RESPONSE TO COMMISSIONER REYES’ TESTIMONY AT TRANSPORTATION BOARD HEARING OCT. 23rd, 2007


To All Concerned About the State of The Taxicab Industry In Chicago:

Recently, Taxicab drivers in Chicago submitted a petition for a 25% fare increase to the Transportation Board of the City of Chicago. This petition consisted of 2000 signatures, a collection of meter receipts to prove our average income, and a lot of hard work of organizing and collecting by a band of dedicated Chicago cabdrivers. A hearing was held on Oct. 25th to hear the arguments in favor of and against this petition. A succession of 10-12 drivers made their pleas, and then Commissioner Reyes, who had not even been in the room for most of our testimonies, made her case that we drivers do not need a fare increase. She based her recommendation on analyzing data that she mentioned to the Board officers, but did not provide hard copy to anyone. This letter is in response to her testimony.

We concerned drivers in the Taxi Industry in Chicago feel that the Commissioner’s testimony was spurious and unscientific in its application in analyzing the data she put forth. While numbers on a page can be analyzed in many different ways, we are talking about human beings and their lives here, and we cannot leave out the human factor in looking at data. The following illustrations should demonstrate what we mean clearly and simply.


Commissioner Reyes’ testimony: “Gas prices fluctuate….is on a down turn….it peaked earlier this year [and it’s] going down….one day it could be up a certain percentage, the next day it could be down a certain percentage”. She also claimed that looking at the last two years worth of data we are “actually paying 9.5% more” for gas than in 2005.



Response:

While it may be true that if one were to analyze gas prices over a few weeks or months that the price may fluctuate slightly up and down, the hard data over the last five years (since the U.S.’s involvement in Iraq) will show a steady increase of a substantial percent. Some of this hard data follows. Since our last taxi fare increase, in May of 2005, gas prices in the Chicagoland area have increased from an average of $217.8 (May 2005) to the current average of $285.9 for the month of October. Even more currently, in mid-November it hit a high of $317.9. Some simple algebra will show that this is a 69% increase in the last two years. (Based on US Government Statistics available at www.eia.doe.gov, and further information at www.fuelgaugereport.com.) The fare increase we received in May of 2005 was an 11.8% increase that came four full years after the previous fare increase, which in itself did not keep pace with either the Consumer Price Index increases, nor gas price increases in those four years.

In addition, a quick glance at the news will reveal that oil prices have skyrocketed up to $94 a barrel, and heading for the $100 threshold. The news also reports that these prices will not be reflected at the gas pump for several more months.

But all this is beside the point. We would grant that gas prices alone do not even make up the major part of why we need a fare increase.

Commissioner Reyes’ testimony: “we’re not number 18 [in the nation in taxi fares]
We’re 10th in the nation. This proposal would put us at number 4”

Response:

The Commissioner dismissed a poster brought by one organizer showing comparative taxi fares in U.S. cities as being “an old statistic”, and not up to date. On the contrary, this chart is the latest statistical analysis available, and one can go to the website oneself to see it at www.schallerconsult.com. Upon further analysis and reflection, however, the Commissioner’s reasoning is flawed in a major way. Taxi fares in U.S. cities cannot be just compared as is across the board without figuring in other very significant data. For instance, what is the per capita income, which figures into the average citizen’s ability to pay for cab fare? In addition, the cost of living in Chicago not only for its citizens, but also for the cabdrivers themselves, who after all have to be able to live and raise families in the same economy.

We have a question for the Commissioner, and so should everyone: What would it mean for Chicago to be “No. 10th” or even “No. 4th” in the nation in taxi fares? According to our own analysis, with a 25% increase we would not be at No. 4, but No. 5. In addition, if one looks at the charts comparing cities, most of the cities mentioned are due for fare increases in the very near future. We anticipate that even if we were to get the increase, Chicago would be shortly relegated to being below ten in the rankings for taxi fares in major U.S. cities. We feel that this ranking is not commensurate with the status of Chicago as the number two economic engine, as far as metropolitan areas go, in the whole of the United States, behind New York City. We feel that cabdrivers in Chicago, who not only live in one of the higher priced cities in the country, but also take a major role in the running of that economy itself, deserve a fairer and more equitable share of that economy.

Commissioner Reyes’ testimony: “Average shift is 11 hours”

Response:

The Commissioner mentioned this in passing, as if it wasn’t a significant statistic. I urge all of you to consider exactly what this statistic means, in human terms. Most cabdrivers are lease drivers, which means they lease a cab for weekly shifts of 12 hours a day. This means that in order to maximize our income, we must drive the majority of hours that we are paying for. This turns out to be the full seven days a week, and if the Commissioner is correct, this turns out to be a 77-hour workweek. Consider also that this statistic accounts for no significant breaks in our day (we can’t afford it—every hour lost is money lost that we can’t regain because we don’t have the option of working longer, we’re already at our maximum). We also do not receive any health benefits, vacation pay or sick days. While owner-operators and 24-hour drivers don’t have quite the same constrictions, the economic pressures are the same in their cases. When times are hard, as they are now, we do not have the option of not working and attending to any other kinds of human concerns, such as family life, a hobby, socializing, cultural events and the like.

Commissioner Reyes’s testimony: “Drivers averaged 22 fares per shift””[we] analyzed fare information collected from drivers’ receipts…6000 fares from 100 cabs…775 fares from 5 cabs over 11 shifts…radio dispatched fares from 50 cabs over a two week period”

Response:

We would like to challenge the Commissioner to provide to the Alderman of the City of Chicago, the Transportation Board, the media and ourselves, the cabdrivers of Chicago, the hard data that this statement is based on. The reason is the following. If it is known that the average number of fares per shift is 22, then it should be easy enough to tell us what the average fare is also. With this figure, it would be easy enough to subtract gas payments, lease costs, taxes, health insurance (we buy our own), and maintenance costs and tells whether we truly have enough left over for raising a family. This is a very important point, and we hope all concerned will join us in requesting the release of this data from the Commissioner.

Commissioner Reyes’ testimony: “Lease rates cap has not gone up in 14 years”
“the current cap is $493 but there are a lot of different extras…that the owners can charge…supplemental insurance, collision damage waiver, new vehicle model, phone call or cell phone usage, workmen’s compensation, rental agreement tax, different things that can be added” ”some leases will be a little bit over $600”

Response:

Until 2002, the City of Chicago’s Rules and Regulations do not even mention a lease cap. We first hear a mention of a cap on lease rates in the 2004 version. Unfortunately, we have not been able to get our hands on any previous versions of the Rules and Regulations to check on the veracity of the Commissioner’s statement concerning whether the cap has not gone up in 14 years, though we sincerely doubt it. In 1994, a weekly lease was approximately $300. What reason could there possibly have been for setting a lease cap of $473 at that time? Commissioner Reyes was wrong about that amount also: the current cap is $473, not $493. In our perusal of the Rules and Regulations, we found no mention of all these “extras” that the Commissioner mentions the owners can charge. It is our position that the Commissioner, and the Rules themselves, should clearly define what these “different things” that can be charged are. For instance: from our understanding, the collision damage waiver, the rental agreement tax and the workmen’s compensation fees are supposed to be included in the base rate, or in the supplemental insurance. We challenge the Commissioner again to explain how a ‘base rate cap’ of $498 can somehow increase by over 20%, to over $600, with all these ‘extras’, which makes a mockery of even the term ‘lease rate cap’. If the Dept. of Consumer Affairs doesn’t follow or monitor, or even establish meaningful rules and terminology concerning lease caps, their own rules and regulations, how is it they can demand and expect the drivers to do so? Can this be considered right, and just?



Commissioner Reyes’ testimony: “Three years ago medallions averaging at $42,000…today—average of a medallion is $71,000, not $130,000”

Response:

While it may be true that the average price of a medallion currently on the open market may not be $130,000, it is nothing less than disingenuous (to say the least) to claim that the average is currently $71,000. A quick look on the Dispatcher’s website, www.cabmarket.com, will clue us in to what is going on. The statistics for the last month will show that there are medallions selling for $105K, $130K, $150K and also ones selling for $1, $100, and even reasonable prices like $47,000. If you averaged it all out, as the Dispatcher did, you would get a current average of $81,000 or so. But why is this ‘average’ a meaningless number? Because if you tracked down those medallion sellers and buyers you would find that the $1 and $100 medallions are being sold between family members or business partners of one kind or another. Same goes for the two that were sold to their partners for $47,000. We can easily find these people and ask them.
Our question is, why is the Commissioner’s Department using this meaningless data? If we were to do a strict scientific and statistical analysis of the medallions for sale, throwing out the prices not sold on the open market (something you learn to do in an Introduction to Statistics class), we would find a much higher average. It is currently approaching the previous high end of $130K, as a quick check of the above website will show, ranging from $105K to $150K for a medallion on the open market. When we do this, we can see that the actual real life real numbers cost of going into the taxicab industry in Chicago has risen dramatically and extremely in the last year, up to 300%!


All this being said, we would like now to go back to our initial arguments we made at the beginning of the hearing on Oct. 25, which the Commissioner was not in the room to hear. Our fledgling organization is committed to representing the Chicago cabdrivers’ interests, not just in playing catch-up with the economic crisis we personally are in and have been in within this recent period, but in also looking ahead to looming economic issues in the near future which will assuredly affect our future economic status. We feel it is in the interests of not only our driver’s community to anticipate future concerns, but that it is also in the City’s interests to be future-looking, as pertaining to relations with the transportation industry here in Chicago.

1. Gas prices have gone up, and will continue to go up. This we see as a given, and anyone who has been paying attention to oil prices would have to agree. As stated above, we believe that the actual statistical percentage is 69%, and due to go higher with the recent increase in the price of a barrel of oil.


2. According to Bureau of Labor statistics, the cost of living has gone up by 4.6% since our last fare increase in 2005. And as also stated above, the last increase of 11.8% did not itself keep up with the increases in the cost of living for previous years.


3. Lease prices have risen substantially in the last few years, despite the lease cap legally mandated by the City. Due to the Commissioner’s aforementioned “different extras” that the City allows owners to charge for above and beyond the “lease cap”, the very term becomes rather meaningless. Due to other economic factors affecting the medallion owners (increased prices, reduction in taxi vehicle life) we expect that the owners will be due for an increase in lease prices, will be asking for them, and we accept that they may be due a lease cap increase. We cabdrivers will need a substantial increase in our fares to compensate for these economic conditions. We also expect and demand that the City enforce its own rules and regulations concerning lease rates charged by medallion owners.

4. The price of entering the taxi business as an entrepreneur has gone up substantially in the last two years. An increase in the price of a medallion from an average of $45K to upwards of $120K has severely affected the prospects for new owners to regain their investment in a reasonable amount of time, thus requiring them to lobby the City to increase their lease prices. This, in turn, will mean those costs being passed on to the average lease cabdriver, who in turn will have no choice but to either petition the City for more and more fare increases, or work longer hours than the 75-80 hours we work already.

5. Last but not least is the recent reduction in the legal life of a taxi vehicle from 5 years to 4, with a possible one-year extension if it is well maintained. This impacts a taxi vehicle owner in a rather severe way. Consider: given this new rule, a purchaser of a brand new taxi vehicle would have to retire a worthless car with no value for resale in four years, while still owing thousands of dollars on it. Again, the only recourse she or he would have would be to pass along this increased expense to the only customer they have, the driver. Another reason the driver will require a fare increase to cover anticipated future costs.

We of the AUPD feel we have made a substantial case here in favor of a fare increase for the cabdrivers of the Chicago taxicab industry. We also feel we have adequately rebutted Commissioner Reyes arguments that we don’t deserve or need a fare increase, raising questions and challenging her statements and position on this issue. We hope you agree. We also respectfully request that you don’t take our word for any arguments we profess here, but to please ask Commissioner Reyes to produce her hard data and statistics for public perusal, and to do any independent research yourself to ascertain the veracity of our arguments.




Peter Ali Enger, Spokesperson, AUPD (Association of Unified Professional Drivers)

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Melissa Callahan, Chairperson, AUPD (Association of Unified Professional Drivers)
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P.O. Box 301142
Chicago, IL 60630
Ph: 312-327-6610
email: info@aupdchicago.org

There is this additional cost of 5% for credit card processing, which I do not understand why the city says the driver should not pass on to the customer.
I do not understand why the cost should not be passed on to the company leasing the cab.

I do belive the company is paying less than 2-1/2% but rips off the driver at 5%. I know one company that charges 7% to credit cards.

I think it is only fair to let the customer have a choice of paying cash or 5% more for credit card use.