Council discusses permanently deregulating taxis

More than 1,200 Portland taxi drivers’ livelihoods are on the line

A taxi in Portland, July 19, 2013 (KOIN 6 News)
A taxi in Portland, July 19, 2013 (KOIN 6 News)

PORTLAND, Ore. (PORTLAND TRIBUNE) — More than 1,200 Portland taxi drivers’ livelihoods are on the line, plus those of hundreds more new drivers for Uber and Lyft, when the Portland City Council takes up deregulating Portland’s taxi industry August 20.

The decision may rest with Mayor Charlie Hales and Commissioners Steve Novick and Dan Saltzman, the council majority who voted in April to allow San Francisco-based Uber and Lyft into the market in a four-month pilot project. Though all three city leaders have voiced concerns about the welfare of taxi drivers, the pilot project flooded the market with hundreds of amateur drivers and slashed taxi drivers’ pay, enabling Uber and Lyft to quickly seize half the local market share.

Now the council will consider permanently deregulating the industry, under terms suggested by a citizen task force picked by Novick, the city commissioner in charge of transportation.

“I just wish we’d get a fair shake at City Hall,” says Darin Campbell, a Radio Cab driver and elected representative of Portland’s taxi drivers.

But many cab drivers and taxi company owners sense the die is cast, and some drivers have jumped ship to Uber and Lyft, which allow anyone to turn their personal car into a taxi “hailed” by customers on smartphones.

At a July 15 City Council hearing to evaluate the pilot project midstream, many taxi drivers testified their wages were down 30 to 50 percent, while many Uber and Lyft drivers testified about how well they were doing.

Uber driver David Holmquist, age 70, said he was earning $23 an hour, while Jan Weston, who was driving for both companies, said he was making $35 an hour.

The average Uber driver in Portland is “taking home” more than three times what the average taxi driver makes according to a city study, testified Brooke Steger, Uber’s general manager for the Northwest.

Such talk, and the findings of that 2012 city study, could give political cover to city commissioners who say they support taxi drivers, many of them immigrants, yet want to accommodate citizens and business groups who are clamoring for lower-cost taxi services available in private cars at the push of a smartphone button.

Study disputed

The 2012 study, conducted by the city Revenue Bureau, concluded the average taxi driver wage in Portland was only $6.22 an hour. That’s below minimum wage, but most Portland taxi drivers are independent contractors, aren’t protected by Oregon’s minimum wage law, and don’t qualify for most employee benefits. The Revenue Bureau heard complaints from many taxi drivers that they have to shell out $500 a week for “kitties” — payments to taxi companies to cover operating costs — and have to work well more than 40 hours to feed their families.

But many people say the city study was politically motivated and grossly underestimated cabbies’ pay.

Then-mayor Sam Adams commissioned the study in 2011, after disgruntled Broadway Cab drivers complained about their pay and working conditions. The cabbies wanted city approval for 50 new taxi permits so they could launch a new driver-owned company, Union Cab.

“There was an agenda, to improve the lot of the drivers who were complaining,” says Frank Dufay, who recently retired as administrator of the city’s taxi regulatory program. “The reality was it was Union drivers who were promoting the survey,” Dufay says, and the findings were “overstated.”

“They were trying to make Broadway look as badly as possible,” Campbell says.

Saying the average Portland taxi driver wage was $6.22 an hour is “an absolute joke,” he says. “I would say it’s got to be at least $12 to $15.”

At Radio Cab, Campbell says, the average take-home pay after expenses is around $19 to $20 an hour.

Broadway and Radio Cab are the two dominant cab companies in Portland, and the study noted that Radio Cab, also owned by cab drivers, paid better than the average. That would mean Broadway drivers earned less than the $6.22 average wage after paying expenses.

“If you were consistently earning that level of pay, you would think there’s a high degree of turnover. I don’t think there is,” says Mike Wilkerson, a senior economist at ECONorthwest.

Wilkerson and a colleague recently completed a Portland taxi market study on behalf of EcoCab, a new company in the market that promises to pay drivers $10 an hour plus a share of taxi fares.

The average tenure of Broadway Cab drivers is about 4.3 years, says Raye Miles, president of the Portland taxi company.

“We questioned the veracity of that report when it came out,” Miles says. There was a broad spectrum of take-home wages in the industry, she says, but nowhere near a $6.22-an-hour average. “It can get as low as $8 to $10 an hour, but I know we have drivers who make two to three times that. Honestly, if you aren’t making that much ($8 to $10 an hour), you want out. Why wouldn’t you?”

Using tax records

The city Revenue Bureau expressed confidence in its findings because it conducted informal interviews with about 250 taxi drivers and got financial information from six taxi companies. The bureau also had access to many taxi drivers’ state and federal tax records, as those are filed along with city business tax forms when independent contractors gross more than $50,000 a year. The Revenue Bureau found the study results were consistent with other studies around the county.

“That study seemed to reinforce what we hear from many taxi drivers,” says Bryan Hockaday, Novick’s aide who is leading the campaign to deregulate the taxi industry and accommodate Uber and Lyft.

However, Hockaday adds, “That was Sam’s study.”

The Revenue Bureau acknowledged that taxi drivers tend to underreport their earnings, which include tips. To compensate, city staff added 15 percent to what taxi drivers reported as their income, still leaving average wages at $6.22.

Many say it’s nigh impossible getting taxi drivers to divulge their true wages, because they collect so much cash and don’t report their full earnings to the IRS and Oregon Department of Revenue.

“A lot of it is unreported income, so who knows what people are really making?” Dufay says.

“I don’t know of any cab driver who will tell you the truth,” says Tesfaye Aleme, managing member of Green Cab. “I don’t think the study was done properly.”

Working overtime

Madelyn Elder, the former leader of the Communications Workers of America local that signed up Union Cab drivers as members, defends the study.

“I think it’s basically correct,” Elder says, “unless the cab companies underreported, and why would they do that? It makes them look bad.”

Many cab drivers were working 14-hour days and seven-day weeks to stretch that $6.22 hourly wage, Elder says.

The study counted tips, she says, if they were included on credit card payments collected by the taxi companies.

Tom Chamberlain, president of the Oregon AFL-CIO, supported the study at the time. But four years later, he admits that $6.22 an hour sounds a bit “goofy.”
To average that amount, for everyone earning $10, $15, $20 an hour or more, there have to be even more drivers dragging down the average by making closer to $3 an hour or so.

And the market has changed in the past four years, Chamberlain notes, with the addition of Union Cab and EcoCab, which treats drivers as employees and not independent contractors.

Taxi drivers say their pay has been understated, while Uber driver earnings are overstated because they don’t take into account the costs of buying and maintaining their cars, among other expenses.

Chamberlain says he worries many of the city’s 1,200 taxi driver jobs will be replaced by people driving part-time for Uber and Lyft.

“I believe this City Council really cares about low-wage workers,” Chamberlain says. “If they move forward with Uber, it isn’t keeping that spirit.

“Before I do anything with Uber, I’d do a new study.”

 

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