Miami-Dade County

January 25, 2014

Miami-Dade County’s taxicab industry: few dollars for drivers, poor service for passengers

Most taxicab drivers in Miami have little economic incentive to provide better service to passengers.

Ah, the joys of taking a taxicab ride in Miami-Dade County. Gruff greetings. Stinky smells. Clunky cars.

Don’t blame us, the hacks behind the wheel say. Blame the economics of being a cab driver.

A few cabbies are their own bosses, pocketing all the cash they make. But most are mere chauffeurs, paying richer people for the privilege to chase down fares — without any incentive to cater to passengers.

This is the distorted reality of Miami-Dade’s highly regulated cab industry, where local laws have protected taxi-medallion holders for so long that any attempt to tinker with the rules is met with stiff political resistance.

County commissioners are scheduled to weigh significant changes Wednesday, including upgrading vehicles and the technology inside them. But they won’t go as far as critics had sought. And life for drivers — and, by extension, for passengers — might not get much better.

Consider Avelino Paula.

One of dozens of drivers lingering Friday morning at the Miami International Airport taxicab lot, Paula doesn’t own his vehicle. He pays a company to lease the car and the permit to drive it.

Paula, 58, wakes up every day with a debt of about $140 hanging over his head: the daily $95 lease payment, plus $40 to $45 a day for gas. Once a year, he renews his county taxi license for $625.

“That’s why you have to work a lot of hours,” sometimes 14 or 16 a day, Paula said.

On Friday, he said he arrived at the MIA lot, where hundreds of yellow cabs wait, at about 5 a.m. He picked up his first passenger at 6:42 a.m.

He knew the precise time because drivers must pay a $2 fee every time they leave the lot. Paula pulled out a pile of receipts, kept together with a paper clip, recording his exits.

That first ride took Paula to the Venetian Causeway. Fare: $29.

The next fare, at 9:16 a.m., was to Coconut Grove. $32.

In between, Paula went back to the airport with an empty cab. Rarely does anyone hail a taxi on the street except in Miami Beach, he said, and even there it’s inconsistent.

During the winter high season, Paula and other drivers said they wait up to two hours for fares at the airport. That’s why they get upset when passengers want to go to Coral Gables, for a flat fare of $17. And drivers don’t like credit cards because the card company charges a 2.75 percent transaction fee.

On good days, drivers say they’re able to run nine or 10 fares and make about $100 in profit. (The best time of year, according to several drivers: Art Basel.)

Divide $100 by 14 hours, and that’s $7.14 an hour — less than the Florida minimum wage of $7.93, and even less on 16-hour days.

But some days are bad.

During the summer low season, waits at the airport can stretch four hours, Paula and the other drivers said. On those days, forget making much money.

“One day, I made only enough to pay” the lease, Paula said.

Not everyone is like Paula, though. Some drivers, like Miguel Lantigua of the New Vision Drivers Association of Miami, which has pushed for better working conditions, own their vehicles.

That means they pay cab companies slightly less, just to cover the cost of the permit. But they’re also responsible for maintenance and periodically buying newer cars.

It’s impossible to measure how much drivers make and spend. Credit-card machines, the equipment the industry uses to keep tabs elsewhere, are not standard in Miami.

The county doesn’t record the lease payments made to companies, which drivers say are almost always in cash. Florida law prohibits the county from capping those payments, as cities in other states do, though Miami-Dade commissioners have asked the Florida Legislature to reconsider.

Cab companies and medallion owners say people like Paula and Lantigua aren’t representative of all drivers and exaggerate their predicament.

“You gotta be nuts to be working in a taxicab when you could be getting minimum wage at Burger King,” said Diego Feliciano, head of the South Florida Taxicab Association, which is made up mostly of owners.

Lantigua conceded that drivers stay because they can’t imagine working in a more structured job.

“We feel free,” he said.

Atop the driver hierarchy are those who own not only their vehicles but also the coveted taxi medallions themselves. Those drivers may also work long hours. But they keep all their earnings. Every driver’s dream.

So why aren’t there more of them? Because medallions are expensive.

The going market price is $340,000, according to the county. There’s a limited number — 2,121 — so their value remains high even if more people want them. The county auctions only a few new ones every couple of years.

Since 1998, only drivers have been able to purchase medallions. That has increased the proportion of drivers who own them to about 28 percent from 6 percent.

Most medallions remain in the hands of investors and cab companies. Some own dozens, county records show. One group of investors alone holds more than 100.

The bulk were sold before 1998. They weren’t medallions then, only permits. Unlike permits, medallions are equitable investments that can be used as collateral for loans.

Just how valuable they are became clear over the past two years, when whispers began that the county was considering reforms.

At the time of the last auction in 2012, four medallions were sold for an average of about $425,000 each. In September of last year, the county estimated medallions had dropped in value to about $325,000 each.

That’s a $100,000 loss in less than two years. Multiply that by the 2,121 medallions, and owners collectively lost some $212 million on their investments with reforms merely under discussion.

The most drastic legislation was not directed at taxicabs but at their cousins — limousines and luxury sedans. Cab companies and medallion owners feared a deregulation of the car-service industry would in turn cause medallion values to plummet.

That would be unfair for drivers who cobbled together their savings for years to purchase a medallion and become independent, with an expectation that the current system would remain in place, said Feliciano of the taxicab association.

“They’re worried that they’re going to lose their loans, lose their homes,” he said.

He toiled as a low-rung driver himself, Feliciano added, then worked his way up. “There’s a lot of good cab drivers in this county,” he said.

Feliciano argued that most complaints about drivers’ working conditions stem from the airport because that’s the most inefficient place to wait for fares.

It’s far better to sign up for radio dispatch, he said — paying a fee — and cement long-term relationships with customers who call drivers directly when they need a ride.

“If [the airport is] all they drive, probably they’re the drivers that make the least money in (Miami-) Dade County,” Feliciano said. “Dispatch is more lucrative.”

Owners made a persuasive enough case against wholesale reform for some key commissioners that the deregulation legislation was withdrawn last month.

But the short-lived push may have softened the ground for the board to accept other improvements.

Chief among them is requiring vehicles — first at the airport and seaport, then countywide — to accept credit cards; install GPS, SunPass and security cameras; and upgrade cars more frequently.

Feliciano said the changes would amount to a “tremendous improvement” for passengers.

But drivers like Paula and Lantigua are not so sure. They were hoping the county would scrap the medallion system altogether.

Now they worry they’ll be saddled with the costs of technology. The alternatives commissioners have proposed are adding a passenger surcharge or raising taxi-meter rates with inflation.

“If the owner buys a new car, how much is he going to charge me for a day?” Paula said.

On drivers bearing the brunt of the potential new costs, both sides agree.

“If they think they’re having a hard time making a living now, imagine how they’re going to do” in the future, Feliciano said. “They can’t afford that technology.”

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