new York Richard Chow struggles for words. He stands in front of his cab in the iconic New York mustard yellow color. Protest posters are attached to the windows. “I’m just overjoyed,” Chow says simply. “And my brother would be the happiest,” he adds, visibly touched in broken English.
The City of New York just canceled about $219,000 in debt for Chow. This is also his personal merit. Along with NYTWA, he has led a long battle – against the city, against lenders, against politicians, and ultimately against a system that has bankrupted countless cab drivers, nine of them – including Chows Brother – to suicide.
New York is relieving thousands of cab drivers from some of the immense debt they incurred to finance coveted cab licenses. In all, the city is presenting a symbolic check for $250 million to drivers who gathered in the forecourt of New York City Hall on a sunny Friday.
Among the cab drivers’ supporters is New York Senator and Speaker of the House Chuck Schumer. “It’s about economic justice – it’s as simple as that,” said the Democrat as he stepped up to the lectern in front of City Hall that Friday.
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The settlement between the city, the taxi union and one of the largest lenders, Marblegate, essentially provides a $200,000 debt relief for the drivers – plus the city will contribute $30,000 in cash. The interest rate should be a maximum of 7.3 percent over a maximum of 25 years, with monthly payments at a maximum of $1,234.
And the city guarantees the loans. “I no longer have to worry about my home, my possessions being taken from me,” Chow expresses his relief. And Schumer adds: “Loans are still being paid off. But they are loans you can live with.”
How could it come to this?
The “medallions” affixed to the hood of every New York City cab are worth a lot of money. At peak times, they changed hands at prices of up to a million dollars. At the beginning of 2015, app-based driving services such as Uber and Lyft entered the New York market unregulated. The big crash followed – the value of the licenses fell below $200,000. Many taxi drivers are left with nothing. In 2022, according to NYTWA, the average debt burden will still be $550,000, while taxi licenses are currently only trading for around $100,000.
For a long time, the yellow taxis were the only option for a ride in the metropolis. The number of taxi licenses and thus the number of taxis that are on the road is binding and is currently 13,587. The licenses change hands via an auction system.
The prices for the scarce taxi licenses rose steadily in the years up to 2014. The New York Times describes a system in which banks and lenders make good money in the overheated market – and numerous bubble warnings are ignored.
The city, meanwhile, has used the extra revenue to boost budgets, the Times reports. The city apparently made a lot of money from the Medallion awards: According to the NYTWA union, New York made a profit of 850 million dollars.
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However, Uber and Lyft do not rely on the license system to transport passengers. Although only the yellow taxis have the right to collect passengers from the side of the road, New Yorkers seem to prefer ordering via app anyway, as the figures show: towards the end of 2016, the app driving service overtook the taxis for daily trips. In the years that followed, usage increased rapidly. Shortly before the pandemic, the app services made more than 749,000 trips a day, the taxis only 217,000.
Drivers and medallion owners find themselves in financial difficulties
There is now a big question mark behind the business model of the yellow taxis. The value of taxi licenses is falling rapidly. However, many drivers financed their licenses with the calculation of selling them at a profit in a few years.
Taxi revenue is also steadily declining. Drivers are struggling to support their families, while many of them still have to pay off loans in the upper six figures. In the records of license transfers from 2017 onwards, the addition “compulsory enforcement” is increasingly found.
The financial hopelessness drove nine drivers to their deaths in the following year, three of them owned medallions. Almost all of them previously complained about their financial hardship, the New York Times reported in 2018. The city spoke of an “epidemic”.
One of the drivers was Kenny Chow. He and his brother Richard immigrated from Myanmar and, like so many other drivers, wanted to fulfill the American dream with a taxi license. Richard bought a taxi license for $410,000 in 2006. His brother Kenny took out a loan of more than $700,000 in 2009 to fund his license.
The medallion is placed on the hood of every New York City cab.
(Photo: AP)
“It’s just not right,” Richard Chow says over and over again when he talks about his brother and the situation of cab drivers in New York. He decided to fight. It’s a long fight that will drag on for years. “I never thought we’d win,” says Chow himself.
The taxi drivers organized themselves and brought top politicians like Schumer to their side. Eventually, the city made an offer for debt relief totaling $65 million. But that wasn’t enough for the drivers. They demanded a guarantee from the city that they would step in if a driver went bankrupt.
A hunger strike for the stage win
“We had to keep escalating,” explains Chow. In 2021 he went on a hunger strike. Together with other drivers and politicians, he stayed in front of the town hall for 15 days. Then finally, white smoke: The deal that the taxi drivers are celebrating today is basically there. The city relented in accepting the guarantee.
Marblegate, the largest lender, has accepted the city’s offer, and the taxi union hopes others will follow. Also, borrowers with more than five licenses are exempt from the program.
By the time the registration deadline to take advantage of the debt relief, more than 1,000 borrowers had received their papers. Marblegate itself assumes that around 2,000 loans meet the conditions for the program.
So for the drivers this is just an interim win. The placards on Chow’s Taxi read ‘All lenders, all loans! Be part of the solution.” New York Mayor Eric Adams also expressed hope that more financial institutions would join the program. “This is an opportunity,” he says.
Chow wants to keep driving, he says. A few more years, then he would retire, rent his cab to another driver.
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