Regulation

Are D.C. Cab Fares Too Low?

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Washington D.C.'s two largest cab driver associations filed suit yesterday against Mayor Vincent C. Gray and the city's Taxi Commission because, they say, fares are too low. The lawsuit claims "the current rate structure is breaking families, forcing drivers to spend increased time away from their spouses and children, as well as putting hundreds of middle class families under increasing financial strain."

Actually, if anything, cab fares in D.C. are too high. Here's how we know this: 

Since 2010, the D.C. Taxi Commission hasn't been issuing licenses to new cabbies. There's no official waiting list, but a representative from the commission told me she receives calls "all day, every day" from potential applicants. In other words, want-to-be cab drivers are clamoring to get into the industry at the going rate.

That's because D.C. cab drivers do well. The lawsuit alludes to a study by Edgeworth Economics showing that D.C.'s taxis are among the cheapest in the nation, but in many other cities drivers have to pay as much as $150 a day to rent a medallion. Thankfully, D.C. doesn't have medallions (yet) and the industry is dominated by owner-operators, so drivers keep what they earn after expenses. The drivers I've met (including the leaders of the D.C. Professional Drivers Association, which is a co-plaintiff in the suit) speak with pride about earning enough to send their kids to college, owning their homes, and funding their retirements.

Anyone who can drive a car and wants a taxi license should be able to get one. Then rates would inevitably fall, which would be good for riders and most drivers. Higher fares only create incentives to keep new entrants out of the industry, which until recently was unsually open to immigrants and African Americans shut out of other professions.

In July, Nick Gillespie and I looked at how the unusual freedom and prosperity enjoyed by D.C. cabbies is in jeopardy because of a proposed medallion system:

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  1. I pity da fool who try to make me buy a medallion

    1. I pity da fool who has to work with Bill Maher.

  2. From my experience rates are too high for what you get. Anywhere outside downtown, you need to give the driver directions – assuming he can understand English. I’d love to see something like the London cabbies’ Knowledge of the City Exam. And don’t get me started on the quality of their driving.

    1. I have to give directions to destinations in Alexandria to cabs that operate in Alexandria. Those guys only know how to go between the King St. Metro and Chart House, apparently.

  3. I’m sure Duncan Black is about to link to this to say that you’re just angry that these drivers are able to earn a middle-class living, and that what you want is for them to be slaves.

    And that if what’s necessary for these guys to earn middle-class incomes is for other people to be shut out of the market for taxi licenses, then that’s just what we’re gonna hafta do. Those other people should enter different occupations and then seek to rent-seek in those occupations, and leave these existing successful rent-seekers alone.

  4. And that if what’s necessary for these guys to earn middle-class incomes is for other people to be shut out of the market for taxi licenses

    As we all know, Teh Markitz is a zero-sum game.

  5. I was a huge Mr T fan growing up. I rented “DC Cab” one night. I didn’t understand a damn thing about that movie.

    1. I used to love that movie when I was a kid. Couldn’t tell you a thing about it now, though.

  6. “That’s because D.C. cab drivers do well.”

    Which is irrelevant. If they think they don’t make enough, get another job.

  7. Washington D.C.’s two largest cab driver associations filed suit yesterday against Mayor Vincent C. Gray and the city’s Taxi Commission because, they say, fares are too low.

    Am I correct in reading this as, “Not content with onerous restrictions on new market entrants, current protected suppliers sue for higher minimum prices”?

  8. The fees in DC are ridiculous. There’s an extra charge for puttin a bag in the trunk of the cab and another for letting the cabbie put it in there. Of course they don’t tell you until after you’re luggage is loaded and your in the cab. Well, they never tell you, I saw the cabbie racking up extras on the meter and here was a list on the door.
    The last time I hailed a cab in DC some guy in a minivan pulled up, we negotiated a price and he took me to my destination. The free market works.

  9. Yes kill the bill. Its the first step to monopolize the last small business opportunity and the FREEDOM of the entrepreneurs. Regulations excuses of improving the quality of service or save on fuel costs is vague and a lie. In Chicago,although they 2.00/mile in the city and 2.40/mile in the suburbs is way more expensive than in D.C but still D.C drivers can take home the same money if not more than Chicago drivers because they dont have to pay $500-700/week to greedy cab companies(Medallion owners)who monopolized the majority of the Medallions to themselves and hiked the price of one Medallion to $250,000. Free market is to not regulate the cab business this way by limiting the numbers of cabs in service or invent residency conditions like those been proposed. Medallion regulation is not good for consumers as they will pay more than $2.00/mile plus the extras and fuel surcharges, and still the cab drivers will be enslaved by working 16 hours/day to compensate for paying the weekly “nut” to the Medallion owner. I wish we have any real cab drivers advocates in Chicago like the D.C. DONT GIVE UP D.C CABBIES.

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