Taxi Drivers Have Uber Problem As Medallion Values Plummet
By Jim Bochnowski in News on May 18, 2015 8:00PM
While the advent of new ride sharing technology like Uber is helping consumers on a massive scale, it is having a disastrous financial impact for traditional cab drivers.
Today USA Today has an in-depth story on the decline of the value of taxi medallions, the license to operate a taxi in most major cities including Chicago. According to the paper, Chicago currently has a traditional taxi fleet of 7,000, the second largest in the country. Most of the taxi medallions are bought by investors and companies that rent their medallions to individual drivers. In 2007, the median price of a medallion was roughly $70,000, a price that rose to $357,000 in 2013. Today that price has dropped to $270,000.
While most people would just shrug their shoulders and say "who cares about the failing investments of giant cab companies," this has a disastrous impact on drivers who personally own their cab medallion. Gary Karczewski, a cab driver who inherited his medallion from his father, was planning on using the sale of it to help plan his retirement. "I have had a pretty successful thing. My hope was to wind down soon and give whatever I could sell the medallion for to my mother. But I am not confident there's a market now." Additionally, traditional taxi drivers end up with more expenses than their Uber contemporaries, due to having to acquire a chauffeur's license and paying for regular inspections of the vehicles.
In response to the challenges faced by the taxi industry, the city has rolled out an official Chicago city taxi app, but many are convinced that there's really no going back to the "good old days." According to Charles Goodbar, a lawyer who helps obtain loans for prospective cab drivers, "There's zero market. In my case, a buyer would have to come to the table with about $220,000 in cash per medallion, because there isn't any financing available."