City should leave cab industry alone

The Salt Lake City Council is proposing to cut the number of taxicabs by 25 percent. The council argues that a driver’s income will increase (conveniently ignoring the fact that more than 58 drivers would be out of work) because there will be fewer down hours per cab.

In 2005, the City Council commissioned the Ground Transportation Study from Ray Mundy, a transportation studies professor at the University of Missouri. Mundy’s recommendation led to the City Council’s March 24 proposal to move from regulating taxicab companies through certificates of public convenience and necessity to a contract-based system. When interviewing cab drivers, Mundy found that many complained they weren’t making money.

City Council analyst Russell Weeks said they are in the process of determining whether to continue the current cab service regulation model, switch to a contract system or open the market to let anyone provide the service.

The bottom line is that government involvement will not improve the economy, and legislation in this case will not enhance the free enterprise system.

The cab industry in Salt Lake City is facing enough day-to-day problems without the City Council telling it how to manage the supply-chain model. According to a Ground Transportation Study for the city, many cab drivers work 14 to 16 hours a day, but make less than minimum wage because of the down time waiting for riders. The cab industry also faces stiffer competition with new shuttle services and courtesy vehicles offered by hotels and resorts, as well as the pending Utah Transit Authority TRAX line extending to the airport.

“Someone has told the city that if they reduce the cabs in the city, then the drivers will make more money, but that is not true,” said Don Barron, director of Yellow Cab. “It’s not a good deal for drivers who work as independent contractors or cab companies. The business that we would lose in the city and county will go to gypsy cab drivers who don’t pick up at one in the morning. Why throw away something that’s working?”

The city has given permits to three cab companies, totaling 268 cars, that serve the Wasatch front and resort destinations. The proposal would cut the number of cabs down to 210.

Barron adds that for his company, if 68 drivers had to be turned away, nearly 200 family members would be affected by that lost income. Yellow Cab turns away potential drivers every day because the city only allows them to operate 145 cabs. Yellow Cab pays roughly $1900 in insurance per cab each year. If those cabs can’t operate, Barron said he’d be losing money in a market where he knows there is demand.

The City Council is waiting for survey results before it’ll move forward with any final decisions, but rather than surveying community members, it needs to explain why it’s getting into the business of determining how many cabs are on the road, what a cab driver can make and why it is only targeting cab drivers and not shuttle drivers or bus drivers. With such unrestricted and asinine intervention, who is to say it won’t start dictating how many mechanics, hair stylists, waiters or receptionists are allowed to work in Salt Lake City? It seems as though someone in power prefers a socialist system.

It is entirely appropriate for the City Council to be involved in measures that ensure public safety and well-being, but definitely not in dictating what the cab industry is allowed to supply the market. That is something that market forces will dictate and companies will respond to.

http://www.dailyutahchronicle.com/opinion/city-should-leave-cab-industry-alone-1.1641698