thousands.

Posted by Ragout | October 30, 2007 9:06 AM

I'm with the posters who say that cab drivers especially dislike meters because the meters will make it impossible for them to underreport income. That means (i) paying more in taxes, and (ii) turning over more of the receipts to employers and/or owners.

Posted by dcuser | October 30, 2007 9:38 AM

I know people are scared of change, especially when they feel they are going to come out on the loosing end. However, the zone system sucks. I live in DC and do what I can to avoid taking cabs because I always feel I am getting ripped off. Imagine what tourists and other visitors feel. The cabdrives out to think very carefully, if they go on strike then a bid cab company will definitely move in and fill the vacuum left by the striking DC cabbies, and it may be hard for them to get back into the market. And if they think that people will care, they are miscalculating. People will see a cab, I don't know that they will care.

Posted by ET | October 30, 2007 10:01 AM

By the way, Matt, the post title should be "(Don't Fear) The Meter." To those in the know, the parentheses make all the difference.

Posted by James Gary | October 30, 2007 10:53 AM

Matt,

You're one of my top bloggers, but you really have to watch the homophones. Undue for Undo. Above you say little-to-know instead of little-to-no. And that's just today's front page. I understand the blog world has a no-editor, quick-to-publish, quick-to-correct model. Would it really be a big deal to go back and edit out the misspellings?

Posted by MikeMc | October 30, 2007 11:55 AM

Am I the only one that found the zone system to be very easy to deal with? There's a map right there in front of you in the cab with the zones, then a chart showing the cost of going from zone to zone. You know EXACTLY what the charge is before you get into the cab.

With a meter, the cabbie will really be able to screw you over by taking the most tortuous route to your destination. This is going to be a particular problem in DC, because almost none of the cabbies know where anything is. You'll be spending $15 bucks to get to Dupont from Adams Morgan because the cabbie will insist on going through Georgetown, and if you couldn't read the zone map before, you'll have no idea that that isn't the way to go.

Posted by Adam | October 30, 2007 12:47 PM

Tyro said:

"Why hasn't this happened now? Well, under the zone system, it's impossible for a large company to audit the cab drivers. A cab company is free to own a bunch of its own cabs and hire drivers, but the drivers can skim as many fares as they want without allowing the cab company to detect this. ..."

This is not really a problem. You don't hire drivers, you lease the cab. If the driver has a bad day and loses money that is not your worry.

Posted by James B. Shearer | October 30, 2007 1:08 PM

Yes Adam I think you were.

For the poor tourists/visitors who don't understand the street system. Also, most people don't know which side of the street to stand on if you are on the edge of a zone - i.e. how to beat the cabbies at their own game.

Posted by ET | October 30, 2007 4:14 PM

I have being living in these area for the last twenty four years,i have never seen so much corruption as this taxi business.The root of the problem is not the cab drivers,it is The dc goverment.

Posted by negasi gebrebrhan | October 31, 2007 6:46 PM