Chicago cabdriver Manuel Rosales takes off only three days a month — half of what he used to — and has increased his hours to 70 to 80 a week in an effort to compensate for a drop in the number of passengers he shuttles around the city.
“We’re struggling,” said Rosales, 42, who has been driving a cab for a decade to support his wife and two young daughters. “There are days when I do awesome, and the next day … it’s a nightmare.”
Taxi drivers and industry experts say the proliferation of ride-share companies such as Uber and Lyft, which entered the Chicago market in 2013 and operate under fewer regulations than city taxis, has put the Chicago cab industry on the skids.
The total number of licensed cabdrivers in Chicago is nearly 9,500 — the lowest in a decade — while the average value of a taxi medallion required to operate a cab has plummeted to about $66,000 this year from a peak of $349,000 in 2013, according to city data. The number of new drivers entering into the taxi industry, which is often an entry point into the workforce for immigrants, also has slowed to close to 300 this year as of Oct. 6, down from about 770 last year and 1,350 in 2014.
Meanwhile, fewer taxi drivers are renewing their licenses. Through Oct. 6, 9,200 taxi drivers had renewed their chauffeur’s licenses, down from more than 12,000 in 2014 and 2015.
“The industry is really in great distress,” said Tracey Abman, associate director AFSCME Council 31, which works with the Cab Drivers United union, adding that the ride-share industry is not hampered by the strict city oversight that taxi drivers endure.
“This is a result of the unlevel playing field that ride-share transportation has created,” she said.
Unlike ride-share companies, which allow people to order and pay for rides through an app and get rides from drivers using personal vehicles, cabs are required to have a city-issued medallion affixed to the hood of a vehicle, and drivers must pay to get a chauffeur’s license from the city in a process that includes fingerprinting for a criminal background check, completion of a training program at Olive-Harvey College and an exam.
Ride-share drivers, many of them part-time, can bypass those rules and regulations. They are able to drive their own car, submit to a background check performed by the company that doesn’t require fingerprinting, and complete a training program online or in person.
And while taxi fares are set by the city, ride-share companies can provide cheaper rides or raise rates depending on demand.
Taxi advocates have pushed for common rules. Some taxi companies sued the city in 2014, alleging a double standard that gives ride-share companies a competitive advantage by not applying the same regulations and threatens to devalue taxi medallions.
But a federal appellate court in October ordered that the lawsuit be dismissed, with one judge suggesting the two industries were as different as cats and dogs, and noting that most cities require licenses for canines but not felines.
“Just as some people prefer cats to dogs, some people prefer Uber to Yellow Cab, Flash Cab, Checker Cab, et al. They prefer one business model to another. The city wants to encourage this competition, rather than stifle it as urged by the plaintiffs, who are taxi owners,” Judge Richard Posner wrote. “There are enough differences between taxi service and (ride-sharing) service to justify different regulatory schemes,” he added.
Uber maintains that more options are better for customers.
“We agree with the 7th Circuit Court’s ruling earlier this year that ride-sharing is a different transportation option than taxi, and that competition and innovation should be embraced, not stifled,” an Uber spokeswoman said in a statement. “When there are multiple players in the marketplace competing for business, consumers win.”
But Robert Bruno, professor and director of the Labor Education Program at University of Illinois at Chicago and author of a study on the cab industry, thinks there should be one overall standard for what is essentially the same service — providing rides to customers.
“The answer is not to take all the rules away. That will create even greater compression or suppression down on the working conditions and pay. What should happen is those standards should be raised and equally applied,” Bruno said.
The existence of ride-share companies has “really depressed the economic earning potential of owning a medallion and driving a cab,” he said.
Rosales and others are feeling that squeeze firsthand.
After leasing a cab for seven years, Rosales sold his home in Guatemala and used the money to put a down payment on a $305,000 medallion in August 2014.
“As a small business owner and investor, you own your medallion and hopefully one day you pay off the medallion and sell it and (say), I’m done with this and I’m going to have a life,” Rosales said.
But now he owes $240,000 on the medallion, more than it is worth. He refinanced his loan two months ago to lower his interest rate and save some money.
Meanwhile, other medallion owners have simply not kept up with paying off their debt, leading to more than 200 medallions listed in foreclosure this year.
In June, the City Council passed a set of rules — watered down from an initial proposal after Uber and Lyft officials threatened to leave Chicago — requiring roughly 90,000 Uber and Lyft drivers to get special chauffeur licenses and fulfill training requirements online. Missing from the ordinance was a requirement for fingerprint background checks for ride-share drivers and for 5 percent of ride-sharing fleets to be accessible to the disabled.
Instead, a task force will study the effectiveness of fingerprinting as part of a background check. And ride-share companies have a year to implement plans to accommodate disabled riders, which is required by the city for a certain percentage of the taxi fleet.
The ordinance also eliminated a drug test and physical exam for any taxi or ride-share driver applying for a chauffeur’s license.
Uber uses a third-party company called Checkr to screen its drivers, perform background checks using national, state and local databases including the National Sex Offender Public Website, and review a court record if needed, according to Uber’s website. The ride-share company disqualifies potential drivers who in the past seven years have had convictions for any felony, violent crimes, sexual offenses, child abuse or endangerment or had a DUI, hit-and-run, speeding over 100 mph or reckless driving on their driving history. Uber said it does annual background checks for all active drivers in Chicago.
In an effort to give passengers another option to hail rides from their smartphones, the city this year promoted two apps for taxi rides. Much like ride-share, the taxi-hailing apps — Arro and Curb — show how far away available cabs are on a map, give estimated wait time and store credit card information as a payment option.
Earlier this year, the city also increased taxi fares by 15 percent, lowered the credit card transaction fee to 3 percent and added a 50 cent surcharge to passengers paying with credit cards.
“The City of Chicago has taken many steps to bring innovation to the taxi industry and increase consumer choice for safe, reliable transportation options for Chicago residents,” the city’s Department of Business Affairs and Consumer Protection said in an email.
The city pointed to reforms implemented recently that have benefited cabdrivers. including requiring cab owners to share revenue from exterior ads with the drivers, having a $50 late fee payable to drivers when cab companies fail to pay out credit card fare payments within one business day, and reducing the maximum lease rates and fines for tickets cabdrivers get. Also, the city lowered the medallion transfer tax paid when one owner sells the medallion to another.
Still, some taxi drivers are getting out of the business entirely.
Joseph Adeyanju stopped driving a cab about a year and a half ago and switched to Uber, prompted by a fellow taxi driver. The Gage Park resident no longer leases a cab after more than 40 years as a taxi driver, a job he took when he moved to the U.S. from Nigeria.
He’s glad he doesn’t have to pay a lease or cab fees, or process credit card transactions. He said since Uber is a cashless transaction, he worries less about his own safety.
“I don’t have to worry about someone who is going to put a gun to my head,” said Adeyanju, adding that he was robbed five times as a cabdriver.
Business is busier and more stable, he said. “With Uber, there’s more action even though it’s cheaper, but at least you have the confidence something will be coming in,” he said.
He works less than he did as a cabdriver, hustling to pick up as many riders as he can in a shorter period of time. Now Adeyanju, 65, can spend more time with his family.
The “cab business is going down, no question about it,” said Adeyanju, “With this I have more peace of mind.”
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