From car to hire to millionaires: how Russians make taxis in New York - ForumDaily
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From car to hire to millionaires: how Russians earn a taxi in New York

Фото: Depositphotos

The yellow taxi is the calling card of New York and a means of making money for many people from post-Soviet countries. There are quite a lot of Russian-speaking drivers, as well as Indians, emigrants from Bangladesh and Haitians. Some Russians have been working behind the wheel of a taxi for decades and try to stick with each other. However, yellow taxis are not only the drivers themselves, they are also the owners of large fleets. And they also come from the Soviet Union. The Russian “taxi kings” – as the American media call them – have made multimillion-dollar fortunes from yellow cabs. However, lately both the former and the latter have had serious problems. ForumDaily understood how the Russians settled in a New York taxi.

Work for immigrants

Owning a yellow cab in New York City is almost like winning the lottery. In the city that never sleeps, cabs that pull up with the wave of a hand have long guaranteed their owners a decent and stable income.

There has always been a lot of money in this business - only a medallion (a special permit from the city that allows a taxi driver to conduct his business) at peak times cost more than a million dollars. It’s clear that not everyone can afford to shell out a fortune.

Dmitry, who came to New York in the early 90s, worked in a yellow taxi for almost two decades and left this business quite recently - he found a better paying occupation. Like other heroes of this article, he asked not to give his last name - in this area they do not like publicity. Dmitry started driving taxis in 1998 - he was 22 years old at the time. Of course, he didn’t have the money to buy a medallion. Therefore, at first, like the vast majority of his colleagues, he was forced to rent both a medallion and a car.

He was not the only one working on a rented car. Together with him, two other people took turns driving the same car - it worked out cheaper. It turned out that the car drove almost 24 hours a day. They had to pay $1200 to rent a car every week.

“The garage owner does not care who pays and how, the car is taken - it must be paid for. We divided this amount among three people according to the schedule we made for ourselves. For example, I chose the morning, and someone else chose the night. Then I go out at 5 am. If my friend worked at night, then he arrives with the car already warmed up. I sit down and work. I've done my job - I'm handing over the car. This is roughly how our business works,” he says.

There were no special requirements to start working as a taxi driver, neither then nor now. We needed only a driver's license and license (hack license), which can be obtained after a week of training in a special school. According to Dmitry, no one paid much attention to their knowledge of English. “This was not a problem, since a taxi driver must speak a fairly narrow area of ​​the language, which is quickly developed, and the garage that issued the car turned a blind eye to someone’s gaps in English. And besides the client and the police, there was no need to contact anyone,” he says.

Dmitry’s colleague Mikhail, who also came to America in the very early 90s, admits: they took a taxi because there was no other choice.

“I started working as a taxi driver early. We were traveling from the USSR, and could not bring more than the required $100-200 into the USA. Therefore, work was urgently needed. The easiest way was to take a taxi. You came, took the car, worked the flight - everything is simple. Any other business required financial investment. There was nothing to invest. There was neither time nor opportunity to study,” says Mikhail.

Some taxi drivers, however, having earned extra money from a rented car, decided to invest their savings in buying a medallion - this was their investment in the business. Dmitry also, after almost 10 years of working in a taxi, in 2007 was finally able to buy a medallion. Then it cost $400 thousand.

Million Medallion

The medallion is a necessary component in order to start taxing in the yellow service. This is a detail that has grown into the skeleton of the taxi business. The Medallions are issued by the New York City Taxi and Limousine Commission (New York City Taxi & Limousine Commission (TLC) at City Hall. The number of medallions is fixed. At the moment, their 13 587. To finally stake out your place behind the wheel, you need to buy it. Then it will be possible either to work on the machine itself, or to lease the medallion. So, Dmitry for several years leased a medal and had $ 2,5 thousand from it monthly.

The principle of limited edition medallions appeared 80 years ago. During the Great Depression, thousands of unemployed men began to taksovat. Taxi cars at some point became much more than passengers. Drivers' earnings fell sharply, and the industry was on the verge of bankruptcy. In order to save her, in 1937, the city authorities invented a system of medallions. From then until 1996, they were 11 787, but over the past 20 years their number has increased somewhat.

On the one hand, the existing system guaranteed stable earnings for drivers. But on the other hand, due to an artificial limitation on the number of medallions, their cost jumped hundreds of times. If in 1947 a medallion could be bought for $ 2 500, then in 2013 it was already worth $ 1.32 million. И since new medallions are not produced, they only sell, buy and rent on the market existing medals handed in by one of the businessmen. This is done by special intermediaries between TLC and taxi drivers - brokers (not to be confused with brokers with Wall Streetthese are completely different people).

Taxi kings

There are only a little more than a third of taxi drivers like Dmitry who own a medallion and at the same time sit behind the wheel of a taxi. 58% of yellow taxis, according to Bloomberg Businessweekowned by companies that simply rent cars to anyone.

And this is where all the money flows from the New York taxi industry. Moreover, they flow directly into the hands of another emigrants from the Soviet Union - Evgeniy Fridman and Simon Garber. For a long time they bore the unofficial titles of “taxi kings”, which the media awarded them.

Born in St. Petersburg, Friedman and a native of Odessa Garber in New York built their own taxi empire. They started a business in 80 and reached zero prosperity by zero, making multimillion fortunes with yellow taxis. In fact, both of them bought through brokers the old medallions that were on sale, and then leased them. In this interview Bloomberg Businessweek Evgeny Fridman admitted that he contributed to the speculative increase in the cost of medallions: “I go to the auction and raise the price of the medallion. Then I go to my bankers and say: “Look how expensive medallions are! Lend me money against my portfolio.” And they let me do it."

Until recently, the "kings of taxis", despite the occasional scandals, felt very good. According to various estimates, at a certain stage Friedman owned 800-900 medallions, Garber - 275-500. Taxi drivers who are familiar with the prices of their garages, are wondering: each of them could earn from $ 3 to $ 5 million every month.

However, just a couple of months ago, the throne under Friedman practically collapsed - Taxi and Limousine Commission deprived of his rights manage 800 medallions, and a little earlier, he took another fifty cars for non-payment of debts to creditors.

How expensive and cheap medallion

Problems with the payment of loan medallions touched not only the king of the taxi. After the arrival of Uber’s mobile service in New York in 2011 and its aggressive expansion, taxi drivers began to complain about the decline in profits, and the price of the medallion, after a peak in $ 1.3 million in 2013 year, began to drop sharply.

Starting in 2016, during a period of a large number of business refusals and medallions being taken away for non-payment of a loan, a medallion could be purchased for $300-350 thousand in cash. When buying on credit, the price was higher, often twice as high.

In fact, buying a medallion on credit works in the same way as a mortgage: you do not make payments - the bank sells the apartment, the client pays for it with the bank. Taxi drivers in general often compare the purchase of a medallion with the purchase of an apartment - the same rules for refinancing and lending.

In March, 2017, one of the medallions was sold for a record low $241 thousand - this is 4 times cheaper than 4 years ago. The price has not fallen so low over the past 17 years. However, such a cost is the exception rather than the rule. Already in April another medallion sold for $ 425 thousand. And now the price of the proposed medallions ranges from $ 320 to $ 800 thousands.

How much do ordinary taxi drivers earn

Dmitry worked every other day, sometimes every other day. On average, I earned $500-600 per day. However, the round amount of earnings is balanced by the same round expenses. “With a team contract, I had about $4-4,2 thousand in various payments per month. Of this, $3000 is the loan payment for the medal, $600 is insurance, $100-200 is paperwork, inspections, and $200 is compensation that you must legally pay if someone else works on your car for a month. This is without gasoline. Plus $5-6 thousand for renting a car. If I give the car to another driver, he pays all the costs of use, and thus brings me from $180 to $200 a day - and so on 15 days out of 30,” Dmitry shares his calculations. “Thus, according to very preliminary estimates, when working together, for example, with one rented car, it turns out: salary for 15 days - $9000, plus sublease $3000. Total $12 dirty. Minus $000 for 2800 weeks of car rental (the partner pays for the remaining 2 weeks) and minus the $2 expenses listed above. That works out to a net $4200 a month or $5000 a year.”

Michael also got the amount of $ 90 thousand per annum dirty for daily work on 10-12 hours per day.

Life after Uber

Coming Uberwho became the main competitor of the yellow cabs, significantly complicated the life of taxi drivers. Now they are complaining about unfair competition: they say, requirements for taxis are much tougher than Uber.

Albert drives his own car, purchased specifically for business.

“Why are I forced to buy a car for $ 43 thousand? I have to buy a car of a certain brand in order to get permission. Uber while it can buy any car and not pass the inspection costing $ 2 thousands per year. Legally, we can not only call on the mobile, but even keep it in the car, but Uber quietly uses the mobile service while driving. Besides, having bought a car for $ 40-50 thousand, I have to throw it out in 5 for years and buy a new one, and Uber this is not required to do. We do not raise prices in the rain, although riding at this time is more dangerous, and Uber when it rains, it inflates prices,” the taxi driver lists his complaints about the mobile service.

Coming Uber on the market means not only a different balance of power. It is also a traffic jam. By 2017 on 13,5 thousands of yellow cars began to account for more than 20 thousands of cars Uber. Mikhail is outraged: “After all, a taxi is needed for what? For convenience and speed. And what is the speed here when the movement in the city is completely paralyzed because of the abundance of services? Food 3 meters per hour.

However, there is one nuance. Few years after Uber came to New York, yellow taxi drivers quite often worked there. That is, they also drove like yellow taxis picking up people all over the city and took orders from Uber. But a year ago, the mobile service hired a lot more drivers, and they didn’t need yellow taxi drivers. This was another reason that the taxi driver’s relationship with Uber at the moment much spoiled.

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