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    Taxi drivers clash with cab industry

    In a federal lawsuit, drivers say cab companies are operating a system that resembles indentured servitude.


    © St. Petersburg Times, published February 12, 2001

    TAMPA -- A group of Hillsborough County cab drivers wants to shed their status as independent contractors and become full-fledged employees of the cab companies that own the cars and equipment they use.

    In a federal lawsuit filed last month, the drivers said they derive few of the benefits of true independent contractors in other professions, and complained that two dominant companies set the rates and control the permits needed to drive a cab.

    Because they aren't employees, they said, they aren't guaranteed an hourly minimum wage, workers' compensation or paid time off.

    They describe a system resembling indentured servitude.

    Experts say say cities across the country have similar systems, with similar flaws. Innovation, they said, has never been a hallmark of the cab industry.

    "It's not easy to change something that is so ingrained," said Sam Staley, who has studied the taxi industry nationwide. "It's a highly regulated business that is resistant to change."

    Because of the specter of fraud and graft, the government controls the number of permits issued to operate cabs, decides who gets the permits and regulates the rates. The idea being that without regulation the system would spin out of control, with too many fly-by-night cabbies flooding the market, leaving customers at the mercy of a system with no controls.

    Yellow Cab and Gulf Coast Transportation control 96 percent of Hillsborough's nearly 500 cab permits. Cabbies pay about $450 a week to the companies to lease a cab, the meter and for use of the dispatch service. Cabbies who use their own cars pay a smaller fee, about $300 a week.

    Many work 30 to 40 hours a week to pay off the lease, then another 30 to 40 hours to make a profit. The weekly pay varies dramatically, with some drivers taking home $1,000 a week while others make half that amount.

    The county sets a maximum rate of $1.75 a mile, slightly higher than the national average. Companies can set any rate they want up to that amount, usually electing for the maximum.

    In some cities, the cabbies, not the companies, own the permits. And in some cases, there are no maximum rate limits.

    But for the most part, the systems are similar to those in Hillsborough and Pinellas, with the drivers leasing the cars and working for themselves, not for an hourly wage.

    Local cabbies have a number of gripes.

    Some would like a raise in the rates and the flat $1.25 charge for getting in a cab, known as a drop fee. Airport cabbies figure most of their fares would pay twice the current drop fee.

    Others would like more visible cab stands close to Raymond James Stadium and the Ice Palace. Pickup spots in Ybor could also be improved, they said. It would also be nice if cabs weren't ticketed so much for parking at metered spots downtown.

    Many are concerned by what they call the stranglehold that Yellow Cab and Gulf Coast Transportation -- the companies that operate United Cabs, Taxi Plus, Thrifty Cab and ABC Taxi -- have over the local industry. The companies actively campaign to keep the status quo.

    "(Tampa is) not a great cab town and it's not a bad cab town," said William McLaughlin, who joined the tiny startup company Cab Plus last month after Gulf Coast Transportation refused to allow him and others involved in the lawsuit to renew their leases. "But it's strange that the county allows two companies to dominate so much."

    Greg Cox, executive director of the Hillsborough Public Transportation Commission, was hired two years ago after a scandal involving permits in the local ambulance industry. His first impression of the local taxi scene wasn't a good one, calling the setup "potentially dirty."

    "Having two companies control so many of the cabs, it seemed ripe for corruption," said Cox, a former lieutenant colonel in the Army.

    But Cox has concluded that breaking the grip the two companies have on the local industry could be harmful.

    He has encouraged several small companies to break into the market only to see them founder. The costs involved in maintaining a fleet of cars made it difficult to compete, he said. The big companies get better rates on insurance and other business costs. The result for the start-up companies is often erratic, and then discontinued, service.

    Eventually, would-be entrepreneurs stopped applying for permits and about 25 went unused for months. Last year, the two big companies decided to expand and bought the 25 permits.

    Even if Cox could find takers, increasing the number of permits might not be the answer.

    More drivers could force some into outlying communities where drivers are reluctant to work. Drivers don't think there's enough profit in concentrating on Gibsonton, Apollo Beach or Brandon. The calls are few and drivers spend too much time making long drives without a paying customer in the car, known in the industry as deadheading.

    So more permits could force more drivers to fight for the finite business around the airport or busy hotels in Tampa, Cox said. It might be good for Tampa customers, but not so good for the drivers. It's a balance Cox tries to maintain.

    "Sometimes trying to make something better ends up making it worse," he said. "It's especially true in the taxi business."

    Staley, director of the Urban Futures Program at the California-based non-profit Reason Public Policy Institute, has seen the problems Cox talks about from Los Angeles to Ohio to Atlanta.

    Staley is skeptical the remedies sought in the Tampa lawsuit are the answer. He is unaware of a city where cab drivers are treated like employees, although the scenario has been considered. The workers' compensation costs alone could sink many taxi companies, he said.

    Because the taxi industry is highly regulated, many of the problems are similar from city to city, he said. Government sets the rates, doles out the permits, disciplines the drivers and decides who can pick up where and when. Staley thinks the key to improving the industry as a whole lies in loosening some of those restraints. The industry cries out for innovation and experimentation, he said, something that is tough to do when there are so many rules.

    He would like to see more cities try to increase the options available to consumers. In Madison, Wis., a city Staley studied, four companies dominate the industry, but they offer some variety by using different ways of charging, from zone rates to the traditional meter system.

    "It may seem like a small thing," Staley said. "But in this industry that's pretty big."

    Such variety won't make everyone happy, Staley acknowledges, but at least the companies are willing to try different ways to make a profit and still serve the customers.

    "It will take failures to come up with the right answers," Staley said. "But right now, all the regulations make it hard for anyone to get into the industry to risk failing. It basically protects the status quo."

    - Times staff writer Graham Brink can be reached at (813) 226-3365 or

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