I have stated time and time again that the function of regulations and the regulators that enforce the rules is not to pick who should and who should not be the winners and losers in the marketplace. The function of the New York City Taxi & Limousine Commission (TLC) is to supervise the for-hire vehicle (FHV) industry and ensure that vehicles are safe and in good working order, to ensure that drivers meet certain standards and abide by safety rules and to make sure that dispatch bases are interacting with the public in a transparent manner.
Unfortunately, the TLC does this… and too much more sometimes.
Over the past decade, I have witnessed the yellow taxi medallion bubble and then burst, the rise of the use of apps, the entrance and subsequent disruption by Uber and Lyft, the explosive growth of the black car industry, a massive increase in the number of FHV drivers and the decline of livery community car services… and of course, a massive increase in the size and scope of rules that the TLC has enacted.
These rules have placed a virtual stranglehold on the FHV industry. Typically, an industry like transportation understandably and appropriately require that the general public enjoy safe, reliable services. This is called safety regulation. What is not appropriate is for local regulators in any industry to pick who is going to be the winners and losers. This is a function of the market itself.
First, the TLC allowed Uber and Lyft to come into the market without being subject to regulation, thus giving them a severe competitive edge. Then, the TLC determined that the service provided by Uber and Lyft was pre-arranged and not on-demand, thus infringing upon the rights of the yellow taxi owners. Then, the TLC knowingly refused to place a cap on the number of FHVs, even as Uber and Lyft were adding up to 2,000 new vehicles per month.
The massive increase in the number of FHVs on the road, providing virtually the same service as yellow taxis, decimated the yellow medallion industry. A piece of tin on a vehicle that was once a better investment than almost anything else on earth, went from a value of about $1.3 million to under $200,000 today. Community car services used to have approximately 25,000 vehicles to service the outer boroughs and upper Manhattan. Today, there are less than 8,000 liveries. Massive debt, overwhelming bankruptcies, loss of livelihoods, credit union failures, and suicides lie in the wake of the TLC’s decisions. These were not market forces at play.
The TLC then decided there are too many vehicles, so it placed a cap on them – under the guise of the need to do so because of traffic and congestions. As if the central business district of Manhattan was a ghost town before, where people could drive like they were on the autobahn. Suddenly, there were no more new licenses allowed, except for those wanting to purchase a wheelchair-accessible vehicle (WAV) or electric vehicle (EV). The purpose of the WAV and EV exception was to encourage people who wanted a license to purchase a WAV or an EV.
Then COVID-19 hit, and all hell broke loose. National pandemic equals no travel, which leads to no work for drivers, vehicle owners, and dispatch bases. All the TLC could offer was for licensees to place their FHV license in storage for 180 days.
The pandemic is still raging, and life is not quite back to normal. Instead of helping the industry, the TLC has used COVID to further reduce licensed vehicles, limiting options for drivers and bases. Limiting the storage of licenses to 180 days when the industry has still not fully recovered from the pandemic proves the TLC wants to get rid of as many vehicle licenses as possible.
Then NYC decided to give away $65 million in a “Medallion Relief Program.”
To top it all off, a new entrant came into the market with the best of intentions and the TLC wanted to stop them. Revel is a new company that wants to do it the right way. Hire drivers as employees and give them benefits. They also want to use EVs to reduce emissions from gas-powered vehicles. They are building the biggest EV charging station in North America.
The TLC showed its cards when it immediately enacted regulations to prevent new licensees from entering the market, even if they enter with an EV. This goes completely against their originally stated intent: to encourage more EVs on the road. Total hypocrisy.
Recently, the Livery Round Table and the Livery Base Owners Association had a meeting with the Chair of the TLC. I wish I could say it went well and was productive, but it was not. The main issue was that the number of livery vehicles available for livery bases has been reduced from approximately 25,000 vehicles to less than 8,000. We have been saying since 2015 – when the FHV cap was originally proposed – that the livery industry is not the problem. The livery industry is not adding more vehicles… but losing them en masse.
Our solution to the Chair of the TLC was to allow the addition of “Livery-only licenses.” In other words, the FHV cap has limited the livery sector and caused ill effects, when liveries were never the problem. A “Livery-only license” would allow the addition of new FHVs as an exception to the cap. The main feature of the “Livery-only license” would be that a licensee driver would only be able to accept dispatches from a livery base. The same may apply to the traditional sector of the black car industry. It would allow a modicum of breathing room to enable livery bases to survive.
The Chair of the TLC paid us less than “lip service.” She did not agree or disagree with such a proposal, but it seemed obvious she was hearing us out simply to shut us up and allow her to say that we were given an opportunity to air and explain our grievances. So much for fair, evenhanded, responsive government leaders!
The liveries were not the cause of the problems the industry now faces but they surely have to deal with the fallout.
The loss of livery drivers is a problem, not only for the livery industry but for those who live in the outer boroughs and upper Manhattan. When local community car services go out of business, communities at the edges of Queens, Brooklyn, and the Bronx have few affordable options for transportation.
Livery bases don’t engage in surge pricing. They are primarily mom-and-pop businesses, many of which are minority-owned and operated. What happens when public options for transportation are limited, and local community car services are forced out of business due to overly burdensome regulations and an agency seemingly bent on picking winners and losers? People who live in those areas suffer.
In my opinion, safety regulation is completely understandable, but economic regulation involves an attempt by government to correct what it believes to be inefficiencies in the market. This is not the function of the TLC, yet the Commission has time and time again tried to create what it believes to be the best way for the market to operate.
The FHV industry in NYC is in the worst shape it has been in the 18 years I have been involved in it. I blame most of the problems the industry is facing on the TLC because through its economic regulations, it has attempted to shape the way it thinks the industry should operate. While regulators are good at regulating, they are not experts in the business and the results are often disastrous when they try to shape how a market should operate. So long as the safety of the public is secured and business in the FHV industry continues to operate with honesty and transparency to the public, the TLC should lay off.
There is nearly universal agreement that government regulation of transportation safety is appropriate. However, economic regulation of transportation – while also accepted nearly universally throughout the middle of the 20th century – has largely fallen to the wayside, in recognition that government cannot manage such things as effectively as a free and open marketplace. Starting in 1978 with the federal government deregulating aviation, followed by trucking (1980), railroads (1980), and buses (1982), states have followed this path as well. The entire transportation industry is now almost entirely deregulated, economically, with great success and innovation. But that almost entirely excludes a few holdouts, including the grasp that the TLC has held over the NYC FHV industry.
Economic regulation by the TLC has not made things better. It has proven to be a disaster, but the Commission continues to take such actions because it allows for the exercise of power and control. The NYC FHV industry should be regulated for safety, but the industry should be deregulated in terms of the power the TLC exerts simply to flex its muscles. When the government engages in economic regulation, rather than letting the laws of supply and demand and traditional market forces work their issues out, innovation is stifled and the market does not operate in the most efficient and fair manner.
With all due respect, the current Chair of the TLC, Aloysee Heredia Jarmoszuk, does not have the experience to serve in this capacity. Prior to being nominated by the soon-to-be outgoing Mayor, her work experience included being Chief of Staff to the NYC Deputy Mayor for Operations, Chief of Staff for Central Operations at the Department of Education, Chief of Staff for Development and Alumni Relations at New York University. She began her career in investment management at Sanford C. Bernstein and served in various roles at Deutsche Bank, Lehman Brothers and Neuberger Berman.
Is this someone with a resume that screams knowledge of the FHV industry? At least the former Chair, Meera Joshi, had experience with the FHV industry as general counsel for the TLC for three years. I can only hope and wish our next Mayor, Eric Adams, will replace the current Chair of the TLC with someone who has experience in the industry.
I am sure statements such as these will not make me popular with the Chair or the members of the Commission, but my job is not to be liked. My job is to be open and honest and to represent the interests of the FHV industry. I have been fighting for the industry for the past 18 years and will continue to do so. Someone must speak up, and if that person is me, then I am happy to lead the charge.