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Driving Poor:
Taxi Drivers and the Regulation of the
Taxi Industry in Los Angeles
Professor Gary Blasi
UCLA Law School and
UCLA Institute of Industrial Relations
Professor Jacqueline Leavitt
Department of Urban Planning
UCLA School of Public Affairs
2
Table of Contents
I. EXECUTIVE SUMMARY............................................................................................ 4
II. INTRODUCTION AND BRIEF SUMMARY OF METHODS .............................. 12
A. The Survey of Taxi Drivers .................................................................................. 13
B. In-Depth Interviews with Drivers......................................................................... 15
C. Interviews with Company Representatives and Others........................................ 16
D. Interviews with Interested Parties and Key Informants........................................ 16
III. THE TAXI BUSINESS FROM THE BOTTOM UP: THE LIVES OF TAXI
DRIVERS AND THEIR FAMILIES................................................................................ 17
A. Overview................................................................................................................. 17
B. A Demographic Profile of Los Angeles Taxi Drivers: Middle-Aged Immigrant
Fathers........................................................................................................................... 17
C. Becoming (and Staying) a Taxi Driver................................................................... 18
D. Hours of Work and the Hidden Costs to Families and the Public.......................... 21
1. Low Earnings Drive Long Hours......................................................................... 21
2. The Impact on Drivers......................................................................................... 22
3. Impact on Families and Children.......................................................................... 22
4. Impact on the Safety of Drivers, Passengers and Public ..................................... 25
E. Income and Economic Security............................................................................... 25
1. Lease Drivers....................................................................................................... 26
2. Owner/Operators.................................................................................................. 26
3. The Impact of Fuel Prices.................................................................................... 27
4. Other Indicators ................................................................................................... 28
F. Lack of Health Insurance......................................................................................... 29
G. Health Status and Health Consequences of Driving a Taxi in Los Angeles........... 31
H. Job Stress.................................................................................................................. 35
I. Percent Reporting.................................................................................................... 37
J.Interaction of Long Hours, Low Income, Poor Health, and Job Stress...................... 41
K. Pride and Resilience................................................................................................ 44
IV. THE TAXI BUSINESS FROM THE TOP DOWN: TAXICABS IN THE
ECONOMIC AND REGULATORY SYSTEM............................................................... 45
A. The Place of Taxicabs in Los Angeles Transportation Planning............................ 45
B. The Regulatory System........................................................................................... 46
1. The Award of Taxi Franchises, Politics and Campaign Contributions. ............. 47
2. Administration of the Franchises: Overview...................................................... 49
3. Areas of Regulation Under the Franchise Ordinances........................................ 51
4. City Regulation of Service to LAX through ATS ...................................................
C. Enforcement of Laws and Regulations Regarding “Bandit Cabs” and “Town Cars”
and Limousines Operating Illegally ……………………………..................................... 56
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V. THE TAXI BUSINESS FROM THE TOP DOWN: The “Co-operative” in the Los
Angeles Taxicab Business ................................................................................................ 59
A. C. Arnholt Smith, the Las Vegas Connection and the Repeated Collapse of Yellow
Cab of Los Angeles ………………………………………………….. ....................... 59
B. Emergence of the Co-operative Form in 1977: UITD and ITOA.......................... 61
C. The Los Angeles Olympics and LA Taxi Company............................................... 64
D. Yellow Cab Becomes a “Co-operative”: L.A. Taxi, Yellow Cab, and the
Administrative Services Co-operative …………………………………..................... 65
VI. WHERE “TOP DOWN” AND “BOTTOM UP” MEET: WHY DO TAXI
WORKERS EARN SO LITTLE?..................................................................................... 66
A. The Need for Responsive Regulation of Meter Rates – and Reasonable Reponses
to Meter Rigging........................................................................................................... 67
1. The “Taxi Cost Index” ostensibly used to set meter rates is seriously flawed.... 67
2. The City Has Not Been Responsible in Timely Adjusting of Meter Rates... 68
3. The Rigging of Taximeters, However Prevalent, Is Inexcusable But Provides No
Excuse for the City to Delay Meter Increases. ……………. ................................... 69
B. Illegal and Other Competition................................................................................. 70
1. Bandit Cabs.......................................................................................................... 71
2. Limousines and “Town Cars” Operating Illegally............................................... 72
C. POTENTIAL INCOME LOST TO SHARP PRACTICES AND CORRUPTION 73
1. Opportunities for Self-Dealing and Kickbacks and the Lack of Financial
Transparency …………………………………………………….. ......................... 74
2. The Lack of Financial Transparency through Simple Withholding or Destruction
of Records: The Case of UITD................................................................................ 75
3. The Lack of Financial Transparency through Complex Business Structures: The
Case of the ASC Co-operatives …………………………………………….……...77
VII. Conclusions and Recommendations..................................................................... 83
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Driving Poor:
Taxi Drivers and the Regulation of the
Taxi Industry in Los Angeles
Gary Blasi
1
and Jacqueline Leavitt
2
I. EXECUTIVE SUMMARY
Six years ago, the City of Los Angeles granted new taxi franchises for the first
time in a quarter century. At the time, the Los Angeles Business Journal estimated that
more than $3 billion dollars in business was at stake.
3
A lobbyist for the taxi industry
was quoted as saying, “Millions upon millions of dollars are at take for these companies.
And what is decided in the next few weeks will also determine the livelihoods of
thousands of taxicab drivers.”
4
In this report we examine what has happened to the
livelihoods of those drivers since 2000, as well as how the structure of the taxicab
industry has evolved. What we have found is troubling. We briefly summarize here a
few of our most significant findings:
1
Professor of Law and Associate Director, Institute of Industrial Relations, UCLA. I gratefully
acknowledge the extraordinary work of the 12 students in my 2006 Fact Investigation Clinic, whose work
served as the foundation for my contributions to this work: Vivian Anaya, Angela Chung, Antionette
Dozier, Anita Garcia, Holly Gilbert, Michael Heinrichs, Jennifer Mockerman, Angelica Morales, Roberto
Ortiz, Sara Richland, Deborah Splansky and Luke Vanderdrift. Phyllis Chen provided excellent additional
research and editing help. We are both grateful to the UCLA Institute of Industrial Relations for material
support and encouragement. My personal thanks to the UCLA Law School Dean’s Fund for summer
funding to allow completion of this research and the writing of this report.
2
Professor, Department of Urban Planning, School of Public Affairs; Director, Community Scholars
Program, (sponsored by the UCLA Planning Program and the Center for Labor Research and Education)
UCLA. I am especially grateful to the work of undergraduate students in the Winter and Spring classes that
focus on community development from the ground up: Jonathan Baskin, Maria Christina Cardelas,
Arnulfo Delgado, Yanira R. Duarte, Navid Ezra, Deborah S. Farnoush, Wilma A. Franco, Alea L. Gage,
Monique B. Gonzalez, Y-Hoa Hoang, Jeric Tao Huang, Shana C. Jenkins, Melissa M. Kelley, Jessika A.
Lopez, Zhao “Lisa” Liu, Aditi Mahmud, Katie N. Mason, Sean Mixon, NanWonnapa Natanon, Lindsay R.
Nicholas, Colleen E. Popken, Paul E. Shirk, Susan Tran, Maricela Ulloa, and Nellie Ok Yu. Laura Russ
was the teaching assistant. We also acknowledge the work of graduate students Paige Cowett and Revel
Sims, who conducted work on the taxi and limousine sector for Professor Goetz Wolff of the Department
of Urban Planning. We are grateful for input on an early draft by Dr. Ruth Heifetz, University of California
at San Diego. We are both grateful to the graduate students who gave substantial time to this research or
who stepped in at crucial periods to lend a hand, including Lindsay Koshgarian, Tanzila Ahmed, Jeffrey
Ziskind, Ana Luz Gonzalez, Deirdre Pfeiffer, Lily Song, and Erwin Latona..
3
Howard Fine, L.A. Aims to Improve Spotty Taxi Service with New Franchise Contracts, LOS ANGELES
BUSINESS JOURNAL, Oct. 2, 2000.
4
Id, attributing the quote to Howard Sunkin, a lobbyist with Cerrell Associates.
5
Long Hours, Low Wages, High Stress, Poor Health
Taxi drivers work an average 72 hours per week, sometimes putting in 18-
20 hours per day driving in Los Angeles traffic
Drivers report high rates of significant health problems associated with
such long hours behind the wheel. More than half have medically
diagnosed back and leg problems.
Drivers report exceptionally high levels of job stress, with more than half
assessed as experiencing severe or extremely severe levels of stress.
In addition to the stress of spending on average six days a week, 12 hours
a day in Los Angeles traffic, Los Angeles taxi drivers, nearly all of whom
are immigrants, face racism and violence. In the past year alone:
o 36.5% were subjected to racial slurs or hostile comments about their
national origin in the past year
o 25% were physically attacked or threatened with physical harm
The livelihood yielded by these long hours and difficult working is
meager: Los Angeles taxi drivers earn a median $8.39 per hour, far less
than the “living wage” adopted by the City in other contexts and less than
the current California minimum wage with overtime protections..
The long working hours of taxi drivers leave very little time to spend with
their children leading to de facto single parent households in many
important respects.
Low earnings have health consequences both for the drivers and their
families
o No taxi company provides health insurance to drivers; 61% of drivers
lack any health insurance coverage at all
o 61% of taxi drivers are fathers of children living at home. Nearly half
of their children lack health insurance from any sources
o Of those children with health insurance coverage, 42% must rely on
Medical or other health care provided by taxpayers.
The “System” in which Taxi Drivers are Trapped
o The City of Los Angeles regulates in great detail many aspects of the
taxi industry, with detailed regulations and reporting about:
How much taxi drivers can charge.
What drivers wear on the job, down to the color of their
socks (black).
Performance by companies in meeting guidelines for
response to customer calls and on-time arrival for pickups
o The most important regulation by the City – setting the maximum fare
– is based on a faulty and outdated “taxi cost index” which does not
take account of the dramatic increase in fuel prices – all of which are
paid directly by taxi drivers themselves.
6
o The City of Los Angeles takes a “hands-off” policy when it comes to
the relations between the taxi companies to which it has awarded
franchises and taxi drivers. All but one of these companies is in the
legal form of an “owner/driver co-operative,” a form that took shape
amid great hope 30 years ago this year.
The Current System of Taxi “Co-Operatives” is Rife with
Opportunities for Simple Corruption and Sharp Practices that
Disadvantage Drivers
o In some instances, there have been indications that millions of the hard
earned dollars of drivers have been siphoned off by a few insiders or
simply gone “missing.”
o In other instances, the systems through which fares earned on the
streets are diverted to managers and outsiders are of dizzying
complexity even if completely legal.
o In many of the co-operatives, the owner/drivers have no meaningful
access to the financial records of their organizations, notwithstanding
clear state law to the contrary.
o The lack of transparency in the business operations of at least some co-
operatives creates many opportunities for self-dealing, kickbacks, and
misuse of co-operative funds.
o The harms from these problems also affect lease drivers, because they
inflate the costs lease drivers must pay.
The City Has Complete Authority Over Taxicabs Operating in the City
but Does a Poor Job of Protecting Franchised Taxicab Companies from
Illegal Competition, and a Poor Job of Protecting Taxi Workers from
Exploitation by their Companies
o The lack of effective enforcement against “bandit cabs” means
franchised companies and legal drivers face intense competition from
illegal “bandit” cabs and limousines operating illegally.
In many areas of the City, one need only stand on any street
corner to watch “bandit” cabs flagrantly plying their trade – a
misdemeanor.
The Los Angeles Department of Transportation (LADOT) has
only 6 inspectors covering the 466 square miles of the City,
and these inspectors lack authority to make traffic stops of
“bandits.”
Limousines ostensibly regulated by the California Public
Utilities Commission routinely violate the restriction that they
only pick up passengers by prior arrangement. Limousine
drivers, unlike taxi drivers, can legally pay hotel doormen
bribes to arrange fares
7
The Department of Transportation and LAPD will soon
increase the level of anti-bandit enforcement by adding 120 8-
hour shifts of patrol cars, but it remains to be seen whether this
increase in resources will be effective.
The City takes a “hands-off” attitude toward allegations of fraud,
corruption, or sharp practices within the taxi companies, while enforcing
minutely detailed regulations on drivers
o Far from being seen as protecting their rights as workers, taxi drivers’
most common complaints are of mistreatment by LADOT, LAPD, and
officials at the LAX taxi holding lot.
o While claiming that taxi drivers are independent contractors, the City
regulates in minute detail aspects of the working lives of taxi drivers
like their clothing, while ignoring 18 hour workdays that endanger the
health of drivers and the safety of the public.
o The City has responded promptly to highly publicized allegations of
taximeter rigging, but has not responded in the past to similar
allegations made by companies and drivers, or taken advantage of the
City’s ready and routine access to every taximeter in the City at the
LAX holding lot.
This report examines the circumstances of taxi drivers in the City of Los Angeles
and how the policies and practices of the City bear on those circumstances. Our initial
research revealed that little was known about Los Angeles taxi drivers: who they are,
how much they make, how many hours they work, their family status, health, stress
levels, access to health insurance, and so on. Our research also found little existing
research about the taxi industry in Los Angeles and how it came to be dominated by “co-
operatives” of owner/drivers, sometimes controlled by a relatively small number of
people. We thus designed a research project to begin to fill these gaps in our collective
knowledge. We examined the issues from both a “top down” (company and regulator) as
well as a “bottom up” (individual driver) perspective. We sought to understand how the
circumstances of drivers are affected by the structure of the industry and City policy and
regulation. This Executive Summary provides a quick snapshot of our study and some of
our additional findings.
The Bottom Up: Taxi Drivers in Los Angeles
With funding from the UCLA Institute of Industrial Relations, we designed and
conducted a sample survey of 302 taxi drivers. These survey interviews were conducted
both at taxi stands all over the City and at the taxi holding lot at the Los Angeles
International Airport (LAX). From these 302 drivers we selected 21 drivers for in-depth
interviews. We also conducted structured interviews with approximately 20 taxi
company officials, taxi co-operative presidents, City regulators and industry experts.
8
In addition to the data reported above our survey revealed that the median taxi
driver is 47 years old and an immigrant. Drivers hail from 47 different countries, some of
which are no longer on the map; 38% of the drivers are from the Middle East region and
Pakistan, 18% from countries of the former Soviet Union region; 18% from Africa, and
12% from Latin America. The median rent or mortgage payment for our sample was
$950 per month. Twenty percent (20%) of drivers report needing to use rooms other than
bedrooms for sleeping purposes
We surveyed 157 lease drivers. These drivers lease from the company (43%),
another driver who owns more than one cab (33%), or from others, such as owner
investors who do not drive (24%). Their median lease payment is $500 per week.
Our survey sample included 127 owner/operators. Unlike lease drivers,
owner/operators are responsible for all expenses, including their share of the expenses of
the taxi “co-operative.” Most of our sample is still making payments on their cab, most
to the taxi company itself. In addition, they must pay fees to the company to cover the
operations of the company and for liability insurance that the City requires. The median
amount paid to the company is $1299 per month.
Our in-depth interviews with 21 drivers went beyond statistics to the meaning of
such numbers. What we found is simple: Los Angeles taxi drivers and their families are
not only among the City’s “working poor,” they are experiencing exceptional stress, with
significant health and other consequences for drivers and their families. Because families
of taxi drivers are de facto single parents, their households are one heart attack away from
being destitute. The ripple effect on households encompasses the lack of free time that
drivers can spend with children and mates to eating and sleeping schedules being out of
sync with others in the household to increased stress on mothers from fathers “missing”
in work.
Taxi drivers endure long hours being afraid for their safety, a concern shared with
family and household members; single drivers’ lives are even more isolated from friends
and companions.
The Top Down: Taxi Companies and Co-operatives
Beyond looking at the circumstances of drivers, we investigated the structure of
the taxi industry and the City’s regulatory system. For many years the Yellow Cab
Company held a monopoly of the taxicab business in Los Angeles, with employee-
drivers represented by the Teamsters Union. In 1976, the Yellow Cab monopoly fell
apart amid a national scandal involving C. Arnholt Smith and allegations of banking and
insurance fraud and involvement by the Mafia. Smith’s interests in Yellow Cab were
later acquired by Eugene Maday, another figure with connections to organized crime in
Las Vegas. Many with whom we spoke expressed beliefs that organized crime still
maintains interests in the taxi business in Los Angeles. We found nothing to sustain
those allegations, though we did not of course conduct the kind of investigation that
would be required.
9
What is clear is that between 1976 and 1984, the taxi business in Los Angeles was
transformed. In 1976-77, amid the collapse of Yellow Cab, two new nonprofit co-
operatives of taxi drivers were born: the United Independent Taxi Drivers (UITD) and
the Independent Taxi Drivers Association (ITOA). The combination of progressive (the
co-operative) and conservative (individual ownership) ideas was politically powerful. As
originally conceived, these co-operatives would be made up of individual
owner/operators: in other words, taxi drivers who own their own cabs. It was not long,
however, before the idea of “investor shares” in co-operatives was approved by the City.
In 1998, the historic Yellow Cab Company franchise was acquired by Mitchell Rouse,
also the founder of SuperShuttle. Rouse transformed Yellow Cab (and his other taxi
companies) into a co-operative of sorts, in a complex transaction that also established an
umbrella “co-operative of co-operatives” – the Administrative Services Co-operative
(ASC) that would, in turn, buy services from private companies owned by Mitchell
Rouse. Eventually, every taxicab company save one followed suit. At present City Cab
is the only one of nine companies not organized as a co-operative.
The original ideal of the co-operative of independent taxi drivers appears to have
been preserved to varying degrees in the various companies. One thing is clear: in the
current system, there are many opportunities for those who come to control co-operatives
to do very well at the expense of the driver-members whose labor is the economic
foundation of each company. We did not conduct any sort of forensic audit or, of course,
any criminal investigation of any co-operative. We did learn enough to suggest the need
for much greater oversight and transparency. For example, in multiple instances taxi
drivers who rose to power within co-operatives came to own real estate valued in the
millions. As noted, we cannot say that this success was the result of anything other than
hard work or good luck. We can say that it is very difficult for the driver-members of
many coops to learn anything meaningful about the financial affairs of their co-
operatives. This is true despite the fact that, at least in theory, members of co-operatives
have a statutory right to examine the books and records of their co-operatives. On
occasion, members have tried to enforce that right and have even obtained court orders.
They have not, however, obtained the books and records, amid claims of their
destruction.
The opportunities for corruption, as opposed to the instances in which those
opportunities are seized, are not difficult to spot. Those who come to control co-
operatives control the business affairs of the enterprise. It is they who decide not only
which lobbyists are hired and which political campaign contributions are made, but also
who gets the business of the co-operative in particularly lucrative areas such as liability
insurance. Opportunities for kickbacks and side arrangements are everywhere. Because
we did not conduct any sort of forensic audit or investigation of the sort the City itself
might do, we cannot say how prevalent such corruption is. We can say that many
member-drivers of co-operatives believe they are being defrauded of the fruits of their
long hours on the road.
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The lack of financial transparency extends beyond the smaller co-operatives with
poor record-keeping in which outside accounting firms have found serious irregularities.
In what most people we spoke with agreed are the most professionally managed co-
operatives – those associated with the Rouse family and doing business under the
Administrative Services Co-operative (ASC) umbrella -- each of the members of the
individual co-operatives (e.g., Yellow Cab) has a right to examine the records of their
coop (e.g., Yellow Cab). But all they can see are that funds have been taken in and then
paid to ASC. They are not afforded the right to examine the financial affairs of ASC or
the transactions between ASC and the companies with which it deals, many of which are
ordinary corporations controlled by the Rouse family. In fairness, these arrangements
(through which the Rouse-affiliated co-operatives pay Rouse-owned companies) are
disclosed to members when they purchase a share of the Yellow Cab co-operative (in a
138-page legal document). The lack of ongoing disclosures beyond brief summaries of
expenses reimbursed to ASC however, breeds continuing suspicion among many
owner/drivers with whom we spoke that they are being subjected to unreasonable costs.
In the next subsection, we address how the City addresses, if at all, these concerns,
among others.
The Top Down: The City Regulatory System
The City of Los Angeles has complete authority over the taxi business within the
city, which it regulates as a “public utility.” Taxicabs must operate under a specific
franchise, described in an ordinance adopted by the City Council and approved by the
Mayor. Not surprisingly, perhaps, taxicab companies are among the more significant
political campaign donors in the City. This is not really news. As the Los Angeles Times
reported in 2000 (the year taxi franchises were last awarded), taxicab companies paid
lobbyists over a quarter million dollars and made $40,000 in campaign contributions to
City politicians. Our own independent examination of campaign contribution records
identified nearly $200,000 in campaign contributions from taxi company officials,
including $23,450 in contributions from Scott Schaffer, the former co-owner of City Cab
who is now awaiting federal sentencing on unrelated charges.
Most of the regulation of the daily lives of taxi drivers comes not from elected
officials, but from three other sources: (a) the City’s appointed Taxicab Commission and
a section of the Los Angeles Department of Transportation headed by a Taxicab
Administrator; (b) the enterprise collectively operated by the companies at Los
International Airport (LAX), known as Authorized Taxicab Supervision (ATS); and (c)
the Los Angeles Police Department (LAPD). One of the most striking findings of our
survey was the degree to which Los Angeles taxi drivers perceive these regulators as
being unfair. Among the top problems identified as “very serious problem” were unfair
treatment by LADOT (63.2%), ATS (52.9%), and LAPD (50.7%) . These perceptions
are supported by some of the things we found, particularly with regard to oversight by the
City’s own bureaucracy:
The City regulates the lives of drivers in minute detail, specifying what they
can charge and even what they can wear. Not only must drivers be “neat and
11
clean,” they must also conform to the City’s very specific dress code: white
shirt, black tie, black shoes, black socks. Violations of the minutest sort –
white dots on a black tie – can lead to significant economic penalties.
Notably, of all the citations of drivers in which fines were imposed between
January and August, 2006, 46% were for “dress code” violations.
At the same time, the City has said it did not have the resources for effective
effort to enforce laws against “bandit” cabs and “town cars” operating
illegally.
The City requires drivers to maintain and submit on a routine basis records
regarding every fare, yet accepts only very general “business plans” and
financial statements from taxicab companies.
In particular, LADOT has a “hands off” policy when it comes to allegations of
serious fraud and corruption within taxi companies – except when it comes to
allegations of meter rigging by individual taxi drivers.
Both companies and drivers allege that LADOT has long known about
potential problems with taximeter rigging, but took no action until the
problem found its way onto the evening news in Spring 2006.
The City has failed to respond in a timely or fair way to the dramatic increase
in fuel prices, 100% of which are paid by drivers. Although the Taxicab
Commission recently approved a rate adjustment, this comes long after fuel
prices began to skyrocket.
Moreover, the “Taxicab Price Index” utilized by LADOT to recommend fare
adjustments is seriously flawed in attributing only 13% of the costs of
operations to fuel, far less than the empirical data would warrant.
Finally, although taxi company officials and drivers may disagree about many
things, they agree that the City has thus far done a very poor job delivering on its end of
the franchise “bargain”: to protect them from illegal competitors not subject to the same
rules. The illegal competition comes in two primary forms. The first are the “bandit
cabs” that ply their trade on the streets of Los Angeles without a City license and without
having necessarily complied with regulations regarding insurance to cover passengers or
to restrict taxi driving by unlicensed and dangerous drivers. City officials agree on the
severity of the problem, concurring with industry representatives that there are at least as
many “bandit” cabs on the streets as legal cabs. The second form of illegal competition
is increasingly severe, in the estimation of all with whom we spoke: these are “town cars”
or limousines regulated (loosely) only by the State Public Utilities Commission. Under
state law, these vehicles are permitted to pick up passengers only by advance
arrangement. In fact, however, they often appear at hotels and other venues and there
compete directly with taxicabs. To this original illegality is added the additional problem
that “town cars” and limousine drivers often pay hotel doormen or other gatekeepers for
fares, long after the City prohibited taxicab companies and drivers from paying for access
to fares. Whether the illegal competition takes the shape of a shabby bandit cab painted
to deceive customers and driven by an unlicensed driver, or a gleaming black limousine
with a spiffy chauffeur, the consequence to taxi drivers is the same: money taken out of
their pockets and not available to care for their families.
12
Note: Taxicabs as Transportation
We found little evidence that the City regards taxicabs as a significant part of the
transportation system in Los Angeles. Taxis are essentially ignored in the City’s primary
transportation planning document, the Transportation Element of the General Plan. One
company official opined that the City does not see taxicabs as a transportation resource,
but rather as a “nuisance to be regulated.” That is not entirely correct. LADOT does
compile and produce reports on how well taxi companies are serving the public: how
long it takes them to answer the phone and how timely they are in arriving at the agreed
time. The City and LADOT in particular are plainly concerned with service delivery to
the public. While service delivery was not the focus of our study, we were persuaded by
many with whom we spoke – drivers, company officials, and city regulators -- that Los
Angeles should begin to see taxicabs as meeting real transportation needs. This vision
would extend beyond the assessment of service to current users and extend particularly to
the increasingly dense parts of the City that can clearly support a “hail cab” system – now
effectively illegal in Los Angeles. Toward that end, we hope this study is not the last to
explore not only the lives of LA taxi drivers but also the services they provide to the
public.
II. INTRODUCTION AND BRIEF SUMMARY OF
METHODS
Little is known by either the public or scholars about taxi drivers in Los Angeles
or about the industry of which they are a part. A literature review reveals that few
scholarly studies include opinions about the industry from the drivers’ perspective.
5
Various blogs offer insights that reflect taxi-related experiences around the world.
6
Much
of the academic literature focuses on organizational structure of the transportation
5
BIJU MATHEW, TAXI: CABS AND CAPITALISM IN NEW YORK CITY (2005); IMMANUEL NESS, IMMIGRANTS,
UNIONS, AND THE NEW U.S. LABOR MARKET (2005); Elizabeth A. Hoffman. Driving Street Justice: The
Taxicab Driver as the Last American Cowboy, 31 L
ABOR STUDIES JOURNAL 2, 1-18 (2006); RAYMOND
RUSSELL, SHARING OWNERSHIP IN THE WORKPLACE (1985); Unfare: Taxi Drivers and the Cost of Moving
the City, Bureau of Labor Statistics, US Department of Labor, Occupational Outlook Handbook, 2006-07
Edition, Taxi Drivers and Chauffeurs, http://www.bls.gov/oco/ocos245.htm (last visited Feb. 27, 2006);
Monique L. Dixon, Alexandria Taxi Drivers Win Struggle for Economic Justice, 3
COMMUNITY JUSTICE
RESOURCE CENTER QUARTERLY NEWSLETTER 3, (2005); CITY AND COUNTY OF SAN FRANCISCO, OFFICE OF
THE
COMPTROLLER, HEALTH BENEFITS FOR SAN FRANCISCO TAXI DRIVERS: HEALTH PLAN
ALTERNATIVES, FUNDING, AND IMPLEMENTATION (2003); DEBRA LAM, KAREN LEUNG, JOHN LYMAN,
STARR TERRELL, & RICK WILSON, THE SAN FRANCISCO TAXICAB INDUSTRY: AN EQUITY ANALYSIS
(2006); RHONDA EVANS, JABRIL BENSEDRINE, KEN JACOBS, & CAROL ZABIN, ESTABLISHING A SAN
FRANCISCO TAXI DRIVER HEALTH CARE COVERAGE PROGRAM: ADMINISTRATION, COST, AND FUNDING
OPTIONS (2006); BRUCE SCHALLER, THE CHANGING FACE OF TAXI AND LIMOUSINE DRIVERS: U.S., LARGE
STATES AND METRO AREAS AND NEW YORK CITY (2004).
6
Hundreds of blogs exist about taxis and all the ramifications from experiences regarding drivers,
passengers, campaigns for more accessible taxis, art projects, etc.
13
industry, regulation, and supply-demand.
7
Studies concentrate on measuring performance
indicators such as promptness of response to calls and safety. No updated history exists
of the development of the taxi industry in Los Angeles, the roots of which go back to the
1920s. This report seeks to fill some of these gaps.
Research was conducted between January and August 2006. As is customary in
most contemporary social science, we used a mix of methods. Between January and
June, we conducted standardized surveys in the field with 302 taxi drivers operating
taxicabs authorized to operate in the City of Los Angeles.
8
We conducted in-depth
structured interviews with 21 of these drivers between May and August. We also
interviewed nine current or former taxi company presidents or managers, five city
officials, and numerous other key informants familiar with particular aspects or history of
the city’s taxi industry. We supplemented our primary research with reviews of
academic and other literature on the taxi industry and on work and family life.
Undergraduate students in Leavitt’s class on “Community Development from the Ground
Up” and follow-up seminar researched the taxi industry in other municipalities. In
addition, we reviewed tens of thousands of pages of documents, including many obtained
through the California Public Records Act and many more obtained by Blasi’s “Fact
Investigation Clinic” law students through various sources. Needless to say, we
encountered occasional difficulties in our research. We touch on some of these issues
below. Nevertheless, we believe we have conducted the most thorough study to date of
the taxi industry in Los Angeles.
A. The Survey of Taxi Drivers
We were fortunate to be able to obtain information through our survey instrument
from 302 taxi drivers and to do so in a way that made the sample we obtained fairly
representative of those who drive the 2303 licensed taxicabs in the City of Los Angeles.
9
This is a significant sample, equal to 13.1%, or nearly one in seven of all franchised taxis
in Los Angeles. Early on, however, we noted that in conducting surveys at hotels and
7
PETER GORDON, TRANSPORTATION ALTERNATIVES FOR SOUTHERN CALIFORNIA (Peter Gordon & Ross D.
Eckert, eds., Online ed. 1998) (1976), available at http://www-rcf.usc.edu/~pgordon/transit.html (last
visited March 11, 2006); J
OHN E. KRAMER & WILLIAM H. MELLOR, OPENING PORTLANDS TAXI MARKET
(1996) available at www.cascadepolicy.org/bgc/kkramer.htm (last visited March 12, 2006); Adrian T.
Moore & Ted Balaker, Do Economists Reach a Conclusion on Taxi Deregulation?, 1
ECONOMIC JOURNAL
WATCH 1, 109-132 (2006); Robert Cervero, Fostering Commercial Transit: Alternatives in Greater Los
Angeles, R
EASON FOUNDATION POLICY STUDY 146 (Sept. 1992); SPUR (SAN FRANCISCO PLANNING AND
URBAN RESEARCH ASSOCIATION), MAKING TAXI SERVICE WORK IN SAN FRANCISCO (Nov. 2001),
available at www.spur.org/documents/011001_report_01.shtm (last visited March 24, 2006); B
RUCE
SCHALLER, 2003 NYC TAXICAB FACT BOOK (2003); James Cooper & Tri Taxi Studies Group, Taxi market
regulation, industry, employment and the identification of data toward informed policy decisions (paper
presented to Scotecon, March 2004).
8
We also interviewed a handful of drivers from companies not franchised to do business in Los Angeles.
These cases were excluded from analysis.
9
Taxi driving is a predominantly male occupation. Although Bruce Schaller [see note 1] identifies an
increase in female drivers, and we are aware of female drivers in LA, no women were identified through
the random sampling. In all our work, we encountered one female driver and were informed that there may
be as few as four women drivers in the entire taxi fleet in the City of Los Angeles.
14
taxi stands that we were getting “clusters” of drivers, by company, by ethnicity, and so on
that would tend to make our sample non-random. This turns out to be a fact of life about
taxi drivers in Los Angeles. At least when waiting for fares, many drivers prefer to wait
with others with whom they have things in common. We were therefore grateful to
eventually receive permission to interview at the taxi holding lot at LAX. Since taxi
drivers make at least twice as much on the one day in five that they are permitted to pick
up fares at LAX, this is an ideal site for obtaining a near random sample. We were
pleased with the results.
Table 2, below, compares the proportion of our sample, by company, to the
known number of cabs licensed to each company by the City. Since these numbers were
sufficiently close to the known number for this variable (company) and since we have no
way of knowing the other characteristics of the full population from which we might just
as reasonably weight the sample, we report here the unweighted data.
Table 2
Taxicabs by Company
(Total Licensed and Number in Sample)
Company Number
Licensed
10
Number
In
Sample
Licensed
Percent
Sample
Percent
South Bay Coop (dba United Checker) 70 4 3.0% 1.7%
Bell Cab Company 261 25 11.3% 8.6%
LA Checker Cab 269 35 11.7% 12.0%
Independent (ITOA) 246 52 10.7% 17.9%
United Independent (UITD) 289 41 12.5% 14.1%
LATC (dba Yellow Cab) 739 86 32.1% 29.6%
City Cab 166 14 7.2% 4.8%
Beverly Hills Coop 163 23 7.1% 7.9%
UITD (dba United Taxi of San Fernando) 100 10 4.3% 3.4%
Total, All Companies 2303 291
11
100% 100%
Of course, other potential issues arise with any survey. Most obviously, a
possibility exists that the respondents are purposely not telling the truth. One way of
controlling for this possibility is to have a large enough sample size to minimize the
effects of a few conscious prevaricators. We made several additional efforts to control
for this possibility. First, as we explained to all potential respondents (and as we were
required to do by human subjects principles), all the surveys were conducted in complete
confidence and with complete anonymity.
12
There was no possibility that we might, for
example, convey information received to the Internal Revenue Service (IRS). These
protections were carefully explained verbally and written information was distributed to
10
Data on franchised taxis are taken directly from the currently in-effect franchise ordinances, Los Angeles
City Ordinances 173649 to 173656.
11
In some cases the taxi company was not recorded.
12
In the report, drivers interviewed are given aliases that best reflect countries of origin.
15
each driver. In addition, however, we controlled by indirect means by asking for
information that might be used to cross check one answer against another. For example,
we asked not only about income but also about the amount of rent paid and family
circumstances. It is difficult to lie consistently about a great many related things at the
same time. And we did not find significant instances in which there were serious
inconsistencies in our reporting, we generally report medians rather than means, to
minimize the effect of outliers.
Much more likely than consciously false answers is simple misunderstanding or
lack of knowledge on the part of either the respondent or the interviewer. Particularly in
conducting surveys with immigrants from a multitude of cultures for whom English is a
second language, doubts nearly always arise about whether a question is understood in
the same way by the researcher and by the respondent. We identified these problems
and attempted to correct for them as best we could. Where we made judgment calls, we
made them against the hypotheses with which we had begun. For example, based on
early reading and attending gatherings of taxi drivers, we hypothesized that taxi drivers
are poorly paid. Thus when we got ambiguous responses to a question about “total
income,” we interpreted those answers as representing net income rather than gross
income, an interpretation that would tend to raise their claimed income (compared to our
hypothesis). To find the outer limits of this assumption, we also ran the numbers on the
assumption that every response to a question about “total income” referred to net income.
We report the results of these different interpretations in the analysis that follows.
In addition to misunderstandings and linguistic conventions, no doubt some errors
reflect an understandable lack of knowledge. For example, driver/owners may not know
how much of the fees they pay to the company go to pay the City’s franchise fee.
Moreover, how many of us could provide a detailed account of our household budget,
providing monthly averages for things that may only occur once or twice a year. In some
of our questions, we asked taxi driver/owners to provide such information. A few
drivers, but certainly not the vast majority, were able to pull out financial papers on the
spot. In general, across all the respondents, we got consistent answers, but in particular
cases, it was clear to us that drivers must simply be wrong in their estimate of how much,
for example, they pay on average for traffic tickets or car maintenance (which may
include occasional large expenditures). As before, where judgment calls were necessary,
we made them against our hypotheses (of low income). Our numbers may to some extent
overstate the income of driver/owners because we have underestimated their costs.
Where other methodological issues arise, we address them in the text below.
B. In-Depth Interviews with Drivers
In addition to surveys of 302 drivers, we conducted in-depth, structured
interviews with 21 drivers. During the later stages of our survey, respondents were asked
if they would be willing to participate in a longer and more open-ended interview. We
selected 21 from approximately 35 who indicated a willingness to be interviewed.
Selection was based on our desire to interview a range of drivers with different
experiences and perspectives. These 21 subjects were interviewed by trained graduate
16
students. All information from which it would be possible to identify these individuals, if
any such existed, was destroyed, pursuant to the human subjects protection rules of the
University.
The interview protocol was divided into five major categories – taxi driving,
family, health, budgets, and housing. The protocol probed the following specific areas
as well as issues drivers raised during the interview: the taxi driver’s background and
reasons for entry into driving; thoughts about driving as a job; family and household
background including ways in which taxi driving has an impact on family and friends; the
resources that drivers use to treat various health problems absent health insurance;
income budgets and the survival mechanisms that drivers and their households use when
wages are insufficient to meet expenses; specific and general questions about their
housing and the housing crisis in general; and an overall category that refers to concerns
about the institutions involved in regulating the taxi industry.
C. Interviews with Company Representatives and Others
We also conducted structured interviews with a range of taxi company officials,
including company presidents and operations managers, as well as with the key officials
in the Taxi Division of the Los Angeles Department of Transportation (LADOT), the
President of the Taxi Commission, and other officials. These interviews touched on
many issues, including many brought up by our interviewees: the concerns facing the
industry, including the competitive and regulatory environment; the relationships
between owner/operators, lease drivers and companies; and the feasibility of various
policy reforms that might improve either service to the public or the lives of taxi drivers.
We also interviewed a number of experts or persons with special knowledge of such
topics as the early history of the co-operative organization of taxi companies in Los
Angeles, or the contours of various proposals to reform the regulatory process in Los
Angeles.
D. Interviews with Interested Parties and Key Informants
We are grateful for the cooperation we received from all concerned. We realized
early on that many of the topics of our study are also the subjects of intense debate
among those whose lives and livelihood are at stake. We encountered a good deal of
distrust and suspicion among our respondents regarding the intentions and veracity of
others. This complicated our task, but in retrospect was inevitable. In addition to
differences that are motivated by personal interest, there is also the universal problem
made memorable in the film Rashomon: what we see depends on where we stand, both
literally and figuratively. Our methodological response was to interview as wide a range
as possible of knowledgeable people: managers and company officials as well as drivers;
lease drivers as well as owner/operators; co-operative leaders as well as ordinary
members; advocates and organizers as well as company and City officials. We have tried
to be fair to the views of all with whom we spoke. Of course, as between conflicting
accounts we have necessarily been compelled to make judgments. Where possible, we
have bolstered our judgments from multiple sources and from documents. Of course, we
17
retain responsibility for any errors in interpretation or our judgments as between
competing factual claims.
III. THE TAXI BUSINESS FROM THE BOTTOM UP:
THE LIVES OF TAXI DRIVERS AND THEIR
FAMILIES
A. Overview
What we learned about the lives of Los Angeles taxi drivers was troubling.
Virtually everything about this industry -- from the number of cabs, the prices they can
charge, to the clothing drivers must wear – is fixed and regulated by the City of Los
Angeles. Nevertheless, working an average of 72 hours a week, these men support
themselves and families on far less than the City’s own “living wage.” Indeed,
considering their long hours on the road, these workers earn less than they would at the
California minimum wage with overtime protection. The hours they work have negative
consequences for these workers, their families, and the public.
Any commuter can begin – but only begin -- to imagine the effect of spending 12-
14 hours per day, nearly 5000 miles each month, on our crowded streets and highways.
About half of all drivers report medically diagnosed back and leg problems. Many report
experiencing “taxi worker limp,” caused by the relative atrophy of the left leg, while the
right leg operates the brake and accelerator for 12 hours a day. Similarly, about half of
LA taxi drivers report severe and extremely severe levels of job stress.
In this section we report what we learned from our 302 surveys and 21 in depth
interviews. We provide both statistical data and the experience of drivers, expressed in
their own voices.
B. A Demographic Profile of Los Angeles Taxi Drivers: Middle-
Aged Immigrant Fathers
The median taxi driver in Los Angeles is 47 years old and an immigrant. Most
support families. Sixty-one percent (61%) have children living at home. The
overwhelming majority of taxi drivers are immigrants. Only 13 of the drivers in our
sample were born in the United States. Because of the difficulties that undocumented
persons face in securing the necessary licenses and permits, there is little reason to doubt
that the great majority are naturalized citizens or legal immigrants.
Taxi drivers in Los Angeles reflect the enormous diversity of Los Angeles. We
spoke with drivers who had been born in no fewer than 47 different countries, including
18
many no longer on the map. Figure 2 below shows the regions
13
of the world in which
the drivers in our sample were born. The most common countries of birth were, in order,
Russia and the countries of the former Soviet Union, Armenia, Ethiopia, and Iran.
Figure 2
Regions of Birth of L.A. Taxi Drivers
Percent
Africa
18%
Asia
3%
Former Soviet
Union
19%
Latin America
12%
Middle East
38%
South Asia
5%
U.S. & Other
5%
C. Becoming (and Staying) a Taxi Driver
One conventional view from many inside and outside the industry is that driving
a taxicab is a transitional job, available to immigrants while they seek other employment.
This view is contradicted by our data. What is true is that many drivers began hoping that
the conventional view was true. As our respondent Ivan generalized, “Every cab driver
thinks this is a temporary job.” Many drivers recall a time when they felt more hopeful
13
We note in passing that the assignment of countries to regions is controversial. We utilized what seemed
to be the most common conventions.
19
about their life chances and that taxi driving was a means to something else, not a
permanent condition.
14
Our survey countered the common assumption that driving a taxi is invariably a
short term, transitional occupation for recent immigrants. Some drivers distinguished
between the experiences of previous waves of immigrants. While a very large proportion
of taxi drivers in Los Angeles are foreign born, most are neither recent immigrants nor
new to the taxi industry. Time in the industry ranged from a few months to 42 years. As
is the convention in reporting descriptive statistics of populations, we primarily report
medians in order to reduce the effect of “outliers” (very atypical cases). The median Los
Angeles taxi driver has been driving for 9.5 years. Those with ownership interests in
their cab and company (owner/operators) have been driving for 12 years. Those who
lease their cabs, typically by the week, have been driving for a median of 8 years. Only
23% of drivers have been driving for three years or less (n=292).
Our in-depth interviews and interviews with taxi company officials reveal much
more about how taxi drivers enter the industry. Access is relatively easy. For example,
the Bell Cab Company lists the typical qualifications for people who want to “earn big
money.”
15
A good many taxi drivers are, by reason of their education and training in their home
countries, seemingly overqualified to be taxi drivers. We asked drivers about their prior
occupations. Nearly half (49%) had been in skilled trades or in business or professional
occupations.
14
In Collateral, a film starring Tom Cruise and Jaime Foxx, Foxx plays a taxi driver in Los Angeles whose
dream is to own a limousine company. Cruise, the passenger, in town on assignment as a hit man,
commandeers the cab and reproves Foxx for accepting the dispatcher’s disdain and the ways in which the
industry treats its working people. Cruise goads Foxx into admitting that he has been driving for 11 years,
effectively discrediting that taxi work is a “temporary” means to a different goal.
15
“Earn Big Money ----- We Will Train . . .,” available at http://www.bellcab.com/driver.htm (last visited
August 12, 2006).
Our taxicab drivers are independent contractors, all the drivers are licensed by the City of Los Angeles
Department of Transportation and must undergo a criminal record check performed by the Department.
Be a United States Citizen or legal resident or have work permit
Be at least 21 years old
Have valid California Class A, B, or C driver's license for at least one year
No misdemeanor convictions & felony convictions within the past (3) years
No Hit and Run resulting in injury or death
No reckless driving causing injury & within last (3) years
No DUI causing injury to others & within the last (3) years
No more than (3) moving violations within the last (3) years with a maximum of(2) violations
within the last year or more than (2) chargeable vehicle accidents within the last (3) years.
Must enroll and pass a drug/alcohol test and participate in random drug test program
Be willing to submit to medical exam if required by Bell Cab insurance carrier
Have no physical or mental conditions that would prevent the driver from boarding, securing,
& transporting passengers safely
Be able to write and speak English
Be familiar with Los An
g
eles Count
y
20
Donald, a lease driver for seven years, confirms that, “It wasn’t difficult to get
into this work, since all I needed was a license.” Assad expands on this:
I filled out an application form, they sent me to drug test. I got some training and
practice exercise questions. Then I went to DOT [Department of Transportation],
passed the exam, and got license. Company gave lease number.
Immigrants find ease and quickness of entry into the industry especially attractive. For
example, one driver says immigrants “have a very limited view of the jobs you can take.”
Competition for jobs is severe and taxi companies beckon. Omar, driving for nine years,
started because he immigrated to the United States with a wife and kids to support; his
objective was to make money. Taxi driving compared favorably to other jobs that
offered only minimum wage and were inadequate to support a family. Further, he “didn’t
want to get on welfare or get that kind of help.” Although writing and speaking English is
a requirement, driving a taxi is also appealing for those who may be less fluent in the
dominant language and speak other languages. Taxi companies advertise for jobs in
ethnic newspapers, reaching people who are able to speak the language in geographic
areas where the fleet operates. For example, one respondent read about a job in a Korean
language newspaper.
None of this is to say that driving a taxicab is without its apparent attractions.
Leo, an owner/operator who was once a lease driver, describes taxi driving as a way to
“swim between the reefs,” explaining that you are your own boss and don’t answer to a
chain of supervisors. Some drivers move in and out of the taxi business. Alex, for
example, also an owner/operator, quit three times and came back because “I like the
freedom, I can make my own schedule, work whenever I want, stop whenever I want.”
Sherif, now driving for nine years, got burned out after two to three years and also quit
three times, returning when he wasn’t making good money in the towing business. Some
drivers quit in order to start their own business but among those we interviewed, none
had succeeded. One driver quit in order to get a much needed vacation, finding that was
the only way that he could get time off.
While drivers may find it appealing that they can set their own hours and have
flexibility, skepticism exists. Ivan, a lease driver for three years, reports,
It’s not that being a cab driver you can pick your hours, because whatever hours
are available you have to take that shift. . . . I take hours that are not convenient
for me to go study.
Indeed, many drivers who take jobs because they harbor hopes of going to college report
that they had to drop out of school because it was too difficult to accommodate both
schedules. Getting married and having children further diminishes the chances of drivers
being able to spend the long hours driving a cab, meeting family responsibilities, and
going to college or otherwise preparing themselves for another job with better pay and
21
fewer hours. Of the 21 drivers that we interviewed only one was in school and driving a
taxi. Many drivers reported, accordingly, that they felt trapped in their current work.
D. Hours of Work and the Hidden Costs to Families and the Public
Among the most striking findings of our research is the very long hours worked
by taxi drivers, summarized in Table 3 below.
Table 3
Median Hours and Days Worked Driving Taxi (n=284)
The median taxi driver in Los Angeles works 312 hours per month, 72 hours per
week, typically working more than 12 hours per day, 6 days per week. One fourth of
drivers report working 370 or more hours per month, or 85 hours per week. One
quarter of drivers report having either zero or one day off in the past 30 days. Because
access to LAX is restricted to once each 5 days (referred to by drivers as “airport day”),
and because drivers typically make much more money on the longer fares picked up at
LAX, drivers tend to work even longer hours – a median of 14 hours – on “airport day.”
One fourth of drivers work from 16-21 hours on “airport day.” The negative
consequences of such long extend to the drivers themselves, their families, and the
general public.
1. Low Earnings Drive Long Hours
The need to pay bills drives the long work day. One man who stops driving for a
week when he finds himself not wanting to work “so bad” describes being trapped by the
realities of installment payments.
I got stuck because every month you have to make payments and fix the cab, and
you get stuck. I couldn’t find another job to make as much money as in the cab
business. If you put in hours, you make money. The more you work, the more
you make. That’s why you have cab drivers working 18-20 hours.
Tradeoffs abound between making money and taking time off. For example, Ivan
tells us:
somewhere in your brain it always tells you that another hour done, no income, no
income. . .the bad part is if you take a day off to enjoy life, in your brain, you
know it costs you so much. I want to take two days off, it’s going to cost me
Hours Per Day (non-“airport day”) 12
Hours Per Day (“airport day”) 14
Days Per Week 6
Total Hours Per Month 312
22
$150, plus whatever money you spend not working…you take a day off you
have to pay for cab and what you not earn, $200-300 a day.
When Solomon takes time off from work, he feels a sense of anxiety over forgone profits:
I don’t have chance to go out with friends or family. Between those hours when
you go out you feel like you’re missing money. You think there is no business so
you sit at home but then you feel like you’re losing out on money.
Drivers are very aware that they have to put in more than a 40-hour week if they
want to acquire even a minimum standard of living. Adit says, “To survive, about 14
hours you have to work, 8-10 hours, we cannot make enough.”
Omar believes that you can sometimes get lucky and then you will make more
money but a fatalistic attitude prevails.
In taxi driving, your income is limited. Can’t be rich or get really good life. So
there is no future for [the] driver. It’s just a limited income you get every month.
You have to manage your life with that income.
2. The Impact on Drivers
Drivers’ emotions constantly fluctuate up and down. They invest their time based
on a belief – justified or not -- that they will realize more money. Frustration comes with
the job. Thurman says, “Sometimes you don’t make money and you have to work long
hours, it really pisses me off.” He works 14 hours a day because he cannot make any
money working less. Some days he’ll drive for 2 or 3 hours and not make more than $5.
He explains,
That sets a guy off. Some start cussing, some can’t take it. But I know if I work a
certain number of hours, I’ll make a certain amount of money. It’s the mindset I
feel like I have to put myself into. One day you have a good day, the next day,
you might not make as much money. You have to balance it.
Drivers lose out in more than monetary ways. As a single man, similar to women
who forego housekeeping when working full time, James lets go of the upkeep of his
home.
Before I had a taxi, I was a meticulous housekeeper. Now my place is a disaster.
I can’t have anyone over. I have no friends. I have no social life. No girlfriend.
No family life. When I have a little bit of free time, I have to do something with
the car.
23
3. Impact on Families and Children
For drivers with families, the impacts are particularly severe. This occurs in
numerous ways from the lack of free time that drivers can spend with children and mates
to eating and sleeping schedules being out of sync with others to increased stress on
mothers from fathers “missing” in work. Haddad shared his remorse that “I never knew
my kids because they didn’t grow up with me. . . .I was there physically.” Mustafa’s
family understands but he says, “The kids are never happy because I don’t spend any
time with them.”
Phil compares his ideas of family life with the way he thinks others function: “In
a family where they have a regular schedule they are able to spend more time with family
but with my schedule it is difficult to find time”.
Donald lives with his adult daughter and barely sees her or other members of his
family. Saying that he doesn’t have any life for himself, he gives examples of what is
missing:
I would really like to visit my family and not have to leave before I’m ready. For
instance today [day of interview] is my baby brother’s birthday and I would really
like to hang out with him on his birthday but I can’t do that. . . .Last time I took a
day off was when I got a severe nose bleed on Memorial Day weekend.
Omar describes the letdown on the July 4
th
holiday when his family had a plan to
return to Utah (where they lived and he drove before coming to LA). . “I didn’t want to
miss it. This kind of thing happens all the time. One of the reasons I can’t do anything is
because I have to pay the company.”
Juan’s limited time with his family is devoted to routine tasks or passive
activities.
There is not any time for family, much less for friends. But the little time I have
I spend it with my family. We usually go to the market or watch TV but it
is actually the only things that we do.
Phil also makes use of any free time to “spend with my wife and usually we have
to take care of the bills or go grocery shopping, things that need to get done.”
Sleeping schedules influence the quality of family life. A typical remark by taxi
drivers who were interviewed is: “I don’t really feel that I have free time because usually
when I am off I am tired so I go to sleep and I don’t really have time to do other things.”
Alex spends very little time with his family. “When I wake up they are sleeping. When I
come home I have time to take a shower, eat a little, and go to sleep.”
Drivers use different approaches to unwind at the end of a long shift. Some do
chores. Juan, for example, is unable to relax right away, “it takes quite some time to do
24
so.” Others go to sleep. Phil who drives 12 to 14 hours a day says, “I feel very tired and
I have no energy.”
As soon as I get home I try to sleep right away. My wife and I have opposite
sleeping schedules because she works during the day and she sleeps at night but I
work at night and sleep during the day. It makes it difficult to have opposite
schedules but you have to get used to it.
For some drivers, like Edward, sleeping schedules may be different only on the
days that he goes to the airport. He works 10 hours a day, 7 days a week. He is
extremely exhausted when he gets home, both physically and psychologically. On the
days that he goes to the airport, he must work 6 am to 12 am.
The mismatch of schedules affects eating together and, when children are young,
the opportunity is lost for experiencing the ways in which parents relate to each other.
Cabdriver families are as one driver put it, “families without fathers,” de facto single
parent households. Omar says that his family doesn’t know who he is or where he is
except “when they eat together once a week.” At the same time, as Omar says, you
censor yourself when you are with family.
You’re stunned, tired, not seeing around. You don’t want to argue because your
brain is being eaten by the business. You don’t want to argue because you’re not
there.
Even when the intention is to be home for dinner, drivers may not be able to leave
work because they have a passenger in the car. For example, Edward succeeds in being
home for dinner only three times a week.
Taxi drivers are painfully aware that their hours create emotional distress for
others as well as themselves. Having to work long hours is a major culprit in personal
dissatisfaction. Most taxi drivers have little “down” time before they are on the road
again in a “long series of shifts.” One driver, asked about how he felt after working a 15
hour day, gave a one word answer – “abused”. Another chooses to drive longer hours to
cover lease payments, concluding that he feels uneasy about his relations with other
people even if “nobody says anything about it.”
Speaking of his family, Phil says, “I am not able to be there for them. I don’t get
there on time and I can’t always answer the phone [while driving a fare].” Sometimes he
asks his family to wait to do certain things and “sometimes I don’t even make it on time.”
Emotional distress is heightened because families worry about the safety of their
loved ones. Donald’s family thinks that he:
should get a job that is less dangerous and doesn’t demand so much time and pay
that is more reliable. A salary that was reliable. . .something that you can depend
on. Like the post office, when you can get paid even if there is no work.
25
Juan who knew the job was dangerous when he started – “but someone has to do
it” – says that his family knows about the dangers and is always worried:
My family usually talks to me about my job and why I have to work such long
hours and they’re always worried. But I tell them that is part of the job and that’s
all I can really say.
4. Impact on the Safety of Drivers, Passengers and Public
Anyone who has ever had to pull over at the end of 8 hours of freeway driving to
take a break can appreciate to some degree the level of exhaustion experienced by taxi
drivers who have spent 12-14 hours on the streets and freeways of Los Angeles. The
direct causal link between vehicle driver fatigue and traffic accidents is well known.
16
An extensive report on the subject suggests that:
Human fatigue is now recognised around the world as being the main cause of
accidents in the transport industry. It is increasingly being recognised as a safety
issue of the highest priority.
17
Interviewees were asked how they deal with being too tired to drive. Answers include
making more frequent stops to buy something to eat, consuming energy drinks, walking,
sleeping in the car, going home to rest, talking with other drivers, and talking with
passengers. Others read. Some play the radio but others that we interviewed are aware
that radio programs are distracting. Drivers are conscious of preventing accidents
because of concerns for passengers but also they carry no accident insurance for
themselves, and time and money that repairs require will cut into their earnings. Boulos
thinks about not getting hit when driving. “In my business, accident is big taboo.
Insurance will go up. DOT won’t let you renew your license if you have too many
accidents.”
E. Income and Economic Security
The evidence from our survey makes clear that taxi drivers work such long hours,
with such negative consequences for themselves and their families, out of economic
necessity. As a group, taxi drivers must clearly be considered among the “working
16
J.R. Dalziel & R.F. Job, Motor vehicle accidents, fatigue and optimism bias in taxi drivers,
29
ACCIDENT ANALYSES AND PREVENTION 4, 489-94 (1997); Jon K. Beaulieu, The Issues of Fatigue and
Working Time in the Road Transport Sector, Working Paper 232, International Labour Organization,
Geneva, Switzerland (2005).
17
Standing Committee on Communications, Information Technology and the Arts, Australian house of
Representatives, B
EYOND THE MIDNIGHT OIL: AN INQUIRY INTO MANAGING FATIGUE IN TRANSPORT,
available at http://www.aph.gov.au/house/committee/cita/manfatigue/mfcontents.htm (last visited
September 9, 2006).
26
poor.” For his long hours of work, the median driver earns about $8.39 per hour.
18
As
might be expected, owner/operators earn somewhat more than lease drivers, but not much
more.
19
If taxi drivers earned the current minimum wage ($6.75 per hour) but were paid
time and a half for hours over 40 hours per week, they would earn at least $2572 per
month, more than their actual median monthly earnings of $2412.
20
The City of Los
Angeles “living wage,” required to be paid to workers in some businesses doing business
with the City, is $10.64 per hour (without health insurance, an appropriate comparison,
given that no taxi company provides health insurance). Even discounting their long
hours of work, Los Angeles taxi workers earn well under the City’s “living wage.” They
earn only 59% of the $4000 per month they would earn if they were paid the “living
wage” and overtime at time and a half.
These numbers suggest that taxi drivers in Los Angeles, one of the most
expensive cities in the country, fare significantly worse than drivers in other large cities.
The median hourly wage for taxi drivers in large fleets across the United States is $10.73
per hour.
21
1. Lease Drivers
We interviewed 157 lease drivers. These drivers lease from the company (43%),
another driver who owns more than one cab (33%), or from others, such as owner
investors who do not drive (24%). Their median lease payment is $500 per week. They
drive a median 72 hours per week. As with owner/operators, they pay all the cost of fuel
themselves. Their median monthly net income from driving is $2313. The median
hourly wage of lease drivers is $8.46 per hour.
22
18
Computed from 266 responses. As indicated earlier, our intention was to ask about gross income and
about expenses separately, and then compute net income ourselves, on the theory that most people probably
have a better idea about the components of their income and expenses than they do about the net result of
arithmetic computations on income and expenses. Nevertheless, it was clear from the context supplied by
answers to other questions that some drivers interpreted a question (Question 40, Appendix A) about their
“total income” as reflecting net income rather than gross income. We reviewed the responses to other
questions on each survey to assist in making a judgment about whether the answer referred to gross income
or net income. In an abundance of caution, we also computed the results if we assumed that all responses
about “total income” referred to net income. Both assumptions may overestimate driver income to some
extent, and it is clear that the latter assumption does so. For the sake of clarity in reporting, we report the
average of the two estimates in the text and provide the range of the two estimates in footnotes. For the
median hourly wage for all drivers, the range was $7.38 - $9.40 per hour.
19
For lease drivers the median is $8.46 ($8.04 - $8.88). For owner/operators the median is $8.63 ($7.14 -
$10.11).
20
Per note 19, the two estimates averaged were $2174 and $2650.
21
Taxicab, Limousine & Paratransit Association (TLPA), Statistics on the U.S. Taxicab Industry, 2005,
reporting wages, commissions and salaries for fleets with 100 or more taxicabs.
22
Computed from the two estimates, as explained in note 6, supra. It should be noted that each of the
medians (hours worked, monthly income, hourly wage) were computed separately, in order to take account
of the differences in the hours per week worked by individual drivers.
27
2. Owner/Operators
Our survey sample included 127 owner/operators. As explained in much greater
detail below, the taxi that is driven by these drivers represents one share in a “co-
operative.” Unlike lease drivers, owner/operators are responsible for all expenses,
including their share of the expenses of the taxi “co-operative.” Most (83%, N=41)
23
of
our sample are still making payments on their cab, most (71%, N=31) to the taxi
company itself. In addition, they must pay fees to the company to cover the operations of
the company and for liability insurance that the City requires. The median amount paid
to the company is $1299 per month (N=116). Owners work the same long hours as lease
drivers, a median of 72 hours per week. They earn slightly more, with a median monthly
net income of $2500 per month, and an hourly wage of $8.63.
24
3. The Impact of Fuel Prices
All taxi drivers pay all their own fuel costs. Unlike other sectors of the
transportation industry, taxi drivers cannot pass increased fuel costs on to their
customers, because fares are strictly regulated by the City.
25
According to our
respondents, the median taxi driver in Los Angeles drives 4330 miles per month
(N=275). This is consistent with data provided by company managers in one company
with the ability to track all miles driven, who estimate 5000 miles per month. Our survey
respondents report a median mileage of 14.4 miles per gallon, almost exactly as reported
in other studies.
26
The monthly cost of fuel for the median driver (at a nominal $3.00 per
gallon) is thus about $900. The impact of fuel prices is particularly severe because of the
high ratio of “deadhead” miles (uncompensated miles traveled to pick up passengers) is
so high in Los Angeles. Only 43.6% of miles driven in Los Angeles are “paid miles”.
27
The effective “paid mileage” for Los Angeles taxi drivers is thus about 6.2 “paid miles
per gallon.”
Every dollar spent at the gas pump is a dollar not available to meet the needs of
the driver, his family, or his children. Phil, an owner/operator, understands this all too
well:
With gas prices rising we have more expenses but still get paid the same. . . .It is
difficult to live when the cost of products continue to go up and we continue to be
23
As is evident from the numbers, a good many owner/operators declined to discuss their financial
arrangements with their companies, despite the confidentiality we were able to provide.
24
The averaged estimates for owner/operators were $2224 and $2775 per month, and $7.14 and $10.11 per
hour.
25
Some relief on that front is now in process – though not yet complete -- within the City regulatory
system, as we discuss below.
26
Taxicab, Limousine & Paratransit Association (TLPA), Statistics on the U.S. Taxicab Industry, 2005
(reporting 14.28 mpg for fleets with 100+ cabs). As in Los Angeles, the most common vehicle is a Ford
Crown Victoria.
27
Computed from LADOT, Reported Taxicab Statistics for 2006 (computed for first six months of year).
28
paid what taxi drivers did a long time ago. It’s difficult to live under these
circumstances.
Rising gas costs are forcing drivers to rethink their priorities such as saving to
send children to college and retiring. Omar, driving for 25 years, was hoping to retire in
five years but realistically knows it’s not going to happen because of “the gas.” He and
his wife had set aside money for his seven year old and two other children who live with
his ex-wife. The savings are gone and he’s just concentrating on “surviving,” making up
for the loss by putting in extra hours driving. “It all goes to the gas pump! . . .We don’t
get money from the gas tank.” He worries about the consequences. “After I work 25
years, I might be homeless in a day. I might be on welfare.” He says he is financially
strapped because of the stagnant fare rate and that the trip is meant to be made on $1.20
to $1.80 for a gallon of gas, so the rest of the current price has to come out of his profits.
Simple arithmetic reveals that when fuel prices increase by one dollar per gallon
and fares do not increase, the net income of the median driver is reduced by $300 dollars
per month. For higher income commuters, this may not seem a lot, but as noted below,
recall this is a number equal to nearly one third the housing costs of taxi drivers, and
potentially enough to secure health insurance for a child.
3. Other Indicators
One check on the accuracy of the estimates above, as well as an independent
indication of the financial situation of drivers is to examine what they are able to buy. In
the next section we discuss how few drivers are able to afford health insurance for
themselves and their children. We also asked drivers about their housing circumstances.
The median rent or mortgage payment for our sample was $950 per month: 20% of
drivers report living in overcrowded conditions, as measured by the Census Bureau
indicator of needing to use rooms other than bedrooms for sleeping purposes (N=254).
The financial duress that taxi drivers face also comes out in interviews when
drivers told us about their reliance on credit cards and other forms of borrowing.
Mustafa, with a wife and children in school, has to make $1000 a week just to break even
to pay for his lease, gas, and any tickets. When he doesn’t he falls into the pattern that a
lot of people in debt do, “I charge a lot on credit cards and work in the stock market –
sometimes make money, sometimes don’t.” His wife is currently looking for a job
because the children are in school. In other cases, a wife’s income is the difference
between making it and not. Aram, now divorced, has to pay child support and barely
makes his rent in months that are slow. One driver whose wife is also working gets some
additional income from being a student; an other supplements his income from the
catering job that used be his main source of earnings.
Others borrow from friends and relatives. Khalid borrowed money from drivers
in the past; also he has lent money to other drivers. Ivan feels like a winner when he
reduces his credit debt.
29
Expectations lower when money is scarce. Juan and his family don’t go out to
eat, watch a movie, or go shopping. Phil keeps looking for more work but will also cut
out movies and buying clothes. Some eliminate recreation activities even as close as Big
Bear, both because of the time lost to make additional money and the lack of savings.
Donald finds food is the easiest to cut and pays his rent with credit card checks that he
receives in the mail. He tries to reduce his fuel cost by cutting out what he calls courtesy
trips for older people and trips that take less than 15 minutes to complete.
The value of subsidized housing is evident in Thurman’s case because he lives in
veterans housing. He is stressed because of expecting to move and anticipating higher
rent, having waited in vain for about three years to get Section 8 housing. Haddad’s
children are grown and he no longer worries about the “big burden” of their education
and now rent is his major personal expense.
Hassan feels that “Always my life is gonna be tight. I spent it and I pay it. I can’t
keep some money as my savings.” He doesn’t have credit cards because of credit issues
in the past. His wife works occasionally, helping people with errands for pay, but she
doesn’t make very much. Sherif’s life is a mirror image when he doesn’t make as much
as he expected:
I have to borrow from someone. I have done that a lot from my sisters, friends.
Right now, I owe my sister $700. Last month, I couldn’t make rent and the court
made me pay $700 ticket. I haven’t been able to pay her back yet.
His wife just started working but she doesn’t make much because she only works 15-20
hours a week. She uses that money to pay off credit card debts and with two boys, 11
and 14, needs money to buy the kids clothes. “All the expense is on me. She helps me if
I tell her, ‘no money for electricity,’ but she is not responsible for anything.”
F. Lack of Health Insurance
Most Los Angeles taxi drivers lack health insurance for themselves and their
families. In addition, unlike the situation in many other cities,
28
Los Angeles taxi
28
Twenty four percent (24%) of large fleets (100 or more cabs) in the U.S. provide workers compensation
coverage for drivers. Taxicab, Limousine & Paratransit Association (TLPA), Statistics on the U.S. Taxicab
Industry, 2005. The City of San Francisco is pioneering a Health Access Program that the San Francisco
Board of Supervisors approved in a second vote on July 25, 2006. This will provide comprehensive
medical services to about 82,000 uninsured people and will go into effect in 2007. The city also
commissioned studies specifically aimed to cover health costs of taxi drivers. See Rhonda Evans, Jabril
Bensedrine, Ken Jacobs, and Carol Zabin March 2006. “Establishing a San Francisco Taxi Driver Health
Care Coverage Program: Administration, Cost, and Funding Options,” San Francisco: City and County of
San Francisco Department of Public Health. United to Win (UTW), Communication Workers of America
(CWA) Local 9410, has been advocating for health care for taxi drivers. In 2002, the San Francisco Board
of Supervisors approved a health plan for taxi workers. On March 21, 2006, at a San Francisco Department
of Health meeting, the overview of the proposed Taxi Driver Health Coverage Plan identified 7000 taxi
drivers, most of whom are independent contractors; approximately half lack health insurance and are very
low income. The proposal seeks to fund health coverage through the San Francisco Health Plan (SFHP),
with funding from four possible industry revenue sources: drivers, medallion holders, cab companies, and
30
companies do not provide workers compensation protection for drivers, who must pay
their own medical bills if they are injured while driving. No taxi company provides
health insurance of any kind to drivers or their families. Only one third of drivers are able
to obtain health insurance for themselves through spouses or other sources. As noted
earlier, 61% of drivers have one or more children living at home. Forty-five percent
(45%) of these children have no health insurance from any source. Of those children
who are insured, the insurance is provided by taxpayers in the form of MediCal or other
government programs. Figure 3 below summarizes the sources of health insurance, if
any, for the children of Los Angeles taxi drivers.
Figure 3
Health Insurance Coverage of Taxi Drivers’ Children
Private Plan
8%
Other Adult
22%
MediCal, etc
34%
Other
5%
None
31%
the riding public. At the end of June 2006, the taxi commission agreed to form a working group composed
of five voting members, likely to be comprised of stakeholders drivers, medallion owners, companies,
tourist bureau representatives – and seven non-voting members, one of whom will be one of the authors of
the report noted above. The taxi commission has recently sent a letter out calling for nominations; it is
anticipated that the members will be selected by the end of September 2006.
31
We did not survey drivers about the consequences of lack of health care for their
children. We assume the consequences are the same as with any population: poorer
health and reduced life chances for these children. We did speak with drivers about how
they dealt with the lack of health insurance for themselves.
The lack of health insurance leads drivers to let serious health problems go
untreated and continue driving. Mustafa, a lease driver for 11 years, has never taken time
off from driving despite health problems. He cannot afford to:
I should have but I couldn’t. A lot of times, I feel back pain but I still do it,
because the first thing that comes to mind is wife and kids. I cannot collect
unemployment from my company, so I’d rather be in pain than on the streets with
my family. A lot of times I can feel my legs are getting numb from sitting all the
time.
Similarly, Khalid says:
I’m afraid to go to the hospital for check up because of money. One driver I
know has hard time going to bathroom. All of the friends ask why not go to
doctor. He says he’s afraid of having prostate cancer, and he cannot do anything.
Other day they find out he doesn’t have it but he is asked to stay overnight so they
just treat him and now he must pay thousands of dollars. Last time I had a full
check up was about 15 years ago.
James says:
I can’t afford to go to the dentist, I can’t afford to see doctors. I have no control
over my diet and exercise. In a sense, it’s a long, slow slaughter—it has to be seen
in those terms. . . .I’m on thin ice with my teeth.
Solomon had to call 911 to come to the taxi stand because he felt so dizzy one time but
he couldn’t follow up with a hospital visit to check his ear because it would have cost
him $600. Although he is aware that it is dangerous to drive, especially when he
experiences vision changes, he makes do by stopping for a while, maybe an hour, until he
regains clarity and continues to drive.
Similar to the ways in which some drivers work through their being fatigued,
those feeling ill may rely on painkillers that may also cause drowsiness. The alternative
is to take time off from the job and some drivers interviewed report that can last from a
few weeks to a few months to a year or so away from the job. Without savings or other
means of earning money, the interviews reveal that drivers think a lot about quitting but
are unable to even take short periods of time off to look after themselves.
32
G. Health Status and Health Consequences of Driving a Taxi in
Los Angeles.
Drivers were asked to rate their general health status from excellent to poor. In
general, self-assessed terms, taxi drivers report their health status as reflected in Figure 4.
Figure 4
Self-Described Health Status of Drivers (N=295)
Poor
10%
Fair
24%
Good
40%
Very Good
18%
Excellent
8%
Of course, given the lack of access of most drivers to health care, as well as
cultural and gender influences, these numbers should not be taken as reflecting the actual
health status of drivers. The generic health problems resulting from driving a cab,
especially back problems, are well known and have been reported in several studies.
29
To deal with the fact that some problems, like backaches, are common, we asked drivers
to describe only those problems that had been diagnosed by a doctor. Table 4 provides
29
See, e.g., Jiu-Chiuan Chen et al., Occupational Factors Associated with Low Back Pain in Urban Taxi
Drivers, 55 OCCUPATIONAL MEDICINE 5, 535–40 (2005); M. Anthony Machin & Jillian M. D. DeSouza,
Predicting Health Outcomes and Safety Behaviour in Taxi Drivers, paper presented at 5th Australian
Industrial & Organisational Psychology Conference, Melbourne, 26-29 June, 2003 (on file with authors).
33
the incidence of medically diagnosed health problems among Los Angeles taxi drivers
that drivers (and the medical literature) associate with driving a cab.
Table 4
Work Related Health Problems
Health Problem Drivers Reporting
Back pain severe enough to interfere with daily activities 49%
Leg problems, including swollen legs and left leg limp 40%
Shoulder pain severe enough to interfere with daily activities 30%
Eye problems 34%
High blood pressure 24%
Serious weight gain or obesity 21%
A number of these health problems are highly likely to be occupationally related.
Common sense would suggest that such long hours behind the wheel would produce back
problems. Moreover, the driver’s seats in taxicabs are not, like those in many
commercial trucks and busses, ergonomically designed. Rather, the most common
taxicab in Los Angeles is a recycled police car with a bench seat. Adit describes the
sensation:
[Taxicab front] seats are not designed so well, especially the driver’s seat. It
should be better because [you] sit there all day. It feels like when you sit in seat,
like you’re falling into a hole, and it gives you back problems.”
Studies suggest that it is not only posture but road vibrations that aggravate back
problems. The required and controversial
30
partitions between the passenger and the
driver seat further exacerbate back problems, particularly for tall drivers like Leo. He
gets some relief by pushing the partition back a little and explains: “Industry average is
17 minutes that passenger stays in the cab. I’m there 17 hours. I need to stay
comfortable.” Alex explains that the passenger and the driver suffer from the partition:
If people have long legs or tall, cannot sit straight or relax. Many [drivers]
complain of back pain because they cannot adjust the seat, and for customer, they
complain because it’s so tight. . . .People complain that they feel like they are
sitting in jail.
Assad points out that partitions “confine the space. You can’t move and even stretch
yourself, and the customer himself doesn’t feel good.”
30
In addition to back discomfort, some drivers report that partitions prevent air conditioning from reaching
the passenger. Others object to claims that the partition, also known as a safety shield, actually adds to
safety for the driver. Assad says that that drivers are told that the partition, “it’s meant for criminal, it’s
bullet proof so they don’t kill you. But I don’t think it’s safe. It doesn’t protect much.” Alex states
“Many people who want to kill the driver or rob them, they can step out of the car and kill them because we
don’t have bulletproof windows.” The partition also makes it difficult to clean when someone drops things.
34
Several drivers reported a syndrome known as “taxi driver limp.”
31
This appears
to be caused by spending so many hours of the day using the right leg (to control the
brakes and accelerator) while using the left leg very little. Back and leg problems are a
risk for taxi drivers everywhere. Shoulder pain, fourth on the list of work related health
problems, as well as back pain, can be associated with lifting baggage and awkward
movements when drivers receive fares and return change to passengers, as well as the
hours spent at the wheel in Los Angeles traffic.
32
Other problems may also be job-related. Eye problems, hypertension, and
serious weight gain or obesity may be associated with long hours, limited access to
healthy food, and job stress. Because drivers do not have routine access to ergonomic,
occupational health and safety services or workers compensation, they report their own
assessments of the causes of their problems. The National Institute of Aging reports that
studies find that bus and taxi drivers who are physically inactive have a higher rate of
heart disease than men in other occupations.
33
Boulos took exception to the interviewer skipping over his assertion that “Health
is related to business,” demanding that the public has to know. He systematically
reiterated the list of his diseases and explained their relationship to driving a cab:
The kidney disease is because I can’t go to the bathroom. Every cab driver, his
bladder is big. You can’t find so easily a place to go to the restroom. You can’t
go to a hotel or a restaurant. And if you go on the street, you’ll get a ticket.
He recalled the times that his only option was to go in the bushes near a hotel, an
embarrassing but necessary part of being a cabdriver.
34
Boulos went on. “My back,
neck and knee are from where you are sitting, from investing in the business.” He said
that his liver disease comes from stress, and his heart disease comes from “the stress and
the tension, the long hours, lots of coffee,” concluding that, “This is a prescription to die.
You see how many cab drivers are dying behind the wheel because of heart attack, stress
from the business, long hours, less time to relax.” Others referred to drivers who had
died behind the wheel from heart attacks. Ivan observes drivers’ big bellies and:
knows that some guys that drive 25-30 years [they become handicap[ped] . .
.because this job has down time, they smoke a lot, they eat a lot, so most
cab drivers are overweight and not healthy. . . .this job can kill you.
31
Diabetes came up as a reported health problem in a number of interviews. Diabetes carries with it the
risk of leg problems as well.
32
Only Edward reported asthma in the interviews, tying its onset to when he began driving. Given levels
of pollution in driving, this disease may be more prevalent than revealed in our survey.
33
Diabetes Monitor, available at http://www.diabetesmonitor.com/chapter1.htm, (last visited August 31,
2006).
34
Another driver explained that lack of access to running water may be a problem for practicing Muslims
who observe ritual prayers. In order to find water, drivers may stop for drinks as an excuse to use
bathrooms. Similarly, Omar pointed out problems about going into bars to use restrooms because of city
regulations that prevent drivers from being around alcohol while working.
35
The National Institute for Occupational Safety and Health’s (NIOSH) findings for
truck drivers bear out this observation. Like truck drivers, taxi drivers sit for long
periods, are sleep deprived, and do not have a balanced diet while on the road. NIOSH
finds that these factors predispose such workers to “obesity, cardiovascular disease,
diabetes, and other health problems.”
35
H. Job Stress
Any Los Angeles commuter has some appreciation for the stress that results from
spending one, two, even three hours each day in some of the worst traffic in the United
States. Not many can fully comprehend the effects of spending 12 hours a day, six days a
week on those same streets and highways. But Los Angeles taxi drivers face sources of
stress few other drivers encounter while driving. As noted below, more than 36% of
drivers have been subjected to racial slurs during the past year. Twenty four percent
(24%) have been physically attacked or threatened with physical harm. Thirty percent
(30%) of these attacks resulted in injuries to the driver.
In order to assess the overall job stress experienced by taxi drivers, we utilized
questions drawn from a well-known survey instrument developed for this purpose by the
Marlin Company and Harris Interactive in annual polling studies.
36
In these studies
responses can be tabulated to rank job stress from “low” to “severe” to “extremely
severe.” The interpretation given to “severe” levels of stress is “able to cope but life at
work can be miserable.” “Extremely severe” stress is considered potentially dangerous.
As Figure 5 indicates, more than half of the taxi drivers in Los Angeles can be judged to
be experiencing either severe or extremely severe stress.
35
NIOSH Program Portfolio, available at http://www.cdc.gov/niosh/programs/twu/economics.html, (last
visited August 31, 2006).
36
See, e.g. Barsade S, Wiesenfeld B, The Marlin Company [1997]. Attitudes in the American workplace
III. New Haven, CT: Yale University School of Management. See also, National Institute for Occupational
Safety and Health, Stress at Work, available at http://www.cdc.gov/niosh/stresswk.html.
36
Figure 5
Job Stress Levels Experienced by L.A. Taxi Drivers
(Percent of Drivers)
Low
8%
Farily Low
16%
Moderate
24%
Severe
23%
Extremely
Severe
29%
The particular responses to the standard job stress assessment instrument provide
some insight into the causes for these very high levels of stress. Table 5 reports the
tabulated responses of our sample.
37
Table 5
Job Stress Conditions Reported by L.A. Taxi Drivers
Never Rarely Sometimes Often Very
Often
Percent Reporting
Work Is Unpleasant Or
Unsafe
7 8 41 21 23
Work Negatively
Affects Physical And
Emotional Well-Being
13 8 28 23 29
Too Much Work Or
Time Pressure
12 9 24 24 30
Difficult To Express
Opinions About
Conditions
26 8 23 20 23
Work Interferes
With Personal Life
18 7 21 27 27
Inadequate Control
Over Work Duties
27 16 21 17 19
No Appropriate
Recognition For Work
32 10 20 12 27
Unable To Use Skills
At Work
23 10 22 18 27
Job stress is directly related to physical health. A recent survey by University of
California at Irvine (UCI) researchers establishes the links between work and poor health
for about 24,500 Californian workers in 2001. Recall that taxi drivers work a median 72
hours per week. The UCI study reports workers who “clocked more than 51 hours in the
job were 29% more likely to have diagnosed high blood pressure.” Clerical workers
were 23% more likely to have higher rates of diagnosed hypertension; unskilled workers
were 50% more likely. Other studies of Asian and European workers link long work
hours to heart disease, sudden heart attack, high blood pressure, and depression.
Our in-depth interviews provided a sometimes troubling account of the kinds of
stress taxi drivers face in Los Angeles. Drivers sometimes broke down and cried with
our interviewers as they described the frustrations of their work. Boulos believes there is
always a sense of being scared, getting shot, robbed, having an accident. “Sometimes on
the freeway, I hope that nothing is going to happen, because when you drive 13 hours a
day, with people they way they drive—plus gangs and drunks.” He hopes that his
customers don’t carry guns, argue with him. He says about a hypothetical customer, “I
manage him, take him where he goes.” Juan “is scared sometimes because you never
know what could happen on the road or what a person could do. They have robbed me
and used a knife on me and sometimes they just don’t pay.” Edward does not like driving
because he fears being the victim of a robbery or a violent crime like so many of his
38
colleagues. Sherif believes that as many as 70% to 80% of drivers don’t want to work at
night because they “don’t want to be shot, robbed, because no idea about the person in
your car – their past.”
The International Transport Workers’ Federation (ITWF) has a campaign
organized around “Fatigue Kills.” A working paper by Jon K. Beaulieu for the
International Labour Office finds that taxi drivers generally are as vulnerable to fatigue as
are long haul truck drivers:
[Taxi drivers] often start work the following day without sufficient recovery from
the previous day’s fatigue. A study on taxi drivers reported that driver time-on-
the-road is often considerable: 67 per cent of those surveyed drove at least 50
hours per week, yet time off in long shifts (up to 12 hours) was often short (as low
as three minutes, with an average of 37 minutes).
37
Accidents are only part of the worry. Fatigue “can also impair a driver’s
ability to handle violence in the work environment, an issue of growing concern.”
In addition to physical violence, drivers – particularly those of apparent Middle
Eastern descent – face abuse from passengers and others since 9/11. More than a third of
all drivers reported being the target of racial slurs. Table 6 reports the experiences of
drivers with racial epithets and physical attacks.
Table 6
Physical Assaults and Racial Slurs
(N=290)
Drivers’ Experience with Assaults and Racism in Past Year
Subjected to racial slurs or hostile comments about the driver’s race or
apparent country of origin
36.5%
Median number of incidents in past year for those reporting (n=70) 4
Drivers physically attacked or threatened with physical harm 24%
Adit faced discrimination before 9/11 because of his long beard and turban. Of
the more recent period, he says:
There is discrimination on the road – people yelling about different races, where
you are from – with Afghanistan problem and now Iraq. There is supposed to be
protection by law but nobody care. In the police forces there is problem[s] too.
They don’t care if you complain. They always wait till something happens to act.
37
Jon K. Beaulieu, The Issues of Fatigue and WorkingTime in the Road Transport Sector, Working Paper
232, International Labour Organization, Geneva, Switzerland (2005).
39
Passengers are not the only source of abuse reported by workers. A surprising
number of drivers report abuse and lack of fair treatment by regulators. As indicated in
Table 7 below, a significant majority of drivers believe they are seriously mistreated by
LADOT, LAPD and by ATS, with nearly two thirds expressing that view regarding
LADOT.
In addition, although the city now prohibits taxi companies from paying for
exclusive arrangements with hotels and other venues, most taxi drivers complain of being
extorted by hotel doormen in order to obtain better fares. Interestingly, these issues are
rated as more serious problems even than being subjected to racial slurs and insults.
Table 7 summarizes the top 5 complaints rated by drivers as being “serious” and “very
serious” in their experience.
Table 7
Problems Rated by Drivers as “Serious” or “Very Serious”
(N=274-280)
Problem or Complaint
Percent
Rating
Serious or
Very
Serious
Having To Pay Hotel Doormen To Pick Up Fares 68.6%
Drivers Not Treated Fairly By DOT 63.2%
Dress Code Interferes With Personal Freedom 53.6%
Drivers Not Treated Fairly By ATS 52.9%
Drivers Not Treated Fairly By LAPD 50.7%
Being Subjected To Racial Slurs And Insults 39.7%
Khalid describes the chain of events in a hotel queue:
[A] bellman calls drivers and gets tips and call his favorite drivers. And they say
you should not tip the bellman. But if you don’t, he doesn’t give you business.
The situation in front of hotels is absolutely not fair. Drivers who know bellman
and tip good have best business at hotels. Drivers complain to DOT and even
though their job, they don’t do anything.
Adit echoes this complaint about the queuing system in front of hotels:
The City of LA opened hotels to every cab company but still some individuals,
they don’t care what city requires. They do not wait in line. And every time we
argue with them [hotel bellmen] they ask for a paper. . . .At certain hotels they
don’t care. They ask for papers and refuse us. And in San Fernando Valley,
especially Universal hotels. Only allow United and City cabs to pick up. To
40
provide for equality of service, it should be open to everybody. They should have
a line system.
Assad, a lease driver for two years sums up the general grievance:
Taxi driver has hardly any rights, no respect. The doormen don’t respect us, and
when we complain, nobody accepts our complaints. When someone complaining
about us, we get punished—doesn’t matter if true or not. Taxi companies treat
drivers very badly. DOT treat us very badly. And ATS treat us very badly. As I
told you, there is no protection. Nobody fights for taxi drivers. So on every
situation we are victims. I don’t like this.
Taking other drivers’ points-of-view under consideration, the complaints appear
systemic. Juan feels that the LADOT and the LAPD, as well as the taxi companies, cheat
and take advantage of drivers. Solomon has a similar criticism about ATS: “If the
customer tells a story, they believe them but not ours.” Other times, actions seem
idiosyncratic. Adit thinks that the DOT takes the attitude that, “If you’re working a day
not your airport day and go to taxi zone to use the restroom they say not your day and
can’t eat at food truck.” Khalid complains that LADOT harasses drivers about small
things a lot such as the uniforms. For example, “This one driver had white dots on his
[black] tie, so he got cited. These are childish citations.” Echoing this sentiment, Adit
zeroes in on seemingly contradictory priorities:
One day they are considering us an independent driver. They give us ID. People
see this and we are taxi driver. Now all together same uniform. Socks, pants.
And now that it’s summertime, no time for some time. But we wear tie while
lifting heavy bags. Get in the way on airport days. Why [does the] City wants to
see us in uniform? Why don’t we have any choice? So inconvenient. We need to
ask the City to make sure we provide quality of service, not have to wear uniform.
It’s a problem if they don’t have taxi driver ID. But uniform not big problem.
In the interviews, the City comes in for its share of complaints. Alex says the
“City’s not willing to give insurance, pension plan, or whatever. We work for the city,
give them the money, follow their rules. At the same time, they don’t give us anything.”
In fact, because cabs are commercial vehicles, drivers receive tickets if they park on
residential streets. Adit worries:
The taxi needs to be in the City. We need to park in safe space so our equipment
doesn’t get stolen. Taxi should be allowed on residential street. These are not big
loading/unloading trucks or busses. The taxi is passenger ship. Needs to be by
people.
Aram thinks Los Angeles “is the stupidest city in the world, the way the taxi
industry works.” He cannot pick people up in a certain area and people get mad and he
cannot do anything. This issue is discussed further in later sections of the report.
41
G. Interaction of Long Hours, Low Income, Poor Health, and Job
Stress
It is not easy to separate out all the aggravating factors contributing to the difficult
life of the average taxi driver in Los Angeles. Some results from the broken dreams of
immigrants. Boulos says:
It’s too late to have a dream. I’m 41 years old. Not that I’m really old. But my
dream is to see my kids grow, get an education, more respectable job that’s easier,
better, with more income.
Others feel like outcasts from anyone except taxi drivers with whom they share common
experiences. When asked who the driver saw as his community, more responded that it
was only their family, that they didn’t have time for anyone else. The drivers who are
single describe frequently isolated lives, too tired to go out to see friends or needing to
work on car repairs, or simply busy working. Billy just wants a quiet space at home and
avoids going out and seeing friends.
Mustafa wouldn’t choose to drive a cab again because “it is not a life for a human
being. . . It’s not healthy to be in such a small space even for 10 hours a day. As far as
the cab driver in this City, everyone looks down on us.”
Not surprising, not one driver interviewed who had children, wants them to drive
a taxi. Taxi workers are continuously brokering between time and family, time and sleep,
and time and paying bills.
Others are dispirited by what they see as corruption about which they can do
nothing. One owner/operator reflected that, “In all companies, [there is] lots of
corruption.” Omar believes, even though he cannot prove it, that taxi dispatchers treat
drivers differently:
There is lots of good business that I don’t get for two, three weeks. I can’t prove
it, but I know they’re doing something. They sell orders sometimes. Some
drivers give dispatchers money and ask for favors.
Drivers also report feeling powerlessness and fearful about taking action. Edward
explains: “It is difficult to establish solidarity with other cab drivers because the cab
companies will stop drivers from organizing. If anyone leads such efforts, he will likely
get canned.”
Other drivers have mixed views about how best to do anything about their
situation. For example, Mustafa says, “I wish to have a union in this business so we have
something to fall back on, so no one will take advantage of us.” Khalid, a lease driver,
agrees that a union would make his job better because it could win benefits such as health
insurance and worker’s compensation. But he sees the City, i.e. LADOT, as being
against unionizing all drivers:
42
I don’t know why they are afraid of us. But that must be politics. Drivers have
tried to organize unions but they don’t have support from city. Eight different cab
companies—maybe they would support union, but I don’t think DOT. Members
would pay dues and union would get retirement benefits, health benefits, workers
comp for their workers.
James doesn’t think a taxi cab union is his “mode of resistance” but thinks there should
be a way to unite drivers. A writer, he proposes:
something like a newsletter or publication that’s supported by businesses, so they
[drivers] can create their own relationships so they [start] their own lives and
vocational future. . . .Show them how to build up their own clientele. I didn’t do
this when I started because I didn’t know how to find someone, create a
relationship with them, and create a relationship with other drivers, have a system
where they’ll pass on client calls to others if they’re already doing a run, and that
this was how a lot of them made their money.
Drivers should have an opportunity “to start sharing stuff that works for you with others
so that it’s not such a secret and that management has all the control.” He believes that
the more information that you have, the more you can overcome the powers that be, such
as management and the city officials and say to them, “This is what I need, and you’re
gonna have to cope with it.” James thinks a newsletter could let cab drivers know what
businesses were ok to go to and which ones weren’t. “It will say where you can go to get
your auto fixed, that they will maintain certain standards with you.” He said that he
would even put the newsletter in the back of the cab so that customers would have this
information. “Not only would it reveal to them their work conditions, but it would also
help them to overcome misconceptions, like to let them know when a cab doesn’t show
up it’s not always the driver’s fault.”
James is actually a very disillusioned lease driver. Asked whether he thought he
would be driving a taxi for three years when he first took the job, he talks about the
“terrifying process” of living on diminishing savings as he tries to continue writing.
James went into the taxi industry without a clue about it and believes that he is “just
picking up” an understanding:
They [the company] don’t help you at all. I’m always able to pay the lease on
time, but god help me…There are a lot of games that companies will play with
drivers that owe them money. They will become the noose around your neck, and
they’ll tighten and loosen it, tighten and loosen it.
He continues: “It undermines the integrity of the human being.” Another driver expressed
similar thoughts in saying that his dignity was being undermined. James contends that
companies are able to buy out the city government and “those creatures that work for the
DOT and up.” He said, “I don’t have a problem with taxi cab starters themselves, but
once you get up to the next level.”
43
All the foregoing problems are aggravated for many drivers by what they see as
the social stigma attached to driving a cab. Edward feels that his wife and kids are
embarrassed about what he does for a living, although they have never discussed the
subject. He regrets that he can’t afford to quit and must continue driving. As a result of
what he believes is shame attached to cab driving, even trivial tasks become burdensome.
For example, in order to take his wife grocery shopping, he must go home first and
switch cars because his wife does not like going anywhere in the cab since she is
embarrassed. Edward doesn’t tell his friends what he does.
Omar takes pride in driving but lives with the knowledge that his children don’t
feel the same way:
Both of my kids are ashamed to tell their friends that their dad is a taxi driver.
Anytime they need a ride, I have to take them in another car. Before, they didn’t
have this problem. As a matter of fact, I’m trying to sell my car right now and get
out of this business. I will try another business.
Leo recalled the time he drove his son to a birthday party and he said, “’Dad, I don’t want
to be seen in your taxi.’ I didn’t like that but kids at that age are cruel sometimes. I
understand. I had to drop him off a block before.”
For drivers like Mustafa, the poignancy is compounded. He holds a professional
degree from in his words “a third world country” and his degree is no good in the United
States. “My kids, they don’t think highly of driving a cab. They are ashamed to ride the
cab because everybody thinks low of a cab driver, even though most cab drivers are
highly educated. I have an engineering degree.”
Two drivers spoke about their ethnic communities and the low regard for taxi
driving. Ivan said:
Yes, well sure, most of my friends think that I am just losing my time and instead
of doing something you know, because, there is an opinion in like Russian, in our
community, whatever you do is better than driving a cab….anything….in our
community it’s ok if you don’t speak English or if you have some other
disadvantages, but if you can speak English and you drive a cab people think you
are stupid or lazy…that’s how to be a cab driver in Russian community.
Speaking about the Iranian community, Sherif remarked:
Iranians try to be friends with people of a better class. Taxi is low class in every
country. That’s why you don’t see Americans driving taxis. Mostly foreigners
because they’re not from here, so they don’t care. The only ones you see are old
and don’t care. Cab driving doesn’t have good social image so no one wants to
have relations with you. If I get another job, more people will want to be family
friends with me.
44
Similar to renters who bankers treat as second class citizens because of their lack
of equity, taxi drivers face awkward situations. Hassan gives an example of this:
I went to go buy car. Dealership asked me, how much do I make a month.
$3,000-$4,000 net. Do you have paycheck stub? I give my company’s
information to finance company and they call. But they answer. He only drive
for our company for two years and he pay lease $500 a week. This is major issue.
Nobody approve you.
H. Pride and Resilience
Notwithstanding all the foregoing, drivers often report a sense of pride in their
work and the service they provide. Omar refers to taxi work this way:
We are a public service so I feel like part of larger community. Out-of-town
lawyers have to get to court to defend cases. We give them rides so they can do
that. We facilitate people’s activities and lives, make it easier for them.
Even when he is exhausted, pride surfaces. Omar said, “I’m a professional. When the
meter is running, it’s like you gave me the strongest coffee.”
Sherif asserts that “I am a cab driver, I’m not someone driving a cab. I’m not just
driving.” Comparing himself to the chauffeur in the movie and stage play Driving Miss.
Daisy, he pulled out his Blackberry during the interview to show the hundreds of
numbers he keeps in there, his loyal customers. He explains:
I have customers for years and years. I have customers that pay me double,
instead of $60 or $70, they will pay me $110 or $120. These are the customers I
have, this is the service I give . . .I’m doing something they appreciate it.
He explains that the customers in the list are his “extra customers” since he can’t just
survive on daily fares alone.
Leo approaches taxi driving strategically and was able to move from being a lease
driver to owning, purchasing an extra cab for a good price with a business partner after
9/11. He selects hours to drive when fewer drivers are on the road and locations where
less competition exists, as in Westwood and Brentwood. He focuses because:
Driving in LA is like a chess game. You have to think 2-3 cars ahead. Woman
driving while talking on the cell phone, driver who is eating – you find a better
position on the road.
His recommendations for navigating the taxi industry are:
45
Learn the business. Know what you’re doing behind the wheel and it will get
better. And no matter what you do, do it well. If you’re gonna drive a taxi, still
be a human being. Keep your cab clean. It’s sad seeing cab drivers who want to
save a dollar or two and don’t turn on their air-conditioner. The passenger
suffers. When I run the air-conditioner all day, I make more money. People pay
more.
Haddad, an owner who has been driving for 19 years, expresses pride in his
knowledge when he is critical of customers getting into his cab with printouts from
www.mapquest.com. This “is annoying because it’s for people who don’t know their
way. . . it’s meant for people from out-of-town.” Haddad describes the situation as one
where people will bring these sheets and think they know more than him about how to get
around.
IV. THE TAXI BUSINESS FROM THE TOP DOWN:
TAXICABS IN THE ECONOMIC AND REGULATORY
SYSTEM
A. The Place of Taxicabs in Los Angeles Transportation Planning
Despite their importance to key segments of the public – from tourists and
business travelers to the City’s disabled poor and elderly – taxicabs are virtually ignored
in the transportation planning of the City of Los Angeles. The state-mandated
Transportation Element of the City’s General Plan never addresses taxis directly, but only
mentions them in passing on other topics.
38
In contrast to other cities, Los Angeles
appears to treat taxicabs as a nuisance to be regulated, rather than an essential component
of a multimodal transit system. As we discuss below, this attitude is most recently
illustrated in the reluctance of City transit planners to support a “hail cab” system even in
downtown Los Angeles – leaving subject to citation the cab driver who responds to the
familiar outstretched arm of a passenger seeking only to get on his or her way.
While our focus is primarily on the circumstances of taxi drivers and the nature of
the taxi industry that may account for those circumstances, it is important for the City to
recognize that a healthy taxi industry with competent, healthy taxi drivers working a
tolerable number of hours each week can be an important supplement to the City’s other
efforts to improve its much maligned traffic and transit system. This is especially so
given the added emphasis that planners are giving to support in-fill development with
increased density that encourage walking neighborhoods.
38
The full Transportation Element is available at http://cityplanning.lacity.org/ (last visited August 31,
2006). It mentions the provision of financial support to students and seniors so that they can use taxis,
among many other possible modes; improving the multi-modal function of transit centers to facilitate
transfers from one mode to another; and “transit friendly site design, where appropriate” to facilitate “smart
shuttles and taxi queuing.
46
Gail Goldberg, the new Director of the Los Angeles Department of City Planning,
raises questions about transforming neighborhoods into places where many daily needs
can take place – e.g., access to dry cleaners, doctors, nearby schools, variety of housing
types, etc. Transformation, she says, cannot occur at the same time as accommodating
the “current rate of car ownership, that’s about 675,000 cars.”
39
This would require “37
square miles of parking.” The simultaneous maturation of neighborhood councils signals
potential for Los Angeles to pioneer new ideas about taxis and their regulation that may
further neighborhood planning for the 21
st
century.
In the conventional view, Los Angeles is not a “taxi town” because of its sprawl.
In fact, however, Los Angeles is no longer the sprawl capital of the United States. Parts
of the city – downtown, Hollywood, Ventura Boulevard -- are among the densest in the
country. Still, Los Angeles has the lowest ratio of taxi and limousine drivers at 0.9 to
1,000 population for a large metropolitan area compared to 4.6 for New York City, 3.0
for Las Vegas, 1.6 for Washington, D.C., 1.4 for Boston, 1.3 for San Francisco, and 1.2
for Chicago
40
. By these accounts, Los Angeles is not a “taxi town” although one study
estimates LA’s combined taxi and limousine driver population of 7,700 ranks with all the
other large metropolitan areas listed above except New York City and Las Vegas. Of
course New York and Las Vegas are unique cities and Los Angeles’ potential “trip
density” is unlikely to equal that of midtown Manhattan or the Las Vegas Strip. But
neither are taxis as irrelevant to our transportation planning as our transportation planners
seem to have assumed for many years. As one industry insider put it: “In Los Angeles
taxis are not seen as a transportation resource, but a nuisance to be regulated.” In the
next section, we examine that system of regulation.
B. The Regulatory System
California assigns to each city the responsibility of regulating the taxicab industry
within its borders in order to “protect the public health, safety, and welfare”.
41
At a
minimum, each city (or county, for unincorporated areas) must adopt ordinances or
resolutions that establish a policy for entry into the taxicab business and taxicab rates.
42
In Los Angeles, each taxicab franchise is contained in a separate ordinance, enacted by
the City Council and signed by the Mayor. Not coincidentally, perhaps, taxicab
companies and their principals have long constituted one of the largest sources of
political campaign contributions in the City. When it comes to taxicabs, there is no
regional planning or regulation of taxicabs, despite the fact that taxicabs obviously transit
across many city boundaries in the course of their travels. Taxi drivers are permitted to
deliver passengers to any jurisdiction, but they can legally pick up passengers in a city
only under the authority of a permit issued by that city. Each city has separate regulatory
schemes and the issuing of franchises in each city is accompanied by substantial lobbying
39
Unhealthy by Design? Not if Cities Plan Liveable, Dense, Walkable Neighborhoods (June 2006),
available at http://www.planningreport.com/tpr/?module=displaystory&story_id=1174&format=html (last
visited August 31, 2006).
40
BRUCE SCHALLER, THE CHANGING FACE OF TAXI AND LIMOUSINE DRIVERS: U.S., LARGE STATES AND
METRO AREAS AND NEW YORK CITY (2004).
41
CAL. GOVT CODE § 53075.5(a) (Deering 2006). In unincorporated areas of counties, the respective
county has jurisdiction.
42
CAL. GOVT CODE § 53075.5(b) (Deering 2006).
47
effort and campaign contributions by taxi companies. We leave to a later section of this
report some of the negative consequences that flow from this arrangement, itself the
product of state law.
1. The Award of Taxi Franchises, Politics and Campaign
Contributions
Taxicabs are considered a public utility in the City of Los Angeles.
43
Taxicab
franchises are awarded by the City Council and Mayor by ordinance. The monitoring
and enforcement of the requirements of franchise ordinances is delegated to the Board of
Taxicab Commissioners and the Los Angeles Department of Transportation. The Mayor
and City Council, respectively, appoint and confirm the members of the Board of Taxicab
Commissioners, which is staffed by LADOT, under the overall supervision of the
General Manager of LADOT.
It is thus not surprising to observers of Los Angeles municipal politics that the
taxi industry is among the largest source of political campaign contributions to members
of the City Council. The Los Angeles Times reported that in 2000 (the last year new
franchises were awarded), taxicab companies paid lobbyists $288,000 in that year and
made nearly $40,000 in contributions to council and mayoral candidates between 1998
and 2000. This did not count the $34,000 contributed by the industry to the unsuccessful
state Assembly race of former City Council Transportation Committee chair Rudy
Svorinich.
44
We conducted our own non-exhaustive review of campaign contributions to
council and mayoral candidates by major figures in the taxi industry (executives, board
members, lobbyists) from 1998 to the present. We did not include donations from
spouses or domestic partners of most of these individuals. We identified a total of
$199,573 in such donations, most often to mayoral candidates or members of the
Council’s Transportation Committee. By far the largest single donor ($23,450) was Scott
Schaffer, former secretary and director of San Gabriel Transit/City Cab, who is as of this
writing is awaiting sentencing on federal criminal charges unrelated to the taxi industry.
We were also told, but could not confirm, that some taxi industry interests had
made very large political contributions by laundering campaign contributions through
donations from individual taxi drivers and their owners, who were then reimbursed by
their companies either directly or by reductions of payments due the company. We did
not confirm this allegation, but do note that the current system of reporting campaign
contributions would make it difficult, albeit not impossible, to detect the laundering of
campaign funds through the coordination of smaller donations. The City might run the
database of campaign contributions against the list of licensed taxicab drivers (and others
residing at the same addresses), but to our knowledge no one in the City has ever done
43
LOS ANGELES, CAL., ADMINISTRATIVE CODE § 22.484(g)(2)(B)(1)(ii) (2000). [Old City Charter art. XX,
§ 212 (pre-2000)].
44
Tina Daunt, Taxi Firms Spend a Lot on Lobbying, L.A. TIMES, Nov. 29, 2000, at B1.
48
this. Beyond this observation, we draw no conclusions from these facts that observers of
the City’s political culture have long noted.
a. Awarding the Franchises by Ordinance
Since 2000, the City of Los Angeles has been “the only large metropolitan area in
the United States to use a franchising system to regulate taxis” but, as in other
jurisdictions, most drivers are independent contractors.
45
Currently nine taxicab
franchises (i.e. taxicab companies) in Los Angeles operate 2303 taxis.
46
In order to
operate a taxicab in Los Angeles, one must have a franchise agreement with the City and
each specific vehicle is required to be separately permitted by the Taxicab Commission.
47
Although the City Council makes decisions regarding the granting of franchises or any
other action that affects an existing franchise, all franchise applications are first sent to
the Board of Taxicab Commissioners for review and recommendation.
48
The Taxicab
Commission must investigate applications and report to the City Council with its
opinion.
49
Practically speaking, this duty is then passed along to LADOT.
50
Prior to 2000 there was no uniform system of taxicab franchise contracts. Each
company had a different agreement with the City with differing terms that tended to
correlate to the lobbying efforts of each company.
51
In 2000 there was a push to create a
uniform system. The Taxicab Commission determined how many taxicabs were needed
for Los Angeles and divided the city into five geographical zones. Taxicab franchises
then bid on the zones and for an allotted number of taxicabs to operate in each zone.
52
The Taxicab Commission awarded franchises based on scoring criteria: 35% quality and
feasibility of management business plan; 25% company experience; 20% management
and administrative experience; 15% character qualifications; and 5% company
identification, structure and organizational procedures.
53
The new franchise agreements went into effect in January 2001 and are still in
effect today. Under the current agreements L.A. Taxi Co-Operative controls the most
taxicabs, more than two and a half times as many as any other company and more than
45
Nelson/Nygaard Consulting Associates, “Making Taxi Service Work in San Francisco, Appendix E,
Regulating Outcomes, Not Inputs,” p. 3.
46
City of Los Angeles Taxi Services, http://www.taxicabsla.org (last visited Apr. 25, 2006).
47
LOS ANGELES MUNICIPAL CODE § 71.02(b) (2001).
48
LOS ANGELES ADMINISTRATIVE CODE § 12(a) (2000).
49
LOS ANGELES ADMINISTRATIVE CODE § 12(b) (2000).
50
See Memorandum from Thomas M. Drischler to Board of Taxicab Commissioners, “Recommendation to
award franchises for the operation of taxicab transportation services in all service zones of the city of Los
Angeles,” (Oct. 19, 2000).
51
Interview with Thomas M. Drischler, Taxicab Administrator, Board of Taxicab Commissioners of the
City of Los Angeles, Los Angeles (Apr. 13, 2006).
52
Id.
53
Memorandum from Thomas M. Drischler to Board of Taxicab Commissioners, “Recommendation to
award franchises for the operation of taxicab transportation services in all service zones of the city of Los
Angeles,” page 6, (Oct. 19, 2000).
49
ten times as many as the smallest company.
54
Of the nine franchised companies, eight
are structured as co-operatives of owner-operators or owner-investors. However, only
40% of the active drivers are owner-operators, the other 60% lease their cabs from either
the company or another driver.
55
One company, City Cab, is owned by a single operator
who leases all taxicabs to drivers. City Cab was also the only new company to be granted
a franchise agreement in 2000.
56
2. Administration of the Franchises: Overview
Although the Board of Transportation Commissioners
57
(Transportation
Commission) has powers and duties over nearly all other privately-owned public utilities
in Los Angeles, taxicab utilities are placed under the jurisdiction of the Board of Taxicab
Commissioners (Taxicab Commission).
58
Prior to 1999, taxicab utilities fell under the
Transportation Commission, but as it consumed a disproportionate amount of the
Commission’s time, the City decided to make a separate department to focus entirely on
the taxicab industry.
59
The General Manager of the Los Angeles Department of
Transportation has general authority over the regulation of the privately-owned public
utilities,
60
and both the Transportation Commission and the Taxicab Commission have an
advisory relationship to her.
61
(1). Board of Taxicab Commissioners
Notwithstanding its advisory capacity, the Taxicab Commission has authority and
the duty to investigate all taxicab companies in Los Angeles, and to compile information
to determine proper services and charges.
62
The Taxicab Commission has the right to
54
Id. at 2-3. L.A. Taxi Co-Operative, Inc. (dba Yellow Cab and Fiesta Taxi) is authorized to operate 739
taxicabs; United Independent Taxi Drivers Inc. (dba United Independent Taxi) is 289; Los Angeles
Checker Cab Company, Inc. (dba Checker Cab Co.) is 269; Bell Cab Company, Inc. (dba Bell Cab) is 261;
Independent Taxi Owners’ Association (dba Independent Taxi Company) is 246; San Gabriel Transit, Inc.
(dba City Cab) is 166; Beverly Hills Transit Co-operative (dba Beverly Hills Cab Company) is 163; United
Independent Taxi Drivers, Inc. (dba United Taxi of San Fernando Valley) is 100; South Bay Co-Operative,
Inc. (dba United Checker Cab Company) is 70.
55
Interview with Thomas M. Drischler, Taxicab Administrator, Board of Taxicab Commissioners of the
City of Los Angeles, Los Angeles (Apr. 13, 2006).
56
Id.
57
The Board of Transportation Commissioners is the successor to the Board of Traffic Commissioners, the
Board of Public Utilities and Transportation, and the Board of Parking Commissioners. L
OS ANGELES
ADMINISTRATIVE CODE § 22.484(a) (2000).
58
LOS ANGELES ADMINISTRATIVE CODE § 22.484(g)(2) (2000). See also LOS ANGELES ADMINISTRATIVE
CODE § 13.2 (2000).
59
Interview with Thomas M. Drischler, Taxicab Administrator, Board of Taxicab Commissioners of the
City of Los Angeles, Los Angeles(Apr. 13, 2006).Interview with Joseph Czyzyk, President, Board of
Taxicab Commissioners of the City of Los Angeles, Los Angeles, (April 13,2006).
60
LOS ANGELES ADMINISTRATIVE CODE § 22.483(a)(7) (2000).
61
LOS ANGELES ADMINISTRATIVE CODE § 22.484(g)(1) (2000); LOS ANGELES ADMINISTRATIVE CODE §
22.488(g)(1) (2000). The current General Manager is Gloria Jeff, former Director of the Michigan
Transportation Department.
62
LOS ANGELES ADMINISTRATIVE CODE § 22.488(g)(2)(A) (2000).
50
access “at all reasonable times” the “property and records of the utilities for the purpose
of investigation” and can also require reports from the companies.
63
The Taxicab
Commission is charged with establishing regulations “for the operation of, the extent,
character and quality of service, the rates to be charged by and the extensions to be
required of, any of those taxicab utilities. . . .”
64
Any proposed regulation must follow
certain public notice and comment procedures and any resolution fixing rates must be
approved by the City Council.
65
Other statutory duties of the Taxicab Commission
include: investigating complaints against the taxicab companies;
66
inspecting the taxicab
companies for compliance with their franchises, city and state laws, and general service,
and enforcing compliance;
67
and keeping a record of all public taxicab utility franchises
granted by the City.
68
(2). LADOT and the Taxicab Administrator
Like other city commissions, the Taxicab Commission is required to hold a
meeting at least once a month that is open to the public.
69
Tom Drischler, the Taxicab
Administrator for the LADOT, serves as the Executive Director to the Taxicab
Commission.
70
Drischler supervises engineers and other taxicab-related staff at the
LADOT.
71
LADOT administrative staff is responsible for issuing permits to taxicab
drivers.
72
The investigative staff inspects taxicabs and drivers for compliance with state
and local rules and issues citations.
73
The Taxicab Administrator and the Senior Transportation Engineer have the
power, authority, and immunity of a public officer to make arrests without a warrant for
infractions committed in their presence.
74
The Chief Transportation Investigators, Senior
Transportation Investigators and Transportation have the immunity, authority, and
powers of arrest of a peace officer to enforce any state law or city ordinance falling under
the LADOT’s jurisdiction.
75
All of the above also have the authority to issue citations for
offenses falling under LADOT’s jurisdiction and to subject the offender to administrative
hearings and penalties.
76
They each also have the authority to obtain state and local
criminal history information.
77
LADOT and the Taxicab Commission use this authority
63
Id.
64
LOS ANGELES ADMINISTRATIVE CODE § 22.488(g)(2)(B) (2000).
65
Id.
66
LOS ANGELES ADMINISTRATIVE CODE § 22.488(g)(2)(C) (2000).
67
LOS ANGELES ADMINISTRATIVE CODE § 22.488(g)(2)(D) (2000).
68
LOS ANGELES ADMINISTRATIVE CODE § 22.488(g)(2)(E) (2000).
69
LOS ANGELES ADMINISTRATIVE CODE § 22.488(e)(2) (2000).
70
Interview with Thomas M. Drischler, Taxicab Administrator, Board of Taxicab Commissioners of the
City of Los Angeles, Los Angeles, (Apr. 13, 2006).
71
Id.
72
Id.
73
Id.
74
LOS ANGELES MUNICIPAL CODE § 71.01.1(a) (2001).
75
LOS ANGELES MUNICIPAL CODE § 71.01.1(b) (2001).
76
LOS ANGELES MUNICIPAL CODE § 71.01.1(c) (2001).
77
LOS ANGELES MUNICIPAL CODE § 71.01.2 (2001).
51
when granting (or denying) permits to drivers and affirming (or denying) membership to
a taxicab coop board.
78
(3) City Involvement with the Franchisees
The franchise agreements provide the City with the means to regulate and control
the industry. Companies (franchises) are required to submit a variety of paperwork to the
Taxicab Commission including: a current list of members, employees, and lessees along
with each person’s current address at the beginning of each month;
79
and an annual
Management/Business Plan which is required to be approved by the Taxicab Commission
and must include the company’s organizational structure and procedures;
management/administrative structure and procedures; financial status and related
information; programs and activities for driver training, testing, supervision and social
benefits; and record keeping among other things.
80
The Taxicab Commission is even
more involved in the companies that are structured as membership organizations (i.e. the
eight co-operatives). Membership organizations are required to elect a Board of
Directors and officers and to submit the names of the directors and officers to the Taxicab
Commission for approval.
81
Membership organizations are also required to submit their
bylaws to the Taxicab Commission for review and approval.
82
Additionally, the City
imposes certain restrictions on the makeup of the membership of the co-operative
organizations and limits members to owning a maximum of five percent of the total
taxicabs in the franchise.
83
The Taxicab Commission may suspend a taxicab franchise for noncompliance
with franchise terms, Board rules and order, Department directives, or the State Vehicle
Code; or when the holder of a majority interest illegally conducts any type of public
transportation operation (this can result in suspension of one or more fleet vehicles and/or
suspension of the right to pick up at certain taxicab stands and at Los Angeles
International Airport (LAX)).
84
Any suspension that lasts for 30 days or more or that
exceeds an aggregate of 30 days in a 12-month period may be appealed to the City
Council.
85
In addition to suspension of a franchise, the Taxicab Commission can give
monetary penalties for violations.
86
Pursuant to this authority, the Board must set a
schedule of penalties, a procedure for assessing them, and an appeal procedure.
87
Any
penalty assessment exceeding $30,000 is subject to appeal to the City Council
78
Interview with Thomas M. Drischler, Taxicab Administrator, Board of Taxicab Commissioners of the
City of Los Angeles, Los Angeles (Apr. 13, 2006).
79
§ 204 Taxicab Rules and Regulations of the Board of Taxicab Commissioners, City of Los Angeles (May
1999). See also Sample Franchise Agreement § 4.2(f) p12.
80
Sample Franchise Agreement § 4.2(h) p12-13.
81
Sample Franchise Agreement § 6 (b), p28; Interview with Thomas M. Drischler, Taxicab Administrator,
Board of Taxicab Commissioners of the City of Los Angeles, Los Angeles (Apr. 13, 2006).
82
Sample Franchise Agreement § 6 (c), p28.
83
Sample Franchise Agreement § 6.2, p29.
84
LOS ANGELES MUNICIPAL CODE § 71.02.1(a) (2001).
85
LOS ANGELES MUNICIPAL CODE § 71.02.1(b) (2001).
86
LOS ANGELES MUNICIPAL CODE § 71.02.2(a) (2000).
87
LOS ANGELES MUNICIPAL CODE § 71.02.2(b) (2000).
52
3. Areas of Regulation Under the Franchise Ordinances
The franchise ordinances give the City the power to extensively regulate the taxi
companies, both in terms of service delivery standards and, to some extent, their internal
operations.
1. Service Delivery
Franchisees are required to dedicate a specific percentage of their fleet to specific
“Primary Service Areas,” which are comprised of one or more of the five geographically
defined “Service Zones” in the City.
88
Each company is also required to deliver to
LADOT on a monthly basis very detailed data regarding the delivery of taxi services,
including 100% of service order and response data and summaries of data regarding
response times.
89
These service delivery data are utilized in deciding whether to extend
or award a taxi franchise. In addition, the fee paid by the franchisees to the City is
determined, in part, by the level of service delivered by the franchisee, as measured by a
Service Factor computed by a rather complicated formula set forth in the Taxicab Rules
adopted by the Board of Taxicab Commissioners.
90
A substantial part of the work of the Taxi Commission and Administrator is
devoted to monitoring the performance of the franchised companies in delivering service
to the public, as they are directed to do in each franchise ordinance. The Taxicab
Commission has developed and occasionally modified both a set of “Taxicab Operator
Performance Review and Evaluation Criteria” and a Taxicab Service Index (TSI) scoring
guideline that results in the computation of an overall score for each company on a 115
point scale. For example, the TSIs computed for companies for 2004 ranged from a low
of 30 (City Cab) to 110 (Bell Cab).
91
The TSI is computed based on data on taxicab
company performance in the following areas:
92
Taxicab Service On-Time Response in Primary Service Area
Telephonic Phone Service Response Time
Telephonic Phone Service - Hold Time
Number of Complaints Received Through the City
Number of Driver and Operator Violations Assessed
Magnitude of Driver and Operator Violations Assessed
Vehicle Inspection - Inspections Failed on First Attempt
Payment (to City) Timeliness - Number of Late Payment Incidents.
88
Form Ordinance supplied by Taxi Administrator Tom Drischler (hereafter “Form Ordinance”), Section
4.1(a).
89
Form Ordinance, Section 4.5
90
LOS ANGELES MUNICIPAL CODE § LAMC 71.05(b)(5) and Taxicab Rules, § 800.
91
Data supplied by LADOT (TaxicabSvc index scoring 2004)
92
Board Order No. 021 Amending Board Order No. 013; Final Resolution of The Board Of Taxicab
Commissioners of the City Of Los Angeles (Aug. 29, 2002).
53
Although collection of data for all these variables would seem an immense task, it
is rendered much easier because all of the taxi companies utilize digital dispatch systems
that produce data files that can be delivered to LADOT for analysis. In addition,
according to LADOT, they conduct spot tests to determine whether the data being
delivered by the companies accurately reflect events in the field.
2. Drivers and record keeping
The City (through the Taxicab Commission and LADOT) also regulates companies
and drivers in a multitude of other areas, including:
the dress of drivers (black dress pants, white dress shirt, black tie, black shoes
with socks)
93
the age and mileage of taxicabs
94
the keeping of records of shifts, trips and fares, including detailed waybills, by
drivers and companies
95
the licensing and qualifications of drivers.
96
3. Operation of Co-operatives
The City regulates the internal operations of those taxicab companies (8 out of 9) that
are associations or co-operatives. Under the terms of the Form Ordinance,
Driver/Manager members of these organizations are not allowed to control and manage
more than three taxicabs.
97
In addition, for example, these organizations are required to:
supply the home mailing addresses of all members on a quarterly basis
98
have any new member provide detailed information to LADOT
99
notify LADOT when any member transfers stock in a Subchapter S
corporation that is a permittee.
100
4. Financial and operational regulation
Under the terms of the franchise ordinance, the companies must submit annually a
Management/Business Plan for how the company plans to carry out its obligations.
101
The plan must include, at least, the following:
93
Taxicab Rules, Rule 212.
94
Taxicab Rules, Rules 401, 447, 448.
95
Taxicab Rules, Rules 312-321.
96
Taxicab Rules, Rule 600.
97
Form Ordinance, 6.2(d).
98
Taxicab Rules, Rule 530.
99
Taxicab Rules, Rule 559.
100
Taxicab Rules, Rule 584.
101
Form Ordinance, § 4.2 says this Plan will be used, “as the basis for evaluating the capability of the
Grantee to provide taxicab operations and service in accordance with the service demands of the public and
standards of the City.”
54
Grantee Organizational Structure and Procedures;
Management/Administrative Structure and Procedures;
Financial Status and Related Information;
Dispatch and Communications - Description of Facilities, Personnel and
Technology;
Operating Location(s), Storage/Parking of Vehicles, Maintenance and
Inspection - Description of Facilities and Personnel;
Programs and Activities for Driver Training, Testing, Supervision and Social
Benefits;
Vehicle Maintenance and Inspection;
Procedures for Maintaining Service Levels, Programs for Addressing Service
Deficiencies;
Service/Operation Procedures for Discipline, Driver Evaluation, Complaint
Processing and Accident/Safety Control;
Special Programs, Agreements and Services;
Record Keeping;
Grantee’s Plan Evaluation & Response to Changes or Additions.
Finally, franchisees are required to post a bond for the term of the franchise
102
and
maintain “a policy of insurance or a program of self-insurance” covering all their
taxicabs
103
and to provide evidence of such insurance or self-insurance program with
LADOT.
104
5. Enforcement of regulations regarding franchisees
A serious violation of a franchise agreement is grounds for termination of the
franchise, although this has not happened in many years. A more common, though still
unusual, consequence of violations is monetary penalties, on the following schedule:
Up to $10,000 for the first offense.
Up to $25,000 for the second offense within a 12-month period.
Up to a maximum of $50,000 for third and subsequent offenses within subsequent
12-month periods.
4. City Regulation of Service to LAX through ATS
According to virtually every person with whom we spoke, serving passengers at
LAX provide a very large proportion of the total fares earned by drivers and companies.
Each taxicab franchised in the City is given one of five stickers (A through E), and can
pick up passengers at the airport only every fifth day. Regulation of taxi service at LAX
102
Form Ordinance § 5.2.
103
LOS ANGELES MUNICIPAL CODE § 71.14, Form Ordinance Section 4.7(a)
104
Form Ordinance § 4.7(c)
55
is structured similarly to the Taxicab Commission system. The Department of Airports
was established by the Los Angeles City Charter and is managed and controlled by the
Board of Airport Commissioners (Airport Commission).
105
As is commonly known,
LAX is also serviced by shuttles (like SuperShuttle), limousines, and more recently Los
Angeles World Airport’s own FlyAway Bus.
106
Taxicabs serving LAX are closely regulated by the Department of Airports (aka
LAWA). Until 1991, LAWA contracted with a private company, Taxicab Management,
Inc. operated and solely owned by Behzad Biteraf.
107
Following an extensive, but
inconclusive, police investigation of illegal campaign contributions and kickbacks by
Taxicab Management, Inc. in 1991, taxi operations at LAX were contracted to a nonprofit
organization, Authorized Taxicab Supervision, Inc. (ATS.). ATS was incorporated by
Biteraf himself in March 1991.
108
The board of ATS is comprised of representatives of
each of the franchised taxicab companies allowed to serve LAX. Biteraf remains the
General Manager of ATS, which operates as a tax-exempt corporation, with a budget of
over $3.5 million in 2004, almost all of which comes from the $2.50 surcharge paid by
passengers departing LAX in a taxi.
109
Along with the Airport Police, ATS is charged
with enforcing the rules of the Airport Commission and LADOT, and managing the
taxicab holding lot at LAX. ATS has the power to impose penalties on the taxicab
drivers and has established hearing procedures with an appeals process to the Airport
Commission.
110
In recent months, there have been several controversies regarding the operation by
ATS of the holding lot and the treatment of drivers by both Airport Police and ATS
employees. We did not conduct any separate investigation of these controversies and
express no opinion regarding them. One informant, however, who had previously been a
member of the ATS board of directors, made certain allegations regarding the operation
of ATS that bear further investigation. As noted above, ATS is a nonprofit corporation,
the board of directors of which is entirely composed of representatives of taxicab
companies and still operated on a day to day basis by the same gentleman who previously
operated the enterprise. This informant told us that members of the ATS board were paid
$500 per meeting and that the meetings were generally held at expensive restaurants, with
the tab picked up by ATS. Given that some of the recent controversies between drivers
and ATS management relate to whether ATS can afford to provide additional shade,
better drinking fountains, and cleaner restrooms, these allegations merit further
investigation. We did not so investigate, other than to obtain the federal IRS filing of
ATS (the Form 990 required to be filed by tax exempt organizations). The 2005 filing
105
LOS ANGELES ADMINISTRATIVE CODE § 23.1 (2000).
FlyAway Service Between Los Angeles’ Union Station and LAX, http://www.lawa.org/flyAwayInfo2.cfm
(last visited August 30, 2006).
106
http://www.lawa.org/flyAwayInfo2.cfm
107
Rich Connell, Cerrell’s Records Seized as Taxi Inquiry Widens Lobbyist, L.A. TIMES, Apr. 26, 1991, at
B1.
108
Articles of Incorporation, Authorized Taxicab Supervision, Inc, (March 11, 1991).
109
IRS Form 990 filed by ATS on Oct. 24, 2005, available at www.guidestar.org.
110
Id.
56
with IRS shows that the nonprofit ATS had $880,000 in fund balances at the end of
2005.
111
C. Enforcement of Laws and Regulations Regarding
“Bandit Cabs” and “Town Cars” and Limousines Operating
Illegally
In addition to regulating those taxi companies that operate legally and pay the
City for a permit to operate, the City is also charged with regulating illegal competition
that would otherwise render the franchises meaningless. This competition comes in
several forms, chiefly “bandit” cabs
112
and limousines or “town cars” operating illegally.
There are several forms of “bandit” cabs: (1) taxicabs authorized by the City to operate
in certain zones but that operate outside their licensed zones; (2) taxicabs legally
permitted to operate in other jurisdictions (e.g., Santa Monica), who pick up passengers
in Los Angeles without a permit; (3) taxicabs that lack permits to operate from any
jurisdiction but that appear to unsophisticated passengers to be legitimate taxicabs,
bearing trade dress and insignia that mimic licensed taxicabs; and (4) individuals driving
private cars that do not mimic taxicabs but who transport passengers for hire. The last
two categories of “bandits” are both generally thought more numerous and more
dangerous to the public. These completely illegal “bandit” cabs must pass no inspection
and may be completely uninsured. “Bandit” drivers may be bad drivers with a history of
serious traffic violations or worse, since they must pass no background check.
It is not difficult to spot bandit cabs; indeed, one can spend an hour on some street
corners in parts of Los Angeles and expect to see several plying their trade. Limousines
and “town cars” operating illegally in direct competition with franchised taxicabs are
more difficult to separate from those complying with the law and the regulations issued
by the state Public Utilities Commission, which has jurisdiction over limousines, shuttles,
buses and most carriers other than taxicabs. Public Utilities Code Section 5360.5
requires limousines to operate on a “prearranged basis,” meaning that “the transportation
of the prospective passenger was arranged with the carrier by the passenger, or a
representative of the passenger, either by written contract or telephone.” Further, a
limousine service or other “charter-party carrier” is forbidden to:
advertise its services, or in any manner represent its services, as being a taxicab or
taxi service. For the purposes of this section, "advertise" includes any business
card, stationery, brochure, flyer, circular, newsletter, fax form, printed or
published paid advertisement in any media form, or telephone book listing.
113
Thus, the line between taxicabs and limousines is, in theory, clear. The problem is that
the line is very poorly policed by regulators.
111
Id.
112
In other cities, illegal taxicabs are sometimes called “gypsy” cabs, to the dismay of members of the
Roma culture.
113
Public Utilities Code § 5386.5.
57
In 2002, the PUC instituted rulemaking in response to complaints from taxi
operators and city officials:
Taxi operators complain that carriers are conducting taxicab or taxicab-like
services under the guise of charter party operations. Activities complained of
include providing service on short notice or in immediate response to telephone
calls, conducting transportation that is predominately one-way and of short
duration, obtaining customers by waiting at hotels, picking up passengers who
hail the driver, advertising in a manner that suggests taxicab service, failing to
prepare waybills, operating vehicles that bear a resemblance to taxicabs, and
charging flat rates instead of on a time and/or mileage basis.
. . .
City officials complain that carriers engaged in these activities undermine
their taxicab regulatory programs. These programs vary from city to city. In
addition to liability insurance requirements, they may include limits on the
number of franchises granted, licensing of individual drivers (which could entail
a criminal background check), fare regulation, vehicle maintenance and
appearance requirements, and service standards.
114
The PUC apparently dismissed this rulemaking in 2003, but was directed by the
legislature in 2004 to examine the same issues.
115
The PUC required limousine drivers to
possess a “waybill” that must include, among other things, the name and address of the
person requesting the service, the time and date the service was requested, and the points
of origin and destination
116
and ordered drivers to show the waybill to, among others, any
city official authorized to inspect waybills if the city imposes “reasonable rules for the
inspection of waybills. . . for purposes of verifying valid prearranged travel.”
117
Apparently, the City has never taken exercised this authority and issued any such
“reasonable rules.”
118
Nevertheless, many drivers, company officials and City regulators told us that
limousines and “town cars” continue to operate illegally beyond the scope of
“prearranged” travel, in direct competition with franchised taxicabs. What matters are
not only the rules, but how (or whether) the rules are enforced. The PUC itself appears
to look into illicit limousine operation only in adjudicating formal complaints --
essentially requiring the complainant to conduct administrative litigation in order to see
that the PUC’s own rules are enforced.
119
Limousine drivers effectively operating as
114
Order Instituting Rulemaking on the Commission’s Own Motion, Rulemaking 02-08-002, filed August
8, 2002, at 3-4.
115
AB 2591, Chapter 603, Statutes of 2004, adding Section 5381.5 to the Public Utilities Code: “The
commission shall, by rule or other appropriate procedure, ensure that every charter-party carrier of
passengers operates on a prearranged basis within the state, consistent with Section 5360.5.”
116
PUC General Order 157-D, effective February 24, 2005, Section 3.01.
117
Id., and Public Utilities Code Section 5371.4(h).
118
Response of Alex Cameron, LADOT, to request under the California Public Records Act, August 31,
2006.
119
See, e.g., Opinion Partially Granting Complaint, Gorgee Enterprises, Inc., et al, vs. Aram Davtyan, and
individual dba Americas Dream Limousine Service, Case 01-01-008, filed January 3, 2001 and Presiding
58
taxicabs are guilty of a misdemeanor
120
and a LADOT Investigator is authorized to make
and arrest “whenever he or she has reasonable cause to believe that the person to be
arrested has committed a misdemeanor or an infraction in his or her presence.”
121
Given the scale of the problem of both bandit cabs and illegally operating
limousines, the enforcement staff of LADOT is woefully inadequate. A force of only six
(6) LADOT investigators and one supervisor is charged with policing both bandit cabs
and illegal limousines across the 466 square miles of the City. Although these
investigators are authorized to effectuate arrests, they are unarmed and are not permitted
to make traffic stops. A bandit driver approached by a LADOT investigator can simply
drive away, without fear of being pursued.
Among drivers interviewed for this study who concur are those who bitterly
resent the City’s failure to address the problem of bandit cabs. Khalid stopped a cab that
had the same number, same logo, same everything as his taxi, parked in front of a strip
club on Hollywood Boulevard:
I got out to talk to the driver and I found out that it was a “gypsy” cab. I didn’t
approach it, I just left. It was dangerous. Most bandit cabs are dangerous. They
carry weapons. If something happened, it would be possible for someone to call
me and blame it on me. But this is not my job. It’s DOT’s job.
He finds that limousines and town cars are the same as “gypsy” cabs, and the City
doesn’t do anything about the issue. “Drivers complain to DOT and they don’t do
anything.” Mustafa, for one, points out that some laws exist but are not enforced. He
says that the City takes dues from taxi drivers every year and tells them that they will use
part of the dues to fight bandit cabs, but this is not happening. He is licensed in L.A. He
says:
If I picks up in other cities, I he will go to jail and pay $3,000. But in Hollywood
and LA, cops sit in their cars and bandit cabs will put up right in front of them and
they do nothing. Often times, bandit cabs have hot meters that overcharge. Then
they not only rip other cab drivers off but also the customers.
The City is on the verge of a new effort to address the “bandit” taxi problem,
funded by a monthly fee to drivers, passed along to passengers at the rate of an additional
20 cents per mile. Under the terms an arrangement between LADOT and LAPD, LAPD
will provide approximately 130 8-hour shifts of uniformed officers, with their police
cruisers, to assist in policing bandit cabs and illegal limousines. Not only will these
officers be authorized and equipped to make traffic stops, the fact that they are drawn
from a much larger pool of personnel means that they will be able to conduct undercover
Officer’s Decision, San Gabriel Transit, Inc., v. Titan Capital Corp, dba Valley Cab & Valley
Transportation, et al, Case No 01-10-012, filed October 10, 2001. Both cases involved alleged illicit
limousine operations in Burbank, Glendale and Pasadena, and in the later case, Los Angeles.
120
LOS ANGELES MUNICIPAL CODE § 71.02(c)
121
LOS ANGELES MUNICIPAL CODE § 71.01.1(a)-(b)
59
“sting” operations of various kinds. How effective this new effort will be remains to be
seen. As we detail below, however, illegal taxicab competition is currently a serious drag
on driver income, as well as dangerous to the public. And, as one company owner told
us, unless the City controls bandits, it is not really delivering on its end of the franchise
bargain.
V. THE TAXI BUSINESS FROM THE TOP DOWN:
The “Co-operative” in the Los Angeles Taxicab Business
One cannot really understand either the current structure of the taxicab business in
Los Angeles or some of the issues of concern to today’s taxi drivers and owners without
knowing something about how the Los Angeles taxi business came to be dominated by
organizations that either are, or claim to be, “co-operatives.” We do not purport to
provide anything like a comprehensive history here. Rather, we explain how the current
systems of City regulation and of the organization of taxi companies into "co-operatives"
came about, and the historical context for current suspicions of corruption – well founded
or not -- in the taxi business.
A. C. Arnholt Smith, the Las Vegas Connection and the Repeated
Collapse of Yellow Cab of Los Angeles
From 1935 until 1973, the Yellow Cab Company had a legal monopoly on the
most lucrative taxi business in Los Angeles: the central area of the city and service to the
airport.
122
By the 1970’s, Yellow Cab in Los Angeles and several other cities had
become part of the Westgate conglomerate controlled by C. Arnholt Smith of San Diego,
a principal backer of the presidential ambitions of Richard Nixon. In 1970, San Diego
Mayor Frank Curran and most of the San Diego City Council was convicted of taking
bribes from Smith’s Yellow Cab.
123
The resulting investigation probed connections
between Smith and John Allessio, a Los Vegas gambler with reputed connections to the
Mafia.
124
By 1970, Smith’s Yellow Cab had acquired about 75% of the taxi business in
Los Angeles. The remaining companies included Wilmington Cab Company, controlled
by the Rouse family of Long Beach that would later come to control the Yellow Cab
franchise in Los Angeles.
125
C. Arnholt Smith’s empire, including Yellow Cab, collapsed in a massive scandal
in 1973, involving the collapse of his U.S. National Bank, political corruption, and
122
Erwin Baker, Council Moves to Expand City Taxi Service, L.A. TIMES, May 22, 1974, at C8; Mike
Goodman, Yellow Cab Agrees to Accept City Competition, L.A. TIMES, Nov. 9, 1973, at D1.
123
Maria L. La Ganga & Tony Perry, Its Ego Bruised, San Diego Asks: ‘What Next?, L.A. TIMES, Apr. 29,
2005, at A1.
124
Don Bauder, Sleaze Saga, SAN DIEGO READER, Sept. 4, 2003, available at
http://www.sandiegoreader.com.
125
Eric Malnic, City Council Gets Taxi Competition Proposals, L.A. TIMES, Apr. 3, 1970, at B1.
60
allegations of ties between Smith and the Las Vegas mob.
126
Smith was later convicted
of embezzlement and tax fraud and sentenced to prison.
127
In December 1976, Yellow
Cab in Los Angeles was shut down because of insurance problems, themselves possibly
the result of Smith’s Westgate insurance companies siphoning money from his taxi
operations. Whatever the cause both passengers and drivers were left in the lurch.
128
Here the story temporarily diverges. One consequence of the collapse of Yellow Cab
was to create an opening for the emergence of two co-operative organizations of taxi-
owner/operators, United Independent and ITOA, as we detail below. Yellow Cab itself
survived. It did not, however, fall into the most capable or reputable of hands.
Eugene Maday was a Las Vegas gambler who, like C. Arnholt Smith, had reputed
connections to the Las Vegas mob. In the 1970's a former Los Angeles Teamsters
official , Homer L. (Dutch) Woxberg -- who had been Jimmy Hoffa’s key spokesman on
the west coast -- bought a unionized Las Vegas taxi company with money from the
Teamsters' notorious Central States Pension Fund.
129
Woxberg sold that company to
Maday,
130
owner of a reputed Mafia-connected Las Vegas casino, Little Caesars.
131
Maday quickly got rid of Teamster's representation for Las Vegas drivers. In 1977,
Maday also made a bet in at the bankruptcy auction in San Diego, paying $500,000 for
the C. Arnholt Smith’s Los Angeles Yellow Cab franchise and rolling stock.
132
Despite
the union’s problems with Maday in Las Vegas, the Teamsters helped Maday lobby the
Los Angeles City Council to approve Maday’s application for a franchise under the
Yellow Cab banner in Los Angeles. Maday promised to recognize the union in Los
Angeles and provide fair wages and benefits for drivers.
133
By 1981, however, Maday claimed he was losing money and demanded deep cuts
in the wages of taxi drivers, who were then making about $150 per week, and the
elimination of their health insurance. In February 1981, the drivers struck.
134
The City,
which had promised to allow Maday to raise fares, voted not to award Maday a new
franchise unless he settled with his workers.
135
Maday refused and sued, losing in the
lower courts, but eventually prevailing in the United States Supreme Court, which held in
1985 that the City had intruded into the federally preempted area of labor regulation. The
Court found in a second case in 1989 that Maday and his Golden State Transit
Corporation were entitled to damages from the City. The City settled with Maday in
126
Al Delugach, C. Arnholt Smith: Troubles Are Far From Over, L.A. TIMES, Oct. 31, 1973, at D8; Denny
Walsh, Banker Friend of Nixon is Target of U.S. Inquiry,
N.Y. TIMES, Sept. 10, 1973, at 1.
127
’Mr. San Diego’ Sentenced to Prison, MIAMI HERALD, Oct. 11, 1984, at 6A.
128
West Coast Is Hit By Shortage of Taxis As Insurance Expires, WALL ST. J., Dec. 2, 1976, at 20.
129
Gene Blake & Jack Tobin, Teamsters Funds Finance Taxi Deal, L.A. TIMES, May 16, 1962, at 2.
130
Harry Bernstein, Attempting to Help the Working Poor, L.A. TIMES, Jan. 21, 1992, at D3.
131
Deanna DeMatteo, Little Caesars, available at http://www.dicedealer.com/your_stories.htm.
132
Margaret A. Kilgore, SBA, Bank Offer Loans to Cabbies, L.A. TIMES, June 2, 1977, at F13.
133
Bernstein, supra note 90.
134
David G. Savage, L.A. Loses Taxi Case In High Court Law, L.A. TIMES, Dec. 6, 1989, at B1; Teamsters
Union Calls Strike of L.A. Yellow Cab Drivers, L.A.
TIMES, Feb. 12, 1981, at OC_A12.,
135
Savage, supra note 94.
61
1992, agreeing to pay $12.75 million in damages, interest and attorney's fees.
136
While
his $500,000 bet had paid off handsomely, Maday died of a heart attack in 1994.
137
In the meantime, the Yellow Cab franchise changed hands twice before being
acquired in 1997 by a company controlled by a principal protagonist in our story,
Mitchell Rouse. How Rouse came to acquire Yellow Cab and to transform it into a “co-
operative” in 1998 while still maintaining economic control is another story, detailed
below. This transformation to a “co-operative” would not have been possible, however,
were it not for the organizing efforts of employee drivers who lost their livelihoods
during the shutdown of Yellow Cab and virtually all taxi service in Los Angeles in 1976-
1977, as mentioned above. The drivers who weathered the shutdown of Yellow Cab for
seven months, in conjunction with the Los Angeles City Council, created the business
form that still dominates the structure of the industry in Los Angeles, at least on paper:
the owner/operator co-operative.
B. Emergence of the Co-operative Form in 1977: UITD and ITOA
In November, 1976, Los Angeles Yellow Cab (then owned by C. Arnholt Smith’s
Westgate California) shut down, ostensibly because it could not pay insurance premiums.
Many believed that the shutdown occurred because of Smith’s own self-dealing, in which
the insurance companies controlled by Westgate charged excessive premiums to the
Yellow Cab franchises controlled by Westgate, in order to move money from one part of
the corporation to another.
138
Whatever the cause of the collapse of Yellow Cab, they
also refused to pay the checks owed to Yellow Cab’s drivers for the preceding two
weeks. David Shapiro, who had been a driver intermittently with Yellow Cab since 1959
but who also was much involved in Democratic Party politics and political campaigns,
took the lead in developing a proposal for a taxi company structured as a co-operative of
individual entrepreneurs, taxi owner/drivers. The co-operative would manage the
required common activities like dispatch, and bargain collectively for services like
insurance to reduce costs. Another group of former Yellow Cab drivers also lobbied for a
change in the law to permit such co-operatives of independent owner/drivers.
139
Taxi co-operatives were not a new phenomenon in 1976, but they were new to
Los Angeles.
140
In April, 1977, the City Council approved an ordinance allowing for
136
Penelope McMillan, City Settles Yellow Cab Suit for $12.75 Million, L.A. TIMES, Jan. 8, 1992, at B1.
137
Eugene Maday: Casino Owner, 66, N.Y. TIMES, Aug. 12, 1994, at A21.
138
Interview with David Shapiro, founder and first President, United Independent Taxi Drivers, Inc., Los
Angeles, California (May 31, 2006).
139
Interview with Jerome Schnitzer, one of founders, Independent Taxi Drivers Association, Los Angeles
(June 26, 2006). The reasons there were two co-operatives rather than one are somewhat unclear. At least
in the perception of some, the founders of UITD were suspicious of the Teamsters connections of some of
the founders of ITOA, although none of the founders of ITOA apparently held any significant Teamsters
office.
140
The Boston Independent Taxi Operators Association (also known as ITOA), was formed in 1924, also to
challenge the dominance of the major taxi fleets. RAYMOND RUSSELL, SHARING OWNERSHIP IN THE
WORKPLACE 108 (1985).
62
individual ownership and operation of taxicabs for the first time in 42 years.
141
And on
June 16, 1977, six months after the collapse of Yellow Cab, the City Council broke the
Yellow Cab monopoly, granting franchises to operate across Los Angeles to two new
associations of drivers, United Independent Taxi Drivers (UITD), the co-operative of
independent drivers led by Shapiro, and another co-operative, the Independent Taxi
Drivers Association (ITOA), organized by another group of former Westgate Yellow Cab
drivers. At the same time, the City Council moved the Yellow Cab franchise to another
operator, Golden State Transit Corp, owned by the Las Vegas gambler Eugene Maday, as
noted above.
142
Both UITD and ITOA were organized as nonprofit corporations with a co-
operative structure. Each was incorporated in June, 1977 as a tax-exempt, nonprofit
corporation.
143
By the summer of 1978, the City Council had authorized Yellow Cab to
operate 302 taxis and UITD and ITOA 176 taxis each.
144
The vision of both co-
operatives, as expressed in their founding documents, was clear: The people who drove
the cabs would own the company. ITOA’s articles stated its purpose to be “a master
association of independent taxicab drivers and taxicab owner-operators that will operate a
dispatch service for its members.”
145
UITD’s founding “specific and primary purpose”
was to:
operate as a business league for members of the taxi driving trade who are
independent driver-owners of taxicabs, providing a radio dispatch system and
other services directed to the improvement of business conditions of the taxi
driving business and advancing the interests of the community at large.
146
In the case of both co-operatives, the initial notion of an association of driver-owners was
later changed by amendments of the corporate bylaws to allow “investor/owners” or
“investor/shareholders” (who did not themselves drive, but who could lease their taxicabs
to other drivers. Scholars of co-operative ownership systems refer to the process through
which a true co-operative of workers evolves to have one class of owners and another of
workers without an interest in the co-operative as “degeneration.”
147
In the case of UITD
and ITOA, the process of “degeneration” occurred rather early on.
148
Within a few years, eight of the nine taxi companies holding franchises in the City
of Los Angeles either were, or claimed to be, co-operatives of independent taxi owners or
141
Erwin Baker, Owner-Driven Cabs Get Green Light From Council, L.A. TIMES, Apr. 14, 1977, at C1.
142
Erwin Baker, Cab Competition OKd by Council, L.A. TIMES, June 17, 1977, at C1.
143
Articles of Incorporation of ITOA, filed April 22, 1977. Articles of Incorporation of UITD, filed June
27, 1977. The founding documents of both co-operatives set out their status as nonprofit co-operatives.
The articles of UITD claimed tax exempt status under Section 501(c)(6) of the Internal Revenue Code,
pertaining to “business leagues.” The ITOA articles referred only to its nonprofit status.
144
Independents Making Inroads in Taxi Battle, L.A. TIMES, July 9, 1978, at WS1.
145
ITOA Articles of Incorporation, April 22, 1977, paragraph II(a).
146
UITD Articles of Incorporation, June 27, 1997, paragraph II(a).
147
Raymond Russell, Sharing Ownership in the Workplace 109-11 (1985.),
148
By early 1980, the selling of memberships in the co-operatives to non-drivers was very common.
R
AYMOND RUSSELL, SHARING OWNERSHIP IN THE WORKPLACE 122-23 (1985).
63
drivers. United Taxi of San Fernando Valley is a dba of UITD.
149
Los Angeles Checker
Cab Co., Inc. was incorporated in 1984
150
as an ordinary corporation but was transformed
through new articles of incorporation in 2001 into the L.A. Checker Cab Co-operative,
Inc.
151
Beverly Hills Cab Company was incorporated as Beverly Hills Transit Co-
operative, a small co-operative with only 51 shares, in 1988.
152
The movement toward the co-operative form – a seemingly liberal, progressive
combination of collaboration and entrepreneurship that began in 1977 was a powerful
one. Bell Cab Company was incorporated in 1985, though as an ordinary corporation
authorized to issue 100,000 shares rather than a co-operative.
153
Although the City has
issued franchises to the “Bell Cab Co-operative,”
154
the records of the Secretary of State
do not indicate that any such legal entity exists.
155
In 1987, when Bell Cab Company
heavily and successfully lobbied the City Council to enter the Los Angeles market -- as
the Bell Cab Co-operative
156
-- the lobbyist for L.A. Taxi, former City Attorney Burt
Pines, "complained that the city was so eager to stimulate cabbie-owned co-operatives
that it did not force Bell to undergo the stiff financial and operational scrutiny required of
previously licensed companies."
157
These lessons were not lost on any of the taxi companies. Only City Cab neither
is, nor purports to be, a co-operative. Rather, it is a dba of San Gabriel Transit, Inc.,
formerly San Gabriel Valley Cab Company, owned by Timmy Mardrossian and, until
recently at least, Scott Schaffer.
158
The remaining franchisees – United Checker Cab and
Yellow Cab are also co-operatives
159
and are, indeed, part of a “co-operative of co-
operatives” – the Administrative Services Co-operative -- founded and controlled by the
Rouse family. United Checker Cab was formerly the d.b.a of the Rouse family’s
Wilmington Cab Company,
160
and is currently the dba of the South Bay Co-operative,
149
Board Report to LADOT 10/19/2000.
150
Articles of Incorporation, Los Angeles Checker Cab Co., Inc, March 30, 1984).
151
Articles of Incorporation of L.A. Checker Cab Co-operative, Inc, filed November 5, 2001. Also filed
with the articles was a letter from Yevgeny Smolyar, President of L.A. Checker Cab Company, authoring
the attorney for both, Neal Evans, indicating “he is our attorney and we want this new name.” Letter of
Yevgeny Smolyar to Secretary of State dated October 10, 2001.
152
Articles of Incorporation of Beverly Hills Transit Co-operative, Inc., filed January 13, 1988.
153
Bell Cab Company, Inc. Articles of Incorporation filed September 26, 1985.
154
Ordinance 170069, signed by the Acting Mayor on October 12, 1994; Ordinance 172733, signed by the
Mayor on July 30, 1999; Ordinance 173114, signed by the Acting Mayor on March 1, 2000; Ordinance
173412, signed by the Mayor on July 26, 2000.
155
On line searches of Secretary of State records as of June 23, 2006.
156
Cab Firm Gets Green Light, L.A. TIMES, Oct. 28, 1987, at 2.
157
Bill Boyarsky, Woo Drops Opposition to More Cabs, L.A. TIMES, Oct. 20, 1987, at 8.
158
Los Angeles City Cab Company, Inc. was incorporated on May 9, 1977, and awarded a franchise in
1980 by Ordinance 154930, signed by the Mayor on February 19, 1981. Schaffer was arrested last year
amid allegations that he traded guns to the notorious Vineland Boyz street gang for narcotics. Kevin
Uhrich & Joe Piasecki, Drugs, Guns, and a City in Crisis, L.A.
CITY BEAT, JULY 21, 2005, available at
http://www.lacitybeat.com/article.php?id=2361&IssueNum=111 (last visited Sept. 13, 2006).
159
Some companies prefer to call themselves “associations”—a distinction without a practical difference as
far as we can tell from the law and operation of such entities.
160
See, e.g., Ordinance 155325, signed by the Mayor on June 1, 1981
64
Inc.,
161
which was incorporated in 1992 by Mitchell Rouse as “U.C.C. – South Bay Co-
operative”
162
How the largest franchise, Yellow Cab (actually L.A. Taxi, Inc, dba
Yellow Cab) became a co-operative is detailed below, as is the failure of the co-operative
form to live up to promise it held for its progressive promoters in 1977.
C. The Los Angeles Olympics and LA Taxi Company
In 1984, anticipating the Summer Olympics and "[f]aced with growing complaints
about unsafe taxis, price gouging and trip refusals, the city granted a franchise to Mitchell
S. Rouse and the Cincinnati-based ATE Management Co. in an effort to shake up the taxi
industry in Los Angeles."
163
On May 15, 1984, the City Council granted a new franchise
to Rouse’s Private Sector Systems and ATE Management to operate L.A. Taxi.
164
According to newspaper reports at the time, the new "LA Taxi" invested $4.1 million in
new cars, put its drivers in uniforms, and promised to end price-gouging and discourteous
service. Rouse, the prime mover in this drama, had started SuperShuttle in Los Angeles
the year before.
165
As with the drivers for Yellow Cab in Los Angeles, the drivers for
L.A. Taxi were employees
166
who received the protections of wage and hour laws,
worker’s compensation, and the like.
By the summer of 1985, however, Rouse claimed that LA Taxi was “in dire
financial straits”.
167
Stories at the time did not report that some of LA Taxi's problems
might, in fact, stem from competition with Rouse's SuperShuttle.
168
Unlike Maday, who
had sought only to cut wages and benefits paid to Yellow Cab drivers, Rouse proposed a
complete restructuring of the industry, entirely ending the status of taxi drivers as
employees and making them "independent contractors." The end of employee status
would mean the end not only of minimum wage requirements but also of workers
compensation and other labor protections under federal, state and local law. The Los
Angeles Times of June 22, 1985 reported the outcome of Rouse's campaign as follows:
Without any discussion, the Los Angeles City Council on Friday approved an
emergency ordinance to let the city's 10 taxicab companies reclassify their drivers
as independent contractors in a move to keep the financially ailing Mitchell S.
Rouse in business. About 75 cab drivers and industry officials, anticipating a
long debate, were caught by surprise by the swift 13-0 vote, which would allow
161
See, e.g., Ordinance 173657, signed by the Acting Mayor on November 29, 2000.
162
Articles of Incorporation of U.C.C. – South Bay Co-operative, Inc., filed September 3, 1992. The
corporate name was changed to South Bay Co-Operative, Inc. on November 20, 1992. Certificate of
Amendment to Articles of Incorporation of U.C.C. – South Bay Co-operative, Inc. filed that date.
163
George Ramos, L.A. Taxi Co. Gets a Boost That May Keep It Alive, L.A. TIMES, May 31, 1985, at 1.
164
Ordinance 158955, approved by City Council on May 15, 1984.
165
Marc Beauchamp, Off the Meter, FORBES, August 11, 1986, at 66.
166
The ordinance specifically required Rouse to use employee-drivers. Ordinance 158955, Section 4.2(e)
167
George Ramos, L.A. Taxi Co, Initially Highly Touted, in ‘Dire Financial Straits’, L.A. TIMES, May 1,
1985 at V_A1.
168
Rouse’s SuperShuttle began serving LAX in April, 1984. David Talbot, SuperShuttle Is Latest Entry in
L.A. Airport Van Fleets, L.A.
TIMES, Apr. 15, 1984, at F4.
65
L.A. Taxi to end fringe benefits and employer contributions to Social Security.
The move would help stem the losses--approaching $1.5 million--that the
company has suffered since going into business before the start of the Olympic
Games last summer. The ordinance, which still must be approved by Mayor Tom
Bradley, also lifts a requirement that L.A. Taxi pay the minimum wage to its
drivers. As independent contractors, drivers would be paid no wages and would
have to rely for income solely on their share of fares, city Transportation
Department officials said....The city's other franchises are likely to take advantage
of the independent contractor status when their permits come up for renewal in
September, executives of several cab firms said.
169
By 1985, L.A. Taxi was still a traditional taxi company, now completely owned by
Mitchell Rouse, first through a company called Private Sector Systems and later through
his Taxi Systems, Inc. (or TSI).
170
But all of Rouse's drivers were now "independent
contractors" without benefit of minimum wage, worker's compensation, or other
protections afforded employees. As the next sections demonstrate, however, the
reorganization of the taxi business in Los Angeles by Mr. Rouse was not yet complete.
D. Yellow Cab Becomes a “Co-operative”: L.A. Taxi, Yellow Cab,
and the Administrative Services Co-operative
The Los Angeles Taxi Co-operative, Inc. (LATC) was incorporated on September
3, 1992.
171
The Administrative Services Co-operative (ASC) and the South Bay Co-
operative (which also operates as United Checker Cab) were incorporated that very same
day.
172
All were incorporated by Mitchell Rouse’s son, William Rouse (also referred to
as Bill in this report). Exactly two months later, on November 3, 1992, the City Council
transferred the franchise previously granted to Rouse’s TSI to operate L.A. Taxi to the
L.A. Taxi Co-operative.
173
Under the terms of the ordinance TSI was to divest itself of shares in the L.A. Taxi Co-
operative from 80% at the beginning of the ordinance to 5% as of July 1, 1995.
In May, 1993, Rouse’s TSI issued an “Offering Circular” to prospective purchasers of
shares describing the process by which TSI proposed to sell its L.A. Taxi assets a
LATC.
174
TSI assigned the equipment needed to run the dispatch operation to ASC.
The members of ASC would be limited only to other co-ops, including LATC, the United
Checker Co-operative and the South Bay Co-operative (and, initially, TSI itself). The
latter two Co-operatives were also created to receive assets from other Rouse operations
bearing similar names. Under the arrangement, LATC and the other co-ops contracted:
169
George Ramos, Measure Aimed at Saving L.A. Taxi Co. Is Approved, L.A. TIMES, June 22, 1985, at 6.
170
ATE Management Company received permission to sell equity interest in L.A. Taxi to Rouse’s Private
Sector Systems on August 7, 1985. Council File 85-1283. Ordinance 160286, approved August 12, 1985,
recounts that "Private Sector Systems, Inc., is presently the sole (100%) owner of the Grantee (L.A. Taxi).
Mitchell Rouse is the sole stockholder of Private Section Systems, Inc.
171
Articles of Incorporation, L.A. Taxi Co-operative (March 9, 1991).
172
Articles of Incorporation, Administrative Services Co-operative, Inc. (Stepbmer 3, 1992).
173
LA City Ordinance 168316, adopted November 3, 1992.
174
Offering Circular, Membership Share in L.A. Taxi Co-operative, Inc., May 18, 1993.
66
with ASC to provide dispatch services, at a cost to be set by ASC.
with “Professional Taxi Managers,” an affiliate of TSI, to provide “administrative
consulting services.
with TSI to lease from TSI radio equipment, at a cost per cab of $35 per week.
with TSI to sublease facilities previously occupied and used by TSI.
One year later, Rouse’s TSI filed for bankruptcy under Chapter 11, apparently in
response to several bodily injury lawsuits by motorists injured by taxis operated by the
company.
175
TSI emerged from bankruptcy protection in January, 1997 and three months
later, Rouse’s Enterprise Finance acquired the rights to the Yellow Cab franchise from
Anything Yellow, Inc., which had acquired the rights to the name and franchise from
Eugene Maday’s Golden State Transit Corporation in 1995.
176
In September, 1998,
Rouse obtained City Council approval to acquire and operate the Yellow Cab franchise
through the L.A. Taxi Co-operative dba Yellow Cab, acknowledging that Rouse’s
Enterprise Finance, Inc. owned all shares in the co-operative on the first day of the
assignment of the franchise and authorizing Enterprise Finance to sell 200 shares
(taxicab permits) by August 31, 1999.
177
Enterprise finance was given time to sell shares
in order to get down to maximum percentage ownership five percent. Two months after
acquiring the Yellow Cab franchise, Rouse created the structure that still exists with
respect to the largest fleet in the City, Yellow Cab. We examine this structure below, in
our evaluation of the financial transparency of the industry to regulators, the public, and
most especially, to the co-operative shareowners and drivers.
V. WHERE “TOP DOWN” AND “BOTTOM UP” MEET:
WHY DO TAXI WORKERS EARN SO LITTLE?
As reported earlier, if taxi drivers were treated as employees (and some argue they
should be), subject to the wage and hour laws that protect employees in California, they
would earn more, even at minimum wage. If these heavily regulated workers enjoyed the
protection of the City’s “living wage” policy, they would receive a wage increase of forty
per cent. Plainly, simple poverty is the most critical issue facing taxi workers in Los
Angeles, along with the lack of health care insurance that poverty occasions. Why, then,
do taxi workers earn so little? A part of the answer is that the system of regulation and
the operation of the taxicab companies in Los Angeles disadvantage drivers in multiple
and reinforcing ways. As we explain in greater detail below, there are three principal
factors at work to keep the net income of taxi workers low:
175
Briefly: Taxi Systems Files for Chapter 11, L.A. TIMES, May 24, 1994, at D2. Although the original
franchise to L.A. Taxi required the company to maintain in effect liability insurance of $1 million per
accident, Ordinance 158955, Section 4.3, later taxi franchise ordinances permitted “a program of self-
insurance.”
176
Ordinance 170486, passed April 11, 1995.
177
Ordinance 172199 and 172200, both passed September 8, 1998.
67
1. Taxi fares are not high enough to pay drivers a living wage. Particularly with
the dramatic rise in fuel prices – and all taxicab drivers pay for their own fuel --
the City’s archaic system of revising taxi fares to take economic changes into
account leaves taxi drivers bearing increases in costs they can ill afford to pay.
The regulatory system not only imposes restrictions on drivers that seem to have
little to do with passenger service but also imposes unwarranted fees ultimately
passed through to drivers.
2. Raising fares will help little if increased fares cause the taxicabs to lose more
business to unregulated and often illegal, competition. At the same time that
taxicab drivers are heavily regulated, they face stiff competition from essentially
unregulated competition: “bandit” cabs and limousines – so-called “town cars” --
operating illegally. Other competition facing taxi drivers is legal, but similarly
loosely regulated: airport shuttles or limousines, sometimes those owned by the
same people who substantially control taxicab companies. Most recently, taxicab
drivers face increasing competition from the City itself, in the form of the LAWA
FlyAway bus.
3. Even if drivers gross more income, they are no better off if that income is
siphoned off through inflated costs and unwarranted “special assessments”
imposed by company managers. The current organization and regulation of the
taxicab industry in Los Angeles creates huge opportunities for sharp business
practices and outright corruption, to the disadvantage of those who directly serve
the public. One indication of the result is that while the many taxi drivers at the
bottom of this system pay nearly half their income to live in small, sometimes
overcrowded apartments, some of those at the top – co-operative presidents and
those who sell goods and services to taxi co-ops -- often live in houses costing
upwards of a million dollars. Although born a noble birth thirty years ago, the
ideal of a co-operative of independent owner-drivers has in many instances
degenerated into a creative system for exploiting those who toil on our streets and
highways, to the benefit of few and the detriment of the many.
We take up each of these problem areas in turn, and link our explanation of the problems
with some specific, targeted reforms the City should consider, including some that it has
recently taken up for consideration.
A. The Need for Responsive Regulation of Meter Rates –
and Reasonable Reponses to Meter Rigging
.
1. The “Taxi Cost Index” ostensibly used to set meter rates is
seriously flawed.
Under the City’s system, taximeter rates fares are to be adjusted periodically on
the basis of changes in components of the Consumer Price Index known as the “Taxi
Cost Index” or TCI. The TCI is supposed to provide an objective criterion by which
68
fares, and the need for fare adjustments, can be made. It is comprised of weighted factors
taken from the Bureau of Labor Statistics. In our view, the TCI needs to be reviewed in
light of current circumstances. For example, fuel costs are weighted to account for only
13% of the TCI, the same amount allocated to “repairs and maintenance.” By contrast,
our survey found that during our survey period (during which time gas prices varied
dramatically), the median taxi driver using about 300 gallons of gasoline per month at a
cost of $833 per month., compared to the median $200 per month spent by owners on
maintenance and repairs (n=127). Of course, rising fuel prices would tend to produce
such an imbalance.
So where did this 13% weighting for gasoline costs come from? In September,
1999 LADOT recommended to the Board of Taxicab Commissioners a taximeter rate
increase based on the then new TCI.
178
The weights of the various components of the
TCI were said to be based on an “extensive interviewing process combined with industry
data.” This interviewing and data collection had been conducted, in turn, by consultants
retained by LADOT, who had produced a report a year earlier.
179
Notably, the
consultants’ report specifically recommended that the TCI be reviewed annually, and that
the weights assigned to its components be adjusted to reflect changes in economic reality.
180
No adjustments have ever been made. LADOT, the Taxicab Administrator, and the
Board of Taxicab Commissioners have, instead, continued to utilize precisely the same
spreadsheet provided by the consultants nearly eight years ago. Although this failure to
attend to economic reality is most striking in the case of fuel costs, there is no evidence
that LADOT or the Taxi Administrator have made any other adjustments. For example,
the 6% weight for “insurance” in the TCI h.14as remained unchanged,
181
despite the fact
that insurance costs are well known to be second only to fuel for the operation of
taxicabs.
2. The City Has Not Been Responsible in Timely Adjusting of
Meter Rates.
In July, 2005, the City Council approved an increase in taximeter rates of
approximately 10 per cent.
182
This was the first increase since April, 2003.
183
In the
meantime the prices for gasoline --- the largest single cost for drivers – had skyrocketed
and continued to climb. And there is no end in sight. In January, 2005, the Taxicab
178
LADOT, Taxicab Industry Request for an Increase in the Taximeter Rates,, September 2, 1999 and
Response of Alex Cameron, LADOT, to request under the California Public Records Act, August 31, 2006.
179
Inter American Holdings co, Hra Associates, Inc, and Echelon Industries, Inc, SMART SHUTTLE
REGULATORY FRAMEWORK, November 30, 1998.
180
Id, at 3-22.
181
Response of Alex Cameron, LADOT, to request under the California Public Records Act, August 31,
2006.
182
Ordinance 177017, enacting a resolution of the Board of Taxicab Commissioners of the City of Los
Angeles, adopted July 21,2005, designated as Board Order No. 037.
183
Ordinance 175365, approving a resolution of the Board of Taxicab Commissioners of the
City of Los Angeles, adopted April 3, 2003, which resolution is designated as Board Order
No. 023.
69
Commission recommended, and the City Council later approved, a system allowing
drivers to post an appropriate notice in their cabs and add to their request for payment by
the passenger a fuel surcharge of 50 cents to the total fare, if the price of gasoline tops
$2.73 per gallon or $1.00 if it tops $3.28.
184
Many drivers say they don’t bother, because
the result is inevitably that passengers pay attention only to the meter. Any “surcharge”
is thus taken from the amount that might have gone to a tip. We have not verified this
phenomenon independently, but it is entirely consistent with both economic psychology
and common sense. Any meaningful rate relief must be reflected in the meter.
Of equal importance is the timeliness of that relief. Between January 20, 2005,
the date of the Board’s resolution authorizing the apparently ineffective “sticker” system
and May 2006, the price of gasoline in Los Angeles increased from $2.01 to $3.40 per
gallon, according to the Bureau of Labor Statistics indicator utilized by the City.
185
The
effects of these price increases are felt by all taxi drivers, all of whom pay for their own
gas. For a taxi driver driving 4,000 miles per month in a vehicle averaging a typical 12
miles per gallon, the loss of net income to the driver and his family in that period
amounts to $465 per month.
On August 3, 2006, LADOT recommended to the Board of Taxicab
Commissioners both approve another fare increase (averaging about 10.5%), based
chiefly on increases in fuel costs, and also that the Board seek authority from the City
Council to adjust meter rates (within a range of 10%) without Council action.
186
Those
recommendations, together with other revisions, including a minimum fare from LAX,
were approved by the Board and are, as of this writing, pending action by the City
Council and Mayor. As before, the LADOT recommendations and Board action were
based on the completely unsupported (and empirically false) assumption that fuel costs
account for only 13% of the costs of operating a taxi.
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3. The Rigging of Taximeters, However Prevalent, Is
Inexcusable But Provides No Excuse for the City to Delay Meter
Increases.
We learned two troubling things about meter rigging in interviewing City
officials. First, one official opined to the effect that “of course they are rigging meters;
what do you expect them to do with gas prices this high.” Second, we were told by a
well-placed City official that a proposal for taxi fare relief was pulled by LADOT from
possible consideration by the City Council as a result of the May 18, 2006 KNBC
184
Ordinance 177018, enacting Board of Taxicab Commissioners Board Order 034, adopted January 20,
2005. The “trigger” rates were increased from 2001 triggers of $2.22 and $2.68, adopted in Ordinance
174131.
185
BLS Series ID APUA4217471A (Gasoline, all types, per gallon), Los Angeles-Riverside-Orange
County, available at http://www.econstats.com/BLS/blscu/index_cpi_area.htm (last visited September 17,
2006).
186
Memorandum from LADOT General Manager Gloria J. Jeff to the Board of Taxicab Commissioners,
August 3, 2006.
187
See Section V(A)(1) above.
70
“hidden camera” expose of meter rigging by some drivers,
188
on advice of influential
people on the City Council. Both attitudes are wildly out of place among those who
regulate the taxi industry in Los Angeles. First, meter rigging may not harm City
officials, but it certainly harms passengers. Moreover, it harms the honest drivers who
make the decision to work yet more hours rather than cheat their passengers. Second, if
the taxi fare increase was delayed for these reasons – and we were told by independent
sources that it was – then it constituted the kind of group punishment of honest, low
income drivers that is not befitting the City of Los Angeles.
There is no doubt that meter rigging does occur. The question is how common it
is and what the City does to stop it. The only empirical evidence of the prevalence of
meter rigging in Los Angeles of which we are aware derives from the “multi-agency law
enforcement taxi ‘sting operation’” conducted by airport police and others on June 8,
2006. According to the resulting press release from Los Angeles World Airports, during
a six hour period, 477 taxicabs were inspected, resulting in 54 administrative citations,
and exactly two (2) taxis with “meter zapper” devices and two more with wires that
might be used for this purpose. Based on this ad hoc empirical “study” conducted by
the City itself, the prevalence of meter rigging appears closer to 0.4% to 1%, rather than
the much larger unsubstantiated figures circulated by others, including Taxi
Administrator Tom Drischler, who recently told a Los Angeles Times reporter he
estimated a prevalence rate 10 to 20 times that high.
189
Mr. Drischler indicated that this
was his best estimate on being asked for a number by a reporter. A company manager,
however, disputed this number as wildly inflated, given the ratio of taxi trips and
complaints received by companies about overcharging.
Whatever the rate, we do not here join the debate about who is responsible for
allowing meter rigging to exist, recently played out in comments in the same news story.
Companies and drivers blame City officials for not acting on prior complaints. City
officials blame drivers. Some acknowledged privately to us that the economic pressure
of rising fuel costs has forced some drivers to cheat to survive. We only note that honest
drivers are powerless to prevent other drivers from meter rigging, and should not
themselves be punished for the actions of others. We also note that in the highly
publicized “sting” at LAX there is a lesson for how taxi meter fraud should be deterred.
Many times each month, every taxicab in Los Angeles passes through a single driveway
to enter the taxi holding lot at LAX, on Alverstone Avenue, near the 96
th
Street Bridge.
If the City conducted routine random spot checks of taxi meters at this lot and imposed
appropriately high penalties, there is no doubt that only the most irrational meter cheat
would continue to do so.
B. Illegal and Other Competition
Each taxi driver in Los Angeles pays $86.85 per month for the privilege of being
closely regulated by the City, all the way down to the color of his socks. At the same
188
Joel Grover & Matt Goldberg, Special Report: Taxi Fare Deception, available at
http://www.nbc4.tv/investigations/9241924/detail.html.
189
Jessica Garrison, L.A. Taxi Business Hits Bumpy Stretch of Road , L.A. Times, July 13, 2006, at B-1.
71
time, each driver competes for business not only with other drivers, but also with
completely unregulated bandit cabs and virtually unregulated “town cars” and
limousines. To this illegal competition is added legal competition from airport shuttle
services and LAWA’s own new Flyaway Bus. We do not address the legal competition,
as this is a policy matter beyond the task we have set for ourselves. We do note,
however, one of the two shuttle companies authorized to serve LAX, SuperShuttle, is
controlled by Mitch Rouse, who also created and still controls many aspects of the largest
taxi fleet in Los Angeles (Yellow Cab and United Checker). Through SuperShuttle,
Rouse also controls a limousine company, ExecuCar.
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The degree to which airport
shuttles actually compete against taxicabs depends on the degree of market segmentation
among transit users. Some argue that the customer base for shuttles is completely
separate from that for taxis. We disagree, if only on the basis of our own experience as
users of both. There is some market segmentation, but it is far from total. The City has
never conducted any empirical study of this competition. Nor has it, of course, examined
how the new Flyaway Bus will affect the other modes of service for passengers at LAX.
1. Bandit Cabs.
At least at LAX, taxi drivers face little illegal competition. This is not the case on
the streets of the City. As with many other aspects of the taxi business, we know of no
empirically based estimates of the number of illegal, unlicensed “bandit cabs.”
Conventional wisdom among those in the industry and City regulators appears to put the
number at approximately the same as the number of legal cabs and drivers (about 2300
and 5000, respectively). Operating entirely outside the law and thus at much lower cost,
these vehicles may be uninspected, uninsured, and unsafe. They may be driven by felons
or people with violent pasts. They may also be operated responsibly by hardworking
drivers simply trying to survive in the environment in which they find themselves,
providing services to communities and neighborhoods ill-served by legitimate taxicabs in
Los Angeles. There is little doubt that both views are to some extent true. South Los
Angeles has long been poorly served by taxicabs, owing to perceptions of the risks to
drivers of violent crime, as well as the likelihood that fares are likely to be shorter trips.
According to some, Koreatown is not well served by drivers who speak Korean. Pico-
Union is underserved by drivers who speak Spanish.
Whatever the causes, there is no doubt that there are far too many “bandit” cabs in
Los Angeles. One can stand on any street corner in South Los Angeles, Koreatown,
Hollywood, or Pico Union and observe vehicles in trade dress approximating that of the
franchised companies, often painted in shades of yellow. More easily obtained evidence
lies not further away than the nearest “Yellow Pages,” paper or virtual. Put “taxi” and
190
ExecuCar claims to be “not a taxi, not a limousine, but is the logical choice in between” provided by
modern, luxurious sedans, chauffeured by courteous, professional drivers.” See http://www.execucar.com
(last visited Sept. 13, 2006). There may be some technical differences between the ExecuCar service and a
limousine service, but given that description and the images of Lincoln Town Cars that accompany it, it is
hard to see any difference that would matter to a prospective passenger.
72
“Los Angeles” into www.yellowpages.com, and one finds 338 entries.
191
Some are Los
Angeles franchised companies engaged in creative marketing. For example the “A-AAA
Taxi” entry leads to the legally franchised Independent Taxi Owners Association (ITOA).
Others may be operating legally outside the City of Los Angeles. But most appear
simply to be businesses not only operating outside the law, but advertising the fact that
they do so. We have conducted no independent investigation ourselves, but it would not
take long to determine the status of listings like A-1 American Yellow Cab (1287 W. 37
th
Street), Center Cab (3420 Council Street, Apartment 101), or Silver Mercedes Taxi
Service (310-828-2233), to name only three of hundreds. Examining the addresses of
the suspect taxicab operations also provides some evidence for the proposition that bandit
cabs are serving areas of the City generally thought to be underserved by the franchised
companies: a great many are located in “Area D” which covers much of South Los
Angeles.
Acknowledging that the issue is complex and bound up in larger transportation
and social issues, we also observe that the current City system for regulating bandit cabs
is ineffective. The reasons are clear, and explicable in standard regulatory theory: the
probability of detection of a violation is quite low. As noted earlier, only six
investigators in the Taxi Division are responsible for covering the 466 square miles of the
City. To this small staff will soon be added a supplemental force of LAPD officers
working overtime, and paid by a monthly fee on taxi drivers. It is, of course, too early to
say how effective this new program will be in apprehending or citing bandit taxi drivers.
Of course, the risk of being stopped – even by LAPD – is not a sufficient
deterrent if the bandit taxi business is lucrative enough and if the costs of being caught
are low enough. The Taxicab Commission has requested an ordinance change to
LAMC Section 71.09.2(b), which currently imposes a $500 ceiling on monetary penalties
on bandits. The request was granted by the Council on a 15-0 vote on July 11, 2006.
While we take no position on whether or how much these penalties should be increased,
it is clear that they are currently insufficient to deter bandit taxis, and the illegal
competition faced by legitimate taxi drivers and companies in Los Angeles.
2. Limousines and “Town Cars” Operating Illegally
The legal difference between a legal taxicab and a limousine is clear: Limousines
are limited to transporting passengers who “prearrange” their trips.
192
Limousines are
regulated by the state Public Utilities Commission, and lie beyond the jurisdiction of the
City – so long as they are operating legally as limousines. For example, when Valley
191
www.yellowpages.com (last visited July 16, 2006).
192
Public Utilities Code 5360.5(b) defines this to mean that “the transportation of the passenger was
arranged with the carrier by the passenger, or a