Cabs Strike In Chicago Against Uber; Uber Drivers Presumably Report Uptick In Business

from the beep-beep dept

Fri, Feb 20th 2015 1:33pm — Timothy Geigner

For a couple of years now, Chicago taxi companies have been making all kinds of noise in an attempt to keep Uber and other ridesharing services from disrupting the marketplace. The whole thing has been a fairly transparent case of a jealous legacy player in an industry not loving a disruptive newcomer. That said, there's precious little validity in a claim against a city or competitor that mostly amounts to: "But I really like all that money I was making."

Not that such a lack of validity is keeping Chicago's taxi services from waving their arms around in an attempt to get attention. The most recent futile event was a staged mini-strike in Chicago's downtown area (actually, directly below my office), during which cabbies refused to pick up fares and instead drove around the loop honking their horns the entire time.

Many cabbies drove through downtown for four hours Tuesday morning, refusing to pick up fares. Dozens of cabs drive in circles around City Hall and the Daley Center for more than an hour, honking their horns to draw attention. Many cabbies had posted protest signs in their windows, accusing Uber of stealing their customers.

“It’s good music to my ears,” said cab driver Rocky Mmomo, a steering committee member of the United Taxidrivers Community Council. Mmomo said cabbies want the tax industry deregulated, so it can better compete with Uber and the other ride-sharing companies.

A couple items to note here. First, don't be fooled by old Rocky's claim that they just want the cab companies to be deregulated so they can be on a level playing field with Uber drivers. What isn't mentioned here is the obvious problem with that line of thinking: Uber's service and livery services aren't really the same thing, so the same regulations don't apply. A full-time taxi driver employed by a taxi service that pays for the medallion and proper livery license is a far cry from an Uber driver who does a little people-shipping during his or her off hours. They're just not the same thing and pretending they are won't get anyone anywhere.

And the city of Chicago, for its part, is licensing Uber based on what it actually is.

On Monday, the city agreed to issue a “transportation network provider” license to Uber, after negotiations led to a promise from Uber to provide more stringent safety measures than required by the city’s ride-sharing ordinance. Uber competitors Lyft and Sidecar were granted similar licenses three months ago.

Again, as you can see, Uber and ridesharing service providers aren't cab companies. Pretending they are doesn't make any sense. But that's what the legacy cab companies want. And you can tell that's all they want by their arguments for deregulation.

“We’ll be sitting at a hotel for two, three hours; and all of a sudden you see three UberX cabs just came and picked up customers while we’re just sitting there. How is that fair? That’s not fair to a cab driver,” cab driver Mustafa Husein said.

Forgive me, sir, but who the hell ever promised you fairness when it comes to competing in a changing business marketplace? The very nature of disruptive business models are to be "unfair" to the legacy models so as to build a more efficient product and happier customers. That's the entire point. I'm fairly certain nobody promised cabbies a living, after all. So honk away, guys. I'm sure Uber drivers are happy to pick up those fares you refuse.

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Filed Under: chicago, protest, strike, taxi drivers, taxis
Companies: uber

52 Comments

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Anonymous Coward, 20 Feb 2015 @ 1:39pm

Adapt or die. Nobody wants a dinosaur.
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Anonymous Coward, 20 Feb 2015 @ 1:52pm

Re:
I want one :( I bet they are delicious.
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DB (profile), 20 Feb 2015 @ 1:58pm

Do legacy cab companies understand how their complains ring hollow, or are come across as entirely self-serving?

One of the major underlying problems is taxicab medallions, a licensing system which is common in U.S. cities. They are nominally a way to certify taxicabs, but they quickly turned into a way to create artificial scarcity. As such, they are the catchpoint for all profit in the taxi system.

In other words, any likelihood of eventual profit (discounted future excess value) increases the value of the medallion. Anyone buying a medallion can't expect to make a real profit. They can only make money by working extra long hours themselves, being exceptionally good at managing others, or the medallion becoming worth even more.

People should be asking why a taxicab medallion, originally issued for a nominal fee, should be worth a quarter million dollars.

I feel sorry for the small-time operator that went deeply into debt to buy a medallion. They bought into a scarcity, thinking it would be their retirement asset. That scarcity is about to disappear, and the medallion become worth much less. But they are blaming the wrong people. They didn't invest in a means of production or greater efficiency. They simply funded the retirement of the previous medallion holder.
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jakerome (profile), 20 Feb 2015 @ 2:15pm

Not unreasonable
What the cabbies want seems reasonable on the surface. Not sure why the Techdirt article takes such a negative to the cabbies call for deregulation. Yes, there are differences. But it's long been Uber's claim (and Techdirt, and others) that the cab industry is an over regulated, captured industry. Many of those regulations should go away, I would think this would be the one cabbie protest Techdirt could get behind. Looks to me like TD is being reflexively anti-cabbie, when the whole tone of this action is world's apart from the typical anti-Uber attack.

Does Techdirt think taxis have the right level of regulation now? That would be news!
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Bill Jackson (profile), 20 Feb 2015 @ 2:16pm

Medallion System
I agree it must go, along with the monthly radio system fee - which is often linked to a large group of medallion holders. So the cab rent and the radio rent are well over $1000 per month

Here in Toromto, Canada, they created a class of cab called "Ambassador", which was only allowed a single driver/owner = no rentals = parked half the time.
This was a sop to the medallion holders. medallion are not legal in Toronto, but have become de-facto 'legal' by long useage. This ambassador costs $6,000 as they say, if it walks like a duck, and quacks like a dusk = DUCK.
The Ambassador cab is a large body of invizible medallions rented out by the city for $500 a month per 12 hour shift.

The system was crooked at the start and remains that way.
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Anonymous Coward, 20 Feb 2015 @ 2:20pm

The stupidity of striking against competitors is just plain embarrassing. You think they would have learned from all of the public transit strikes that made their business explode with money.

I assure you that food trucks and carts would absolutely love it if restaurants closed in protest of the "unfairness" of being able to operate in moving locations.
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Anonymous Coward, 20 Feb 2015 @ 2:24pm

God help me, this whole situation is making me feel more sympathetic to ISDS treaties. These poor bastard cab drivers forked over good money for an extortionate monopoly and now their monopoly is being undermined. At the least they should receive their medallion fees back.
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John Fenderson (profile), 20 Feb 2015 @ 2:24pm

Re:
"They are nominally a way to certify taxicabs, but they quickly turned into a way to create artificial scarcity."

This. I think that a large percentage of the population (and a majority of the population the takes cabs regularly) understand this. Cab companies aren't doing themselves a favor by pretending that it's anything else.
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John Fenderson (profile), 20 Feb 2015 @ 2:26pm

Re: Not unreasonable
I can't speak for Techdirt or Tim here, obviously, but personally, I simply don't believe the cab drivers when they say what they're agitating for is more reasonable regulation. If that were the case, then the protest wouldn't even need to mention Uber.
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Anonymous Coward, 20 Feb 2015 @ 2:27pm

old men in cabs yell at clouds! *fist shake
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Anonymous Coward, 20 Feb 2015 @ 2:28pm

Re: Not unreasonable
Well the stupidity in their response for one.
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David, 20 Feb 2015 @ 2:29pm

Have they considered
that all those regulations they wanted to protect them, and the union demands over the years, might have made them uncompetitive?
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John Fenderson (profile), 20 Feb 2015 @ 2:29pm

Re:
"At the least they should receive their medallion fees back."

I wouldn't fight against that, but I also don't have a great deal of sympathy for those who bought medallions. They were knowingly buying their way into a corrupt system in the hopes of benefiting from that corruption, so it's hard to cry for them when they can't extract value from it.
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John Fenderson (profile), 20 Feb 2015 @ 2:31pm

Re: Have they considered
Yes, and in a particular way. Competing is hard. It takes a lot of work, constant innovation, and the effort required never ends. I understand why companies prefer a system that locks competition out and allows them to avoid doing all that work.
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DCL, 20 Feb 2015 @ 2:38pm

Re: Not unreasonable
I think it is completely unreasonable for legacy businesses pound their fists and demand to be paid for an outdated model that doesn't meet your customer's needs or demands as they change. Techdirt isn't ant-taxi... it calls out things that are anti-innovative.

There are other options for taxi companies. Here is a recent article about an 82 year old Bay Area taxi company is using technology and rebranding to better compete with Uber and Lyft:
http://abc7news.com/business/sfs-desoto-cab-company-rebrands-itself-as-flywheel/524301/

Innovate to the market... tat is the way to be successful, not to just honk your horns and demand attention because "things aren't fair"
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Bill Jackson (profile), 20 Feb 2015 @ 2:38pm

Corruption is systemic in the Chicago
From medallions to unions and their bosses and the elected officials who begat this system which is inexorably strangling Chicago and many other cities that do not allow competition at the worker level. I would like to see all city jobs open for bid, with the current union holder allowed to match the lowest bid and the workplace must allow any new workers to be non union.

In Buffalo NY, another city ruined by unions, they have rat shaped balloon as a symbol of their unions after all, they "Ratify" agreement = infest with union rats.

Same with Greece. Socialist civil serpents (as in snakes) need to be routed, "Right to Work", needed.
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Bill Jackson (profile), 20 Feb 2015 @ 2:39pm

Unions care? They get paid, pensions more than you and wages more than you
Right on the taxes.

Look at Detroit - Next Chicago
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Bill Jackson (profile), 20 Feb 2015 @ 2:42pm

old men in cabs yell at clouds! *fist shake
They also Fart at the Man in the Moon - with similar effect - the moon orbits inexorably on...
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Haywood (profile), 20 Feb 2015 @ 3:03pm

Re:
My thoughts exactly, force loyal customers, who would probably never have considered using Uber to give it a try. What could go wrong?
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Bill Jackson (profile), 20 Feb 2015 @ 3:17pm

Re: Re:
How soon before goon tactics begin?
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Anonymous Coward, 20 Feb 2015 @ 3:22pm

seems to me like they need to work together
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Bill Jackson (profile), 20 Feb 2015 @ 3:50pm

Re:
LOL, polar opposed POV. The taxi drivers would love to get rid of medallions, as long as they were allowed to drive and use apps for rides, like UBER. UBER has cut the phone - radio link out of the loop and that was the strangle hold the medallion owners and radio systems had on the true drivers. A few drivers own medallions, but are still prey to the radio rip-off.

In effect the cab drivers are proxies for medallion owners.

Medallions cam out of the huge number of soldiers released from the armed forces who know how to drive, Prior to WW2, few people could drive - except tractors.
All these farm boy with a $50 depression wreck became free taxi drivers. Fights over fares emerged when one guy hailed a cab, but refused because it was dirty etc, and took another.
Out of this glut of drivers emerged taxi limitation laws and the medallion system. They failed to keep the city the owner of the medallions and prices rose.
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Anonymous Coward, 20 Feb 2015 @ 4:00pm

Re: Re: Not unreasonable
Now, granted, I'm sure there are legitimate issues with the current Taxi businesses and the way the system is run (and I don't know anything about the US system or state regulations).

But Uber in general seems far less to about innovation, and much more about shucking all responsibility and liability to cut corners, and acting like it's a far more trustworthy business than it actually is.

I mean, I could probably do something similar in the restaurant industry if I tried to loophole my way through things like health and sanitation regulations and business licensesm, but...
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Anonymous Coward, 20 Feb 2015 @ 4:28pm

> A full-time taxi driver employed by a taxi service that pays for the medallion and proper livery license is a far cry from an Uber driver who does a little people-shipping during his or her off hours.

At the time the Uber driver is giving the ride, it sure seems like it's the same service being provided.

The line I called out above is decrying Uber drivers being licensed with the restrictions of taxi drivers.

So present the opposite argument: Why should taxi drivers not have the same restrictions placed upon Uber drivers?

> They're just not the same thing...

Once you get over the concepts that taxi drivers a) are doing this for their primary source of income, b) are doing so continuously, c) may have bought into corporate branding cachet - what are the differences for which they should be regulated differently from Uber drivers?
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toyotabedzrock (profile), 20 Feb 2015 @ 4:32pm

Two things.
1. Uber looks like a taxi to me just has an easier way to hail it. Prices are set centrally.
2. Cabs might charge more sometimes because they are there ahead of time and don't get to gouge you other times.

So if you want cabs to go away that is fine but be prepared for your surge price future that ends up making prisons more over crowded when poor people can't get tot court.

You never look at the long game only short term selfish.
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Anonymous Coward, 20 Feb 2015 @ 4:32pm

Re:
(Sorry... continuation of above)
I'm not saying that their business model will survive... they have costs (health care, retirement, capital expenses of the vehicle) that the Uber driver may simply not consider when offering their services.

But arguing that they shouldn't be deregulated - or that they should be regulated differently - is not supported by any argument in the article.
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Haggie, 20 Feb 2015 @ 5:16pm

Removing your product from the market is a poor method of protesting when a.) your former customers don't want it anyway b.) it drives your few remaining customers to the very thing you are protesting.

It would be like me withholding sex from my wife as a punishment...
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Anonymous Coward, 20 Feb 2015 @ 9:17pm

Re:
I bet there's a larger market for dinosaurs than cabs these days.
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Anonymous Coward, 20 Feb 2015 @ 11:06pm

Re:
Many places already have minicabs which are the same idea as Uber, but use manual dispatching and voice calls to hail a ride (just like you can do with taxis). Usually, the regulations prohibit touting for trade or using taxi ranks (and bus lanes, if taxis can use them - IMO they shouldn't be allowed to, but that's another issue).

How many poor people are catching taxis anyway? Here, a 10km journey will cost you more than six times as much by taxi than by bus.
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jackn, 21 Feb 2015 @ 5:55am

Re: Corruption is systemic in the Chicago
The Truth.

You can tell when you arrive in one of these regions. If you see the local king's picture everywhere; You're in systemic corruption land.
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Anonymous Coward, 21 Feb 2015 @ 6:05am

Re: Re:
You can't fight the livery commission, they're just too big.
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DB (profile), 21 Feb 2015 @ 8:14pm

I think I didn't explain the problem with medallions well enough.

A city can refund the original medallion fee, but that won't solve the problem. In most cities with the system, a 'medallion' is the transferable right to run a cab. The city originally issued it at a nominal fee. But the market value of a medallion is now up to a quarter million dollars.

That quarter million dollars is money already taken out of the system. It's the prospect profit to be made by the medallion, so it's money taken out of future of taxis.

It's now in the pocket of some guy, long since retired, that bought up a bunch of medallions early on. The medallion has likely been through a few owners since, mostly cab companies that figured out how to extract the maximum value from them.

In my experience, many Uber/Lyft drivers are actually former taxi drivers. They figured out where the money was going. They didn't own medallions, and were employees of a company or owner that used most of the revenue to pay back the investment in the medallion.

The saddest stories are of guys that saved 20 years to buy their own medallion. They still spend long days in a cab with an employee or two that runs it the rest of the time. They were counting on a medallion as their retirement, and are watching their plans and investment fall apart.
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annie the moose, 22 Feb 2015 @ 12:44pm

Re: Re:
No.

Taxi medallions predate the automobile, and limitations on the number of taxis even predates the US. In London taxi licenses (medallions) have been around since the mid 17th century. NYC, Boston and many other US cities adopted medallions during the 1930s before WWII, and while their reasoning was similar to the once you present the impetus was the Great Depression and not returning WWII vets. Some cities (LA *cough*cough*) experienced massive growth in the post-WWII era and adopted a medallion system, but the impetus was the growth of the city and not directly attributable to returning vets.

WWII changed many things about US society, being able to drive was not one of them and automobiles were far from rare. The rest of the world was different but to put some perspective on this, in 1935, during the heart of the depression, US new car sales were an estimated 3,250,000 while in 1954, during the heart of the post-war boom, US new car sales were only up to about 5,500,000.
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tim, 22 Feb 2015 @ 3:20pm

Re: Medallion System
The solution is to get rid of the medallion system. Minneapolis did it. San Diego just did it. Its better for all involved.
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Bill Jackson (profile), 22 Feb 2015 @ 3:48pm

links to San Diego and Minneapoli medallion changes
http://bit.ly/1EkIsU2

http://bit.ly/1FMJAkZ
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Bill Jackson (profile), 22 Feb 2015 @ 3:49pm

Re: Re: Medallion System
I posted links to Sandiego and Minneapolis changes
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Rachel Galindo, 23 Feb 2015 @ 2:40am

Regulation or not regulation
What many people don't understand is that uber just re-started the circle. What pretty much prompted to regulate taxicabs is very similar to what uber is doing: running a (technological advanced) gypsy cab fleet, only this time is with the financial backing of wealthy investors, very much interested on the "environment" and the "well being" of the people.
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Bill Jackson (profile), 23 Feb 2015 @ 4:26am

here they are again
http://www.i-twa.org/?page_id=41

http://www.utsandiego.com/news/2014/nov/10/taxi-cap-limit-lift-medal lion-cab-regulate/
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Mike, 23 Feb 2015 @ 7:17am

Uber is a criminal enterprise that must be banned from
operation.

There are court rulings made on that exact point.

Essentially, Uber cars don't pay a penny for the right to
operate while taxicabs are paying for the same right.

App done from streets (which what Uber is) is a TAXICAB
operation.

Uber is lying and deceiving around this issue while
violating laws and regulations. BAN THESE CRIMINAL CROOKS.
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Bill Jackson (profile), 23 Feb 2015 @ 7:40am

Re:
I do not want these new fangled horseless carriages taking passengers away from me and Betsy(my horse).
Their smoke fills the air, and they leave nothing for the gardens and sparrows, and in the wintertime youg boys love the frozen amber globes...
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richard40, 23 Feb 2015 @ 8:18am

The article is unclear on one point. Are the taxi drivers really asking for deregulation, basically deregulating them so they are no more regulated than uber, or is their idea of fairness asking uber to be as regulated as they are. For example, is the taxi industry demanding that taxi medallions be issued in unlimited numbers, to anybody who can pay a nominal fee and pass a test and background check, or do they want to keep the present competition restricting system where medallions go for hundreds of thousands of dollars.

If the taxi drivers are asking to be deregulated, I support them. But if their idea of "fairness" is to regulate and restrict uber as much as them, then I oppose them.
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John Fenderson (profile), 23 Feb 2015 @ 8:50am

Re:
My impression is that they want Uber to go away so they can go back to business as usual. I don't think that they really want regulations to be changed -- they rely on those regulations to keep competition to a minimum. Plus they keep mentioning Uber in their efforts to change the regulations even though Uber is a different issue, so it's pretty clear that the regulations aren't what they have a problem with.
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Bill Jackson (profile), 23 Feb 2015 @ 9:02am

Re:
Yes, the medallion owners force the cabbies to stage these demonstrations. It is true that more cabbies would own and drive cabs once deregulated.

Who needs Uber with free cabbies and an app on a phone. Dial-ins could also be linked to the phones of the drivers via some simple script that made the need known - whence 10 cars would try for it..a need for some sort of central dispatcher of a robotic kind, based on who is available, where the ride is = it picks the closest or the next to share a ride in close proximity situations.

Would more drivers lead to hundreds of unused cabs waiting for rides? Apparently that is what led to medallions with thousands of unemployed WW2 soldiers released in a very short time with no job, but they could drive and they bought junkers. Now the requirement for a car under 7 years old will keep the junkers oyut.
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JBDragon (profile), 23 Feb 2015 @ 9:51am

Re: links to San Diego and Minneapoli medallion changes
I like how the argument when getting rid of the Medallions is always that there will be to many people trying to run Cabs or whatever and that there will be a glut and no one will be able to make any money!!!!

In a free Market without Government out of the way, Prices will drop and if there's to many people doing it and making no money, they'll leave and do something else and the market will stabilize to a working level for those left. It won't happen overnight. Who knows what that real world number will end up being. Let the free Market work it out, not Government!!!
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Bill Jackson (profile), 23 Feb 2015 @ 10:37am

Re: Re: links to San Diego and Minneapoli medallion changes
For some reason, my submissions with links in them were moderated off the blog???
search this

San Diego deregulates controversial cab industry to boost fairness, opportunity

and this

international taxi workers alliance and choose Minneapolis.
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Bill Jackson (profile), 23 Feb 2015 @ 10:39am

Re: Re: links to San Diego and Minneapoli medallion changes
yes, teh glut after WW2 created a distortion and regulation occurred.

Now the pot is so at that medallions sell for $250,000 or more.

LET THE MARKET SPEAK.
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gambino, 23 Feb 2015 @ 11:33am

uber- why its 'unfair'
Uber, the darling of the street. the Robin Hood, good guy, babe, has no license, no commercial insurance, no drug test, no professional driving test or experience, no photo i.d. and at the low low rate everyone is loving, the UGLY fact is PASSENGERS AND UBER EXPLOIT THESE POOR DESPERATE SOULS BY DEPLETING THE EQUITY IN THEIR CAR,in exchange for essentially $9.00 per hour!!!
Stop pretending it's a great thing, it's disgusting, disingenuous to say the least. Probably the most selfish greedy exploitive crafty illegal disruptive biz (protected by Google et al the "elite" investors). EAU SEAU NAUT UBER-KUHL
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Bill Jackson (profile), 23 Feb 2015 @ 1:07pm

Re: uber- why its 'unfair'
Friends I know make quite a bit more than $9 per hour. What does a tax driver make when he has no fares? He has still paid his medallion rental, PLUS all the other costs you mention as car owner.

Low earners should quit driving Uber or driving cab...

both take some sort of skill in maximizing revenues./
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alishabrown, 27 Mar 2015 @ 9:12pm

Taxi Services
Uber services are awesome and these are always observed when you are going alone .It not only helps you see the routes but you can do online booking.
http://birmingham-airport-taxis-transfers.co.uk/services/
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Roseamanda, 28 Mar 2015 @ 12:45am

Reliable service
I agree with you Alisha! I had good experience though using Uber and its name is also going on in the market.
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Andrea, 11 Nov 2015 @ 4:45am

Awesome!
The information is all true. I have heard this from a source before, and everything you said here are pure reality.
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Blackcareverywhere.com (profile), 23 Nov 2020 @ 7:12pm

Good feature of UBER
Hi Guys,

Very interesting topic, luckily, Traveling is my favorite topic, I little agree with the comment of bill Jackson, but would like to say, Uber is some sort of convenient and cheap service comparatively...

Although sometimes it's unreliable especially in the morning when you need the ride to the airport. and you don't have time to take any risks then it's little challenging.

I would like to say go for the uber when you have enough time and don't have urgency, but as far as where airport transfer, special business meeting or have something special go for the professional car service.

It may cost you a little extra, but trust me, it worth it... peace of mind.

Thanks for considering my point of view.

Regards,
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