NYC Taxi Drivers are Driven to Despair
“Over the past year, a spate of suicides by taxi drivers in New York City has highlighted in brutal terms the overwhelming debt and financial plight of medallion owners. All along, officials have blamed the crisis on competition from ride-hailing companies such as Uber and Lyft. ... [M]uch of the devastation can be traced to a handful of powerful industry leaders who steadily and artificially drove up the price of taxi medallions, creating a bubble that eventually burst. Over more than a decade, they channeled thousands of drivers into reckless loans and extracted hundreds of millions of dollars before the market collapsed.”
How the Price of a New York City Taxi Medallion Has Changed
“As in the housing crash, government officials ignored warning signs and exempted lenders from regulations. The city Taxi and Limousine Commission went the furthest of all, turning into a cheerleader for medallion sales. It was tasked with regulating the industry, but as prices skyrocketed, it sold new medallions and began declaring they were ‘better than the stock market.’ A Pakistani immigrant who thought he was just buying a car ended up with a $780,000 medallion loan that left him unable to pay rent. ... A Haitian immigrant who worked to exhaustion to make his monthly payments discovered he had been paying only interest and went bankrupt.”
“At least eight drivers have committed suicide, including three medallion owners with overwhelming loans. The medallion bubble burst in late 2014. Uber and Lyft may have hastened the crisis, but virtually all of the hundreds of industry veterans interviewed for this article, including many lenders, said inflated prices and risky lending practices would have caused a collapse even if ride-hailing had never been invented. ... City data shows that since Uber entered New York in 2011, yellow cab revenue has decreased by about 10 percent per cab, a significant bite for low-earning drivers but a small drop compared with medallion values, which initially rose and then fell by 90 percent.”
The New York Times, May 19, 2019: “‘They were conned’: How reckless loans devastated a generation of taxi drivers,” by Brian M. Rosenthal
