Reclassifying cabdrivers as regular employees would arguably entitle them to legal protections they now lack, such as minimum wages, overtime, and the reimbursement of expenses. But no adjustment of their legal status will fix the underlying problem: the feudal system that has turned the taxi industry into a protected cartel, unfairly enriching a handful of medallion owners by severely restricting the number of taxis allowed on the roads.
In Boston as in most cities, the number of authorized cabs is kept well below the public demand for cab service. That is why the price of medallions — which have no intrinsic value; they represent nothing but permission to be in the cab business — is so obscene. Reasonable minds can differ on how much regulation the taxi industry requires. But medallions aren’t regulation, they are brute protectionism. They strangle competition, distort the market, and empower the politically wired. Medallions are why cab fares are so high — and why cabbies’ earnings are so low.
“The single most powerful thing an employee can say to his employer is ‘If you don’t treat me better, I’m going to work for the competition or start my own firm,’ ’’ says Robert McNamara of the Institute for Justice, a public-interest law firm that has challenged taxi oligopolies nationwide. “In most cities in this country, taxi drivers can’t say that. That is why they get such a raw deal.’’
The existing system isn’t chiseled in granite. In Minneapolis, which lifted its cap on new taxi businesses in 2006, both consumers and cabbies are benefiting from competition. The number of taxis serving passengers in the city has doubled, while the lease rates drivers pay to operate a cab have dropped significantly, sometimes by hundreds of dollars per week.
Competition can work wonders. What Boston cabbies need is economic power, and there is no better way to achieve that power than by unshackling the market. Sharecroppers belong in the history books, not behind the wheel of the city’s cabs.