The New York City Taxi Medallion Crisis.
"If the mayor wants war, he can have war. There is no peace without justice for drivers."
For the last few months, the New York Taxi Workers Alliance (NYTWA) has been holding daily protests against Mayor Bill de Blasio’s response to the cities taxi medallion crisis. More than 40% of New York City taxi drivers are of South Asian descent and owe an average of $500,000 in medallion debt. The alliance has announced that protests will continue every day until the mayor agrees to a medallion loan plan that’s “more than just a cash giveaway to hedge funds.”
Recently the city has announced a plan to create a $65 million fund that’s supposed to help taxi drivers buried in debt after buying medallions pay off their massive loans, but in a statement, the New York Taxi Workers Alliance said:
“Mayor de Blasio’s response to our debt crisis does absolutely nothing for drivers. It’s a cash bailout for lenders while drivers are left to drown in debt, foreclosure, and bankruptcy…If the mayor wants war, he can have war. There is no peace without justice for drivers.”
The New York Taxi Workers Alliance has also recently called for an investigation into the Mayor’s taxi medallion proposal since de Blasio’s proposal allegedly copy and pasted a hedge fund’s plan to bail out lenders instead of considering the debt forgiveness plan that has been proposed by Attorney General Letitia James.
Instead of Mayor de Blasio’s proposed plan drivers are demanding the passage of Congressman Gregory Meeks’ bill for tax exemption on medallion debt forgiveness. They’re also “calling on lenders to restructure medallion debt to $125,000 and refinance for no more than 20 years at $757 per month,” and asking that “the city play a ‘backstop’ role for loans that are restructured to $125,000”.
Since the Haas Act was passed in 1937, the City of New York has decided how many taxis are allowed to operate and has regulated the authorization of taxi medallions. New York City Taxi historian Graham Russell said that when this was passed “no one expected the medallions to ever be worth more than the ten-dollar license fee.” However, by 1950 the average cost of a medallion was already $5,000.
Medallion costs soared to tens of thousands of dollars throughout the late 20th century and even though they were expensive acquiring one essentially “guaranteed entry into the middle class for drivers and their families,”. However, this changed after medallion prices began to be “distorted by speculation and predatory lending” in the early 2000s resulting in prices soaring to more than $1 million in 2014. These astronomically high prices made it nearly impossible for drivers to afford a medallion and obtain a middle-class living.
New York State Attorney General Letitia James has filed to sue the City of New York for fraudulently inflating the price of thousands of yellow taxicab medallions and profiting from it over a 14-year period. The lawsuit says that from 2004 to 2017 the city participated in a scheme to defraud medallion owners and that it continued to push the medallions “at overvalued rates even after internal reports raised warnings about the inflated values.”
This crisis became even worse in 2014 when the city allowed ride-sharing companies like Uber and Lyft to operate without needing a medallion. As a result medallion prices have dropped to between $120,000 and $150,000, leaving those who’ve managed to earn a high-priced medallion with massive amounts of debt. The New York Taxi Workers Alliance has said that this has caused many drivers to lose their homes, suffer health complications, and be unable to afford college for their children. They also said that “In one twelve-month period, nine drivers committed suicide.”
Public school teacher and City Council candidate Felicia Singh, whose husband lost his medallion and home after falling behind on his loans said, “The hard part here for me is that nine people have taken their lives, and that was not enough for the city to stop and do something…Us being unhoused in a pandemic is still not making the city move with urgency.”
Partap Singh is one of the many taxi drivers who bought into the idea that a $140,000 investment for a medallion was a ticket into the middle-class lifestyle. However, after three decades he still owes more than $65,000 in medallion loans and the crushing effect covid-19 has had on taxi demand in the city has made it even harder for drivers to keep up with paying off their loans. According to NBC News,
“Singh, who drives 60 hours a week, said he makes $10 an hour ‘on a good day,’ which doesn’t always cover his costs. His loan and insurance payments, as well as gas, surcharges, and repair fees, can add up to more than $3,000 a month. He is also behind on his medallion loan, credit card bills, and property taxes.”
NBC News also said, “Desperation over their situation has turned seniors into activists and their adult children to run for office. Over the past few weeks, immigrant drivers have organized a series of actions to demand debt relief, including shutting down the Brooklyn Bridge and delivering searing testimony at Zoom hearings.”
During a City Council hearing on the medallion crisis, candidate for New York City Council in District 23, Jaslin Kaur, explained how she was forced to go into student debt to pay for school because right before she was supposed to attend college her father was forced into debt when the medallion bubble burst. Kaur said that the city has been complicit in predatory lending that has caused immigrants to live even more precarious lives than when they first arrived in the city, and that the mayor “continues to kick the can down the road…while our seniors remain food and housing insecure.”
According to Kaur, nearly 950 taxi drivers have filed for bankruptcy and nearly 25% have contracted COVID-19. Kaur also said that refinancing medallion debt would cost the city about $75 million over 20 years and that under the plan being advocated for by the New York Taxi Workers Alliance monthly payments would only be about $800 per month instead of over $2,000 per month payments that would result from the Mayor’s proposal.
Attorney General James has said:
“Government should be a source of justice, not a vehicle for fraudulent practices. These taxi medallions were marketed as a pathway to the American Dream, but instead became a trapdoor of despair for medallion owners harmed by the [New York City Taxi and Limousine Commissions’] unlawful practices.”
According to the Attorney General’s lawsuit, the City of New York made $810 million by selling medallions at artificially inflated prices and “collecting a five-percent transfer tax on third-party transfers.” The city made millions off-putting their most essential workers in a position where medallion debt could not be paid off by the income earned through operating a taxicab, whose fares are regulated and set by the City of New York itself.
City Council candidate and daughter of New York taxi driver Jaslin Kaur has said that fighting for debt relief “is about labor justice for people who were effectively scammed out of something that was meant to provide a pathway to economic stability and economic prosperity.” If the City of New York is serious about providing adequate relief to some of thier most essential workers it should listen to the demands of drivers rather than proposing a plan that the New York Taxi Workers Alliance calls “a cash giveaway to hedge funds.”
Matt Dougherty is an independent journalist and managing editor at The Bull-Moose Note. You can subscribe here to get our articles delivered directly to your inbox. If you’d like to support our work, which is always made available for free, you can give a one-time donation through Venmo or become a monthly supporter for $3, $6, or $12 per month through Patreon.