San Diego Bows to Capitalism, Dumps Taxi Limits

San Diego Bows to Capitalism, Dumps Taxi Limits

Editorial writer Steve Greenhut at the San Diego Union referred to the structure of the taxi industry, in which cab drivers rent cabs from a company that has acquired a limited issue permit with a city, as something akin to how freed slaves in the South after the Civil War became “sharecroppers” doomed to a life of poverty. 

Greenhut seems to have effectively shamed the San Diego City Council by inserting racism into the Monday night debate on taxis versus Uber. The city eliminated the cap of 993 limited issue taxi medallions in San Diego and opened up the system to all applicants.  

Greenhut referred to a 2013 study by San Diego University and the Center on Policy Initiatives called “Driven to Despair” that surveyed the state of the taxi industry in San Diego. The study found that the average lease cost for a cab driver for a month was $1,200, and drivers are paid about $5 an hour and no benefits.

Uber advertises to recruit drivers be stating they can make $18 an hour using their own car as an on call limo. A Milwaukee Business Journal article found response times for Uber were slightly better than taxis and somewhat cheaper. The main difference was Uber drivers work for the fare; whereas taxi drivers really make their living on 20% tips. With a 30% average price advantage for Uber, taxis’ market share has been savaged.

The only reason that San Diego got involved in the battle between taxicabs and Uber is that cities and their airports collect fees, better known as hidden taxes, for issuing limited use permits to bestow the privilege of picking up and dropping off passengers. As a limited commodity, San Diego “medallions” were trading for about $140,000.

That came to an end on Monday night when the City Council eliminated the cap by a vote of 8-1. The measure also dispenses with the 10 year age cap on taxis, restrictions on tow trucks to carry stranded drivers, five year requirements for driving or management experience, and clarifies citizenship and legal U.S. residency requirements.

Councilwoman Marti Emerald, who led the effort to open up the 993 permits, stated that her concern was that the permits administered for the city by the Metropolitan Transit System and issued for a $3,000 fee were fetching about $140,000, and buyers passed along costs to drivers, who paid the fee with long hours at low pay. She emphasized that the new city ordinance will require the insurance and safety rules for taxi operators.

Uber competition has done a great public service in forcing the City of San Diego to eliminate the crony limitations on taxi licenses. As of today, the price of a license will essentially be the cost of the permit. The public will get lower fares, and the drivers will have the opportunity to make more money. That is how capitalism is supposed to work.

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