The fighting going on between the Seattle taxi industry and the rest of the rideshare services — Uber, and those cars with the bright pink mustache on their grill — is part of the larger economic battle. Old school businesses try to deliver goods and services at the lowest price with little regard for the wants and needs of their customers. Newer businesses deliver the best goods and services at higher prices with the needs and concerns of their customers at the very top of their “to do” list.
The new school is taking the old school to school — and taking their lunch money.
Take coffee. Seattle invented the two dollar cup. The price is not about the coffee but the experience. In most retail places, a pleasant, helpful and friendly employee is unusual; at Starbucks, it is very unusual when you encounter a taciturn staffer. That isn’t an accident. It’s the Starbucks business model.
The taxi business is not the coffee business. It isn’t like an airline or a bus or any other enterprise that moves people from point A to point B either. Nearly all taxi businesses are cooperatives: Yellow Cab, Farwest and most others are simply umbrella organizations that help owners of individual cabs operate a dispatch service from a central lot and buy things like insurance. The actual cabs are owned by individuals.
Some owners have one or two cabs. Others have six, seven or eight. A few have a dozen or more. The owners run their cabs pretty much as they like. There are few rules and fewer standards. The umbrella company controls the fleet in the same way one controls a swarm of locusts.
When I started driving a cab in 1978, the taxi owners would buy their cars from auction, used. Actually, abused is a better word. Typically, cars would have over 100,000 miles on them — hard miles, at that — and we would proceed to run them into the ground. The vehicles survived on average less than a year — a year of ongoing maintenance. Oil changes every 5,000 miles. Brakes were a constant headache. I could tell you about a tire “retread” that would curl your hair.
The only cab owners who made money were the ones who could do the maintenance work themselves. So, the taxi industry was run and operated by mechanics — who, by and large, could care less about customers.
Then there are the drivers. The key to understanding the taxi industry (and its failings) is to understand that drivers are not employees. They are not paid by the taxi company. They do not earn an hourly wage, or a percentage, or get benefits like health insurance or 401k plans. They are independent contractors, who “rent” their cabs for the day or night for a fixed amount.
Drivers pay that rent and for the gas they use, then keep the proceeds. An average shift might cost a driver around $60. On a regular night you hoped to make $100. About once a year, the taxi gods will smile on you and you will go home with a couple hundred bucks. About once a year, the taxi gods will frown, you won’t even cover your overhead and you will end up paying for the privilege of driving.
In a weird reversal of roles, the taxi cab owners needed the drivers more than the drivers needed them. Since driving is a job that has almost no chance for advancement (there is almost no management in the taxi business), there is little the owners could offer in the way of enticement to the drivers. Early on, it occurred to the owners that they could dangle one very valuable thing to the drivers: they could leave them alone.
In the years I drove, the supervisor never checked up on me. I was never visited out on the streets to see if I was doing the job correctly. If I screwed up, like not picking up a passenger on time, they might yell at me but that was it. Complaints were rarely acknowledged (the city would later mandate a complaint form, but there is no muscle behind it). In fact, unless it was the police calling, the company ignored all complaints.
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