Are unions the answer to Chicago taxi drivers’ problems? - Liberty Justice Center

Are unions the answer to Chicago taxi drivers’ problems?

It’s hard to make a living as a Chicago taxi driver. A recent study showed that Chicago drivers make an average of just $5.40 an hour, far below minimum wage, and just over $20,000 per year.

Some cab drivers have tried to change this by suing the city of Chicago. They argue that because the city profits from the sale of taxi medallions and controls the conditions under which cab drivers work, they should be considered public employees and paid minimum wage.

Meanwhile, unions are seeking to mobilize Chicago cab drivers. Last week, American Federation of State, County and Municipal Employees officials announced they were forming a new outfit called “Cab Drivers Unite.” The trade organization would advocate for cab drivers in negotiations with Chicago Mayor Rahm Emanuel to raise fares and push more regulation on ridesharing companies such as Lyft, Uber and Sidecar.

But a union is not the solution to taxi drivers’ problems.

The main reason cab drivers don’t earn much money is the city’s taxi medallion system. In addition to paying for their gas, they have to pay to lease a medallion from a cab company, the legal privilege to operate a taxi and in some cases a lease for the vehicle itself. Drivers are charged as much as $518 a week out of their earnings in leasing fees. That’s nearly $27,000 a year they miss out on.

Why don’t they just buy their own medallions? Because at the last auction, Chicago was selling them for a minimum bid of $360,000. A mere 6 percent of Chicago’s 12,763 taxi drivers are medallion owners.

With respect to fair fares, there’s some legitimacy to taxi driver complaints. The city has frozen fares since 2005, saddling drivers with one of the lowest standard cab fare rates in the country, despite higher gas prices. Taxi operators simply aren’t allowed to set the prices they charge for their services, unlike nearly every other market. If they were, Chicago cab-riders would feel the true cost of the city’s regulatory burden on the taxi industry, and drivers might suffer even more as consumers would flock to their rideshare competitors to save money.

Instead of working to liberalize regulation of their own industry, taxi operators have mainly focused their efforts on bringing down those competitors, which consumers increasingly prefer because they provide superior service at a lower cost than traditional cabs.

If taxi drivers want to continue to survive in the coming years, they need to focus on catering to consumer demand and getting rid of government restrictions that prevent them from fully competing. The government is not their friend; it’s the reason why they’ve been hobbled by the competition in the first place. But if taxi drivers think consumers will tolerate them pushing restrictions on transportation options, they’ll find themselves losing more customers fast. And that’s a problem unions can’t fix.

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