The yellow-cab industry shows the first inklings of a comeback. Meanwhile, in a driveway in Queens, Brinto Rashed’s black Lexus sits idle
Brinto Rashed worked six days a week driving for the restaurant delivery business he started, saving up so he could do what he thought would really make him money: driving for Uber.
But no sooner had he and his younger brother, Ali Eftear, bought Lexus and Acura sedans than the two scrapped their plan and started spending their days behind the wheel of a yellow cab. Now they’re telling everyone in their extended family to do the same.
“It’s all about money,” Rashed, 29, said. “Where you get more money, run there.”
Some might think Rashed and his brother made a wrongheaded move. Uber, after all, has pummeled the cab business ever since the San Francisco-based company gained traction in New York in 2014, luring drivers away with $5,000 bonuses and creating so-called taxi graveyards, where garages fill with empty cabs. The app-based service says it now has 36,000 drivers in New York.
But the brothers believe they made a narrow escape. The yellow-cab industry, which had long operated with little competition, is now offering drivers better terms, while Uber has gained a reputation as a cutthroat player with little regard for its driver “partners.” For the first time since the service started shaking up the ride business, a driver migration appears to be flowing the other way—back to yellow.
“We were dead a year ago,” said the manager of White and Blue Taxi in Long Island City, Queens, who gave his name only as George. Outside his lot during a recent weekday shift change, drivers lined up to lease a cab for the next 12 hours. George stressed that business was still not as strong as it used to be. He estimated that about a third of the garage’s more than 350 cabs were going unused. A year ago, half sat idle.
But taxi executives are seeing glimmers of a comeback, and drivers might be the ones to benefit the most. Ron Sherman, president of the industry group the Metropolitan Taxicab Board of Trade, and one of the larger fleet owners, says his business is up about 10% this year. “And it’s 100% because of having more drivers,” he said.
Nowhere is the shift back toward yellow cabs clearer than outside the three-story home Rashed and his extended family rent on a quiet street in Richmond Hill, Queens.
In the driveway and along the curb nearby sat the six cars family members have purchased since they started emigrating to the United States from Bangladesh five years ago. Three are for the restaurant delivery service, two were intended for Uber and one, a yellow Toyota RAV4, is for the family’s newest endeavor: driving a taxi.
On a recent Tuesday—the designated one day off for the family’s five breadwinners—the RAV4 rested across the street, where Eftear, 25, parked it when he returned home at 1 o’clock that morning. It wouldn’t be going out again until Rashed began his shift the next day at 6 a.m.
Inside, Rashed’s aunt cooked a lunch of curried chicken, beef and fish. His wife played with the couple’s two small children, while a young cousin, who works nights making deliveries in Manhattan, pulled the covers over his head on a nearby mattress.
“I was doing experiment,” Rashed said as he plopped on the couch upstairs. A new 65-inch curved Samsung TV played a Meghan Trainor music video. Sipping a Dos Equis, Rashed expanded on one of his favorite subjects: why it’s better to drive taxis than work for Uber, and how he and Eftear avoided a big mistake.
It all started in 2014, when working for Uber seemed a good deal. “I asked friends who drive Uber,” Rashed said. “I asked my older brother, who drives a yellow cab.”
The good things he had heard about the company came to be overshadowed by complaints. The company raised its commission for new drivers to 25% from 20%, and in January announced a 15% fare cut in New York. It had not even warned its drivers, who went on a brief walkout and said they would now have to work longer hours to make the same amount of money. “When I saw the pay cut, and Uber drivers going on strike, I decide: I will go straight to medallion,” Rashed said.
He was not the only one. In January 2016 there were 6.2% fewer yellow-cab drivers on the road than in the same month of 2015. By April, with 30,488 drivers, the gap with the same month in the prior year had narrowed to 3.4%.
The city has helped, starting with piloting a “universal license” in December that lets drivers move freely between driving taxis and black-car services, such as Uber. So has Uber’s growing reputation for undermining its drivers.
“Uber’s treatment of its drivers is a liability for the company at this point,” said Brishen Rogers, a Temple University law professor who specializes in labor issues. “The way they’ve changed the terms of their driver agreements without notice, for someone who has made a significant investment in a vehicle in order to drive for Uber, that has to be incredibly frustrating.”
The Metropolitan Taxicab Board of Trade says it has signed up 2,200 drivers for the new license at its Long Island City driver center, and about 85% went on to drive cabs. Some 350 came over from Uber. Three who spoke to Crain’s said they earned more money, in fewer hours, driving yellow.
“Yellow cab is better for me,” said Masud Pervez, who worked for Uber about six months last year—putting in 12 hour days, six or seven days a week—but switched to cabs in December.
Uber and Pervez both said he earned an average $1,400 per week after the company took its 20% commission, but Uber says he worked only an average 38 hours a week.
The data, though, only accounts for the time the app is turned on. Pervez said he would work mornings and evenings, and take a nap in between. He would also turn off the app when looking for parking, eating meals, taking breaks or when driving back from a trip out of the city.
After Pervez paid his car and gas expenses he says he was left with $700 a week. Driving a cab these days he says he clears $1,500 a week.
The financial pressure on fleet and medallion owners from Uber’s army of drivers has helped make yellow cabs a bargain for drivers. The cap on cab leases—the maximum amount set by the Taxi and Limousine Commission that owners can charge for rentals—hasn’t risen in 12 years, with the peak night-shift cap at $129. And fleet owners are likely to offer discounts of 10% to 20% below the cap, insiders say.
The rate for leasing a medallion, the piece of aluminum bolted to the cab’s hood that gives the vehicle an exclusive right to street hails, dropped after taxis began to go idle. Rashed noted that the weekly price was $1,200 six months ago, or 21% more than he pays now.
His expenses run about $1,325 a week, including $275 for the cab he bought and $944 for the medallion he rents, which includes insurance.
The brothers each net as much as $1,500 a week and keep their shifts to just eight hours except for the busy nights at the end of the week.
Tips, which Rashed says 99% of taxi passengers give, were another selling point. Unlike Uber, rival car services Lyft and Gett include tips in their apps. Then there are the airports. Each brother begins his day—Eftear around five in the evening and Rashed at six in the morning—lining up at John F. Kennedy International, and generally each scores a ride within an hour.
Uber drivers often complain about the difficulty of obtaining rides at airports, where, like everywhere else, they are not allowed to pick up a passenger unless they’ve been summoned via the app.
Rashed is doubling down on cabs. He plans to buy another RAV4 in the coming months for two young cousins to share. And he just made a down payment on a RAV4 for two older brothers. (The Lexus and Acura purchased for Uber are not among the model vehicles approved for use as a taxi.)
“When I first come to this country, I work in a grocery store for $200 a week,” said one of his brothers, Abu Shahed, 40, who arrived from Dhaka, Bangladesh, in 2012. He then worked in a hotel, in construction and now in the restaurant delivery business, his weekly wages rising to around $700. “Taxi will be a thousand dollars a week,” he said. “That is the way up: step by step.”
But yellow-cab medallion owners are making a lot less than they used to. Competition from Uber has eaten into the number of New Yorkers raising their hand on a street corner.
It’s been particularly painful for cabbies who own their medallion, like Samuel Tekoh, 61, who bought his in the early 1990s for $190,000.
Like many other medallion owners, he has borrowed against the asset over the years and now has trouble making payments. He said that was primarily because of how much his business was down from where it was before Uber.
“You have to work harder,” said Tekoh, who grosses around $300 a day compared to $450 prior to Uber. “Before, I could pay all my expenses.”
The most recent TLC statistics continue to show Uber’s impact. Total taxi trips for January through April 2016 came to about 1.5 million, 11% below the same period last year and 23% below those same four months in 2013, before the app-based service gained traction.
“The entry of Uber and its imitators has created a race to the bottom,” said second-generation taxi operator Allen Weingarten. A co-owner of Taxifleet Management in Woodside, Queens, he leases Rashed and Eftear their medallion and sold them their cab. “It is difficult for anyone—Uber drivers or medallion owners—to operate profitably,” he said.
Meanwhile, the number of drivers Uber signs up keeps growing by about 500 drivers a week in New York. The company said it has not seen any increase in attrition, though a spokesman declined to say what the attrition rate was.
Uber also says its relationship with drivers will improve now that it’s working with the recently formed Independent Drivers Guild—an affiliate of the International Association of Machinists District 15—which is representing all drivers. In addition, the company also says that the fare cuts have stirred up demand.
Average hourly earnings for those who drive UberX—the basic service—have gone up by 17% in New York, the company said on its blog one month after the cuts went into effect, adding that drivers were working fewer hours. The post also noted big jumps in ridership in the boroughs outside Manhattan.
“Uber NYC strives to offer the best earning opportunity for drivers,” a spokesman said. “Every year since we launched more drivers have signed up with us and the average earnings per hour has increased at the same time.”
He added: “This is a work in progress that is never finished but our goal is to be the best option for New York drivers.”
Fleet owners, independent medallion owners and others continue to fight back. They plan to rally at City Hall on June 22—the kickoff for a campaign urging the city to take a more aggressive stance with their app-based competitors.
The advocates want limits on the number of vehicles—the very reason medallions were created in the 1930s—and “regulatory parity,” starting with wheelchair accessibility requirements for Uber and others that would be in line with those set for cabs.
Uber is also facing another class-action suit—it recently settled one in California—charging the company with misclassifying its drivers as independent contractors rather than employees.
The suit, brought by the New York Taxi Workers Alliance and Uber drivers, was filed in federal court in Manhattan last week. An Uber spokesman called the suit a “stunt.”
Some experts see little chance for a turnaround of the taxi industry, however, and expect Uber to continue shrinking drivers’ incomes as the service expands and becomes just as convenient for riders as a cab.
“If you can press a button and the Uber car will be there in less than two minutes, it’s not all that different from hailing a cab,” said Evan Rawley, a Columbia Business School professor who has written on the taxi industry. “I don’t know if yellow cabs will hold on to 50% of [their market], or 25%, but Uber will eat into their market share, and continue to eat into it.”
Right now, none of that weighs on Rashed and his brothers, who believe there will always be plenty of people who want to step out on the street and hail a taxi.
“I’m going to do this for the next 10 years,” Rashed said before the extended family began preparing to pack into a caravan of cars and head out to a kebab dinner in Jackson Heights.
They are not placing all their bets on taxis.
They will continue to operate their delivery business, which serves 16 restaurants in Forest Hills and Kew Gardens. More than a dozen freelance drivers make the deliveries, along with cousins and in-laws.
But the families are also secure enough in their gamble on cabs that they plan to stop renting and buy a house in their Richmond Hill neighborhood next year.
“We didn’t think, ‘What is going to happen?’” Eftear said, explaining the decision to buy their RAV4 rather than lease by the day or week. “We think, ‘We have guts. We can make it.’ And we are making it.”
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