New York City cab driver Jaswinder Singh was the subject of a sad and fascinating profile in the Epoch Times this week by reporter Amelia Pang. The story gives a human face to the story of collapsing taxi medallion values.
When Singh purchased his medallion in 2008 for $450,000, the world became his "oyster," he told Pang. The medallion's value soared. So Singh borrowed an additional $390,000 against its value to buy a house in Long Island for his wife and three kids. He also started renting out his cab in the evenings to another driver for $2,000 per month.
Last September, his driver left to go work for Uber. Singh was left to cover his roughly $7,000 in monthly overhead by himself. (The first $4,300 goes to cover the medallion mortgage.) So he started driving seven days a week, which means he never gets to see his young kids. Even so, his bills are stacking up and he hasn't paid his medallion mortgage in three months.
Then Singh's health started deteriorating:
He went to the emergency room twice in September for an overwhelming bursting sensation in his stomach.
It turned out Singh has kidney stones. But his main reaction was frustration that he had to go to the hospital on a weekend, when driving was most profitable.
"I'm scared something will happen to him," said Ruby Singh, his wife. "He's sleeping only four to five hours. He's losing his weight."
I feel sorry for Singh. In August, I profiled Alaa Khalil, an Egyptian immigrant and medallion owner, who's having a similar experience. He also borrowed against his medallion to buy a house, which drove up his monthly payments. Now his farebox revenue is plummeting, and he's also facing financial ruin.
The experiences of Singh and Khalil highlight why medallions were such a bad idea from the outset. "Not every city exposes small investors to this business to making big bets on public policy," says New York Times reporter Josh Barro, who was interviewed in my story on Khalil. Those big bet paid off handsomely for years. Then they stopped paying off.
It's also important to remember that for every medallion owner like Singh and Khalil, there are many more cabbies who've seen their quality of life improve immeasurably thanks to Uber. The Epoch Times quotes an Uber driver named Samuel Nunez:
As a yellow cab driver, Nunez earned around $30,000 a year and paid the medallion owner to use his car.
With Uber, he doesn't need to pay a garage or medallion owner. He drives his own car.
"With Uber, I make about $60,000 a year—and right now, I'm only working three days a week," he wrote. "We're no longer stressed about paying the bills and are more focused on spending quality time with one another and doing what we love."
For more on the fallout from the great taxicab collapse, and for Alaa Khalil's story, click below: