Spectacular Failures - NYC Taxi Medallions’ steep fare (Transcript)

Read the transcript for our episode “NYC Taxi Medallions’ steep fare.”

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In the world of people who collect things, Nathan Willensky is a rare bird. 

Nathan Willensky: There are four of us in the world so we're all good friends and we don't compete with each other

Lauren: Wait...four who? Four people who collect taxi stuff? 

Nathan Willensky: Yeah, on a serious basis. There were five but we lost one. It was really sad, but we bought his collection from his wife.

Nathan is a collector of taxi memorabilia. Toys, games, if it’s about taxis, Nathan has it. 

He’s talking to me over Facetime from his home in Long Island. And as we’re chatting I see a bit of his toy collection peeking out from behind him. 

Lauren: It's so funny, I'm just looking over your shoulder and it's just like a million cars stacked up on shelves.

Nathan Willensky: You know, I'm limited. I was given one room. This is the room and so I have the attic, I've got some cabinets in the dining room, and I've got the garage. But that's it. So, if you came to the house you wouldn't know there was a collection here.

That’s because Nathan’s wife Barbara was like, “Uh no I will not live in a “Hoarders” house!”

To be fair, Nathan’s collection of 9,200 taxi toys is extremely orderly. Like I wish he could come to my house and organize all of my knick-knacks.  

Lauren: So can you take me around and show me a little of what you have? 

Nathan Willensky: Sure. So I'm gonna flip the phone.

PS- I would have gone to see Nathan’s collection in real life but coronavirus. 

Nathan Willensky: Okay. So over here by my desk with the view are these little H.O. things.

Lauren: Are those like little Matchbox cars? 

Nathan Willensky: Smaller. 

Lauren: Oh, they're like Micromachine-y kind of.

Nathan Willensky: Bigger than Micromachines, smaller...these are what the Germans collect. These are mostly German because they don't have much space.

There are the wind-up taxis and rubber taxis and replica Volkswagen Beetle taxis. There are taxis made of glass and taxis made of porcelain and tricky taxis that spin around a table but won’t fall off. 

Nathan Willensky: And then we go along here and if I'm going too fast, say something. Up top are my favorite American tin and European tin. And then my other favorite are made-in-Japan toys. These Japanese tin are really neat.

But Nathan’s collection isn’t just toys. He takes me into the attic where an equally huge assortment of taxi collectibles live. Taxi cigar boxes and taxi ashtrays. Taxi hats and taxi baby shoes. Two huge binders containing the sheet music to taxi songs.  

Lauren: Oh my god, it just keeps going.

Nathan Willensky: Business cards, tokens, matchbooks, lots of matchbooks. 

Then we get to the piece that inspired Nathan to start collecting taxi memorabilia 30 years ago — a taxi cookie jar that his mom bought him. 

Nathan Willensky: Gotta be here somewhere. Not down there. Let me see if this is it. This is it!

Lauren: Oh my God, that's an enormous cookie jar.

Nathan Willensky: That's the one that started me.

Nathan’s amassed other collections over the years, but as a New Yorker, nothing stuck like cabs.

Nathan Willensky: I like taxis. I get a tingle when I see one. 

But, in the wake of coronavirus, there are more taxis inside Nathan’s home than there are on the road. The usually cab-choked streets of Manhattan have been quieter. Rows of taxis sit idle on streets throughout the city. For one of the first times in the history of yellow cabs, this iconic symbol of New York has been rendered practically useless.

But the city’s taxi industry had been flailing way before the virus hit. And it’s not just because Uber and Lyft rolled into town and stole all the fares. Cuz you know when President Trump’s felonious former attorney Michael Cohen is involved in the taxi industry, its problems run way deeper than ridesharing. 

I’m Lauren Ober and from American Public Media, this is Spectacular Failures, the show that always keeps the meter running for failure.

PART ONE

The way Dave Pollack tells it, he was born in a taxi. 

Dave Pollack: You know, it's funny - I was speaking with my mother about it about six months ago. And she says, “Oh, come on, we made it into the hospital.” And I said, “Well, that's not what Dad says.” You know, they came out and then in the front seat I was born. Then they took me inside. So I was at the hospital but I wasn't born in the hospital. I was born in the cab.

Pollack is a Bronx boy with a Bronx story. So it makes sense that a guy who bleeds Yankee blue and taxi yellow would have this kind of beginning. His grandfather emigrated from what is now Ukraine and became a yellow cab driver. His father also drove a taxi. And of course, Pollack was going to do the same.

Dave Pollack: I drove a cab part-time when I was going to college in the city. And as time went on, I started driving more and taking fewer classes. And ultimately, I dropped out of college and drove a cab full time.

Pollack worked as a taxi driver in New York for about five years in the ‘70s. Back then the city was libertine and lawless and alive. 

Dave Pollack: I used to love driving late Friday into Saturday, and then Saturday nights into Sunday. You feel like you're the blood and pulse of New York City.

Pollack became well acquainted with the downtown party scene. Andy Warhol sat in the back of his cab on more than one occasion. One time Pollack got some passengers into the famed nightclub Studio 54 by dropping some names at the door. It was an electric time to drive a cab in the city. 

Dave Pollack: Saturday night ends and all of a sudden everybody is home and it's four or five in the morning, and it's starting to get light and you're alone on the streets of the city. That's something that you can't really describe. You have to live through it to understand. It was great.

After Pollack quit driving, he began working in the taxi insurance business. Then he moved on to work at a credit union for cab drivers. Later he started a taxi newspaper. Then a taxi radio show. 

CLIP [Taxi Dave Intro]: You’ve never heard a radio show like this before. Following in the footsteps of his father and grandfather, Taxi Dave drove a taxi in New York City for many years. In fact he was born in the front seat of a yellow cab. Join us for an hour of informative discussion... 

The Taxi Dave Show is just one small slice of taxi esoterica. There are taxi periodicals and taxi reality shows and taxi joke books. Which is where I got this gem: 

I just got fired from my job as a taxi driver. Turns out people don’t like it when you go the extra mile for them.

[Laugh track.]

In 1978, Danny Devito starred in a hit TV show all about taxis. It was called “Taxi.” 

CLIP [Danny DeVito from Taxi]: You’re a cab driver? What do you mean busting my chops here making me think you’re a regular person! 

A solid number of Seinfeld scenes were filmed in the backseat of cabs and they often ended like this: 

CLIP [Seinfeld]: Get out! Get out each of you! Each and every one of you get out of my cab! 

There’s always been an undeniable mystique about cabs. They are more than just a mode of conveyance; taxis are havens. They save us from the rain, from bad dates, from being late when the trains aren’t running. Cab drivers are confessors and voyeurs. Sometimes they might even give you stock tips. And they occupy a special place in our collective cultural psyche. 

Taxi Dave was part of that. He’s retired now and lives upstate. But in his early days, he was the embodiment of New York’s yellow cab business and all the pride and nostalgia and gritty glamour that came with it. At one point, he even owned a prized taxi medallion. 

Dave Pollack: The taxi medallion was always, I guess the cliche is, the gold standard of transportation in New York City. 

In order to understand the collapse of the taxi business in New York, we have to first get real friendly with taxi medallions. 

Basically, before 1937, New York City was jam-packed with tens of thousands of unlicensed, unregulated and often unsafe cabs. Wildcat drivers with busted up cars were hustling passengers all over town. 

The city was like, uh yeah we gotta pump the brakes on this nonsense. So, they created a medallion system.

Brian Rosenthal: It is literally a piece of tin bolted to the hood of your cab. And it is the license that allows you to own and operate a taxi cab. 

That’s Brian Rosenthal. He’s an investigative reporter at The New York Times and he’s written extensively about the taxi industry in New York City. And won a little Pulitzer Prize for his work.

Basically, the city said “All the cabs on the street at this time are eligible for a medallion. The rest of you bums, get outta here.” And that essentially froze the number of cab licenses at around 17,000. 

These medallions were the gold standard of transportation in New York. They let passengers know, hey this driver answers to some legit authority. And you’re not going to get ripped off and the wheels aren’t going to fly off of the car while it’s on the road. Hopefully.  

Brian Rosenthal: They are originally issued by the city. But once they've been issued by the city, they can be bought and sold like any other asset and so the price can fluctuate like any other asset. 

In 1937, a taxi medallion cost just $10. After World War II, the price had climbed to $5000. Because there was a limited number, and high demand, the value kept going up. 

Brian Rosenthal: Over time, they steadily increased in price. Steadily, but slowly kind of with inflation, as well as a little bit more than inflation as people realized that you could really make money with these things. You know, they got up to 50,000. They got up to 75,000. They got up to 100,000.

For years, the value of the medallion tracked nicely with how much a driver made using the medallion. As the population grew and the city became more prosperous, the amount a cab could bring in increased. So the value of the medallion kept going up. 

Brian Rosenthal: The people that owned medallions were really focused on making money just off picking up fares off the street.

But all that changed in the 1990s. That’s when a guy named Andrew Murstein came on the scene. He came from a taxi family. His emigre grandfather drove a cab when he arrived in the U.S. from Argentina and managed to scoop up hundreds of medallions over the years. His father carried on in the medallion scooping-up business. 

But as the lore goes, Andrew Murstein wanted to do his own thing. No taxi biz for him. So he went to business school, got his MBA, and worked as an investment banker at some big deal banks. 

Eventually, though, Murstein found his way back to the family business. But instead of managing medallions, Murstein convinced his family to sell them off to finance a new lending business. He called the enterprise Medallion Financial Corporation and its slogan was “In niches there are riches.”

Brian Rosenthal: A lot of these kind of second generation, third generation in the cab business types of people were thinking of ways to make more money.

So rather than just buy and sell medallions among fleet owners or individual owner drivers, Murstein figured you could treat the medallions as an “alternative asset class.” Like vintage wine or foreign currency or precious metals. And you could sell those assets to passive investors who had zero interest in the taxi business but wanted to make some big returns. 

Gary Roth: He called them riskless assets. I mean, basically everyone saw it as easy money.

That’s Gary Roth, a former policy analyst at the Taxi and Limousine Commission, which distributes the medallions.

And here’s Murstein himself talking to the Associated Press about those little money-makers: 

CLIP [Andrew Murstein with AP]: It's kind of like real estate when if you buy something, you own it for life. And the reason why taxi medallions are such a valuable asset is if you bought one, you don't have to drive the cab. Just like real estate, you rent it out. 

Ok, I’m with you...

CLIP [Andrew Murstein with AP]: ...so you're getting a return on your current investment by getting the rental income, plus you're keeping all of the appreciation, and there's only so many of them. 

Continue...

CLIP [Andrew Murstein with AP]: There's only been a thousand new medallions in the last 70 years. So the New York population has gone up tenfold in the last 70 years, but the medallion population has gone up less than ten percent.

All that meant that as the city got bigger and the medallion numbers stayed flat, the value of the medallion kept creeping up. ‘Cuz scarcity. Then in 1997, the city auctioned 400 new medallions. It was the first auction like this in 60 years and medallions fetched around $200,000 apiece. 

And, Murstein told the Tradestreaming podcast, that meant a tidy little profit for the city. 

CLIP [Andrew Murstein with Tradestreaming Podcast]: They’re receiving a transfer fee of five percent every time a medallion is bought and sold. So it’s a great income stream for the city also. That’s one of the reasons why they protect the market so well and regulate it is because, again, they’re our partner and they’re getting five percent of the sale price. 

Now I don’t know about you, but I’m picking up some very distinct cartel vibes. If the city stands to make money off of the sale of medallions, then the city has an interest in making sure the prices continue to climb. 

In advance of the next medallion auction in 2004, the city’s Taxi and Limousine Commission ran ads around town encouraging cab drivers to buy. 

CLIP [City Medallion Ad]: I’m my own boss and I’m in charge of my future./Hi, I’m Commissioner Matthew Daus of the New York City Taxi and Limousine Commission. For only the second time in city history, a limited number of new taxi medallions will be auctioned off directly to the public. A medallion gives you the right to own and operate your very own taxi and it’s often seen as a great investment. Visit us online at NYC.gov or dial 311 for more information on this once in a lifetime opportunity./Deciding to own a cab was the best decision I ever made.  

It wasn’t really a once in a lifetime opportunity. But the line worked. 

Medallion prices skyrocketed, which was a great thing for investors and for anyone who already owned a medallion. When the city auctioned off even more new medallions later in 2004, bids topped $300,000. Five years later, medallions pulled in more than half a million dollars. 

But why the dramatic spike? Well, part of the reason was that when Murstein and others of his ilk got in the game, they marketed the hell out of the medallions. Particularly to investors who were still true believers in the fiction of riskless assets that only ever appreciate. Did they learn nothing from the housing crash?

CLIP [Andrew Murstein on Fox Business]: They’ve gone up 15% per year for 70 years as you said outperforming the Dow, Gold, NASDAQ, real estate, you name it. 

Ooh, I’m almost sold! You’ve told me how it’s just like real estate, now tell me how it’s not at all like real estate!

CLIP [Andrew Murstein on Fox Business]: Unlike real estate, real estate eats cash. People have to pay maintenance, people have to pay real estate taxes. These are little cash cows running around the city spitting out money. 

I mean, tell that to an immigrant cab driver bringing home $40,000 a year in one of the most expensive cities in the world. But anyway. 

Investors weren’t the only ones trying to get their mitts on some medallions. Drivers who wanted to become their own bosses and have a little more control over their destiny were also being encouraged to buy medallions. But as investors kept driving medallion prices higher and higher, drivers kept needing bigger and bigger loans. And this doesn’t make any sense, but those giant loans were becoming easier and easier for drivers to get.  

Part of the reason that happened says Brian Rosenthal, is because the lines between the lenders and the brokers and the fleet owners — the entire money side of the business — seemed to get real blurry. 

Brian Rosenthal: Some savvy business people ended up doing all of those things at once. And so you'd have an insurance salesperson that was also the broker, the bank or the lawyer, the fleet owner and everything else. And, you know, it all just got kind of tied together.

So if I’m selling taxi insurance, but I am also a taxi broker, I could hook you up with a medallion while I’m selling you insurance. Then I could connect you with my guy who is a lender. And he thanks me by sending insurance business my way. And everyone’s palms are greased. Call me vanilla, but that’s a few too many people in bed together for my taste. 

Now, what does this sound like? Mid-aughts? A balloon that just keeps getting bigger and bigger and bigger? Is it reminding you of anything? How about the 2008 housing crisis? 

In financial terms, a house and a taxi medallion aren’t that different. Both were reasonably safe and boring appreciating assets that generally required a loan to purchase (unless you’re a moneybags investor). And as we know from the housing crash, not all loans are created equal. Loans can have wildly different terms and conditions, depending on how much of a risk the borrower is. And the riskier the borrower, the more exotic the loan deals can get. 

There’s a good reason the taxi bubble started to look a lot like the housing bubble before it. 

Brian Rosenthal: We tracked how some of the people that were involved in the housing market bubble, after that kind of got shut down, they were looking to apply those practices elsewhere. And so they went into the taxi industry. You know this is something that has happened over and over again. And with this type of an asset, there were people that thought that they could make money off of it. And so they did.

But the inflation of the medallions was actually a little worse than the subprime mortgage crisis in one particular way — the government was actively rooting for it. 

Brian Rosenthal: They're saying that this is a risk-free investment that you should invest. It's the opportunity of a lifetime. So, I mean, yeah, if you don't know anything about finances, and not only is your boss and everybody in the industry telling you that it's a great idea, but the government itself is telling you it's a great idea, what are you gonna think? 

By 2013, medallions were worth an eye-popping $1.3 million. That valuation doesn’t track with the income that cab drivers were bringing in. Not even close.

That $1.3 million figure represents a 500% spike in value since the first city medallion auction in 1997. That’s a really big bubble. But here’s the thing about bubbles — they can’t grow infinitely huge. At some point, they will burst.

We’re going to take a quick break. When we come back, what happens when the laws of physics come to bear on a multi-billion dollar industry. Plus, what a rideshare tech disruption and a global pandemic mean for one of the world’s most iconic transportation systems. 

PART TWO 

When Miriam Rosin and her husband Eli moved to the U.S. from Israel in 1973, there weren’t a ton of job opportunities. So they turned to their countrymen for help. 

Miriam Rosin: We found some Israelis that, you know, came here like us with the same idea and they told us that probably the best way to do, is to buy the medallion, which is an asset, and you will be able to drive the car. 

Eli had been a truck driver back in Tel Aviv, so driving a cab seemed like a logical extension of that. Plus…

Miriam Rosin: As an immigrant, there would be, there is no requirement as far as like, you know, the education levels and basically you have to just drive and know the city and speak a little bit of English. And if you don't speak English, that would be okay too. 

So the couple pooled together their money and bought into a mini-fleet — basically a little taxi corporation with two medallions. They shared the medallions with another owner-driver.

It wasn’t the dream of Miriam’s life, but owning a cab did feel kind of special. 

Miriam Rosin: You’re part of New York. You own something, a part of New York. Because the Yellow Taxi really represents New York.

And things were good for a long time. Miriam got a job in the city’s diamond district and Eli drove the cab. In the beginning, Eli worked crazy long shifts — sometimes 14,15 hours a day, six, seven days a week. But once he got a groove going, things fell into place. 

He’d hang out with other Israeli drivers at one of the city’s airports waiting for fares. Or he’d swing by one of the few midtown hotels where he had some good connections with the concierge. He drove his cab all over the city all day long.

In a way, Eli was living his American dream. And that’s what cab driving had been about since the beginning, says Prof. Ted Landsmark.

Ted Landsmark: Driving a motor vehicle to transport individuals from one location to another is the kind of business that ought to be open to immigrants, new arrivals, and long term residents of the city, who may be diverse and aspiring to make some money. In a way where they can build up some equity for themselves and their families. 

Landsmark is the director of the Dukakis Center on Public Policy at Northeastern University. He grew up in Harlem in the 60s and most of his early taxi experience was with unlicensed cabs — traditional yellow cabs at that time often didn’t serve Black or Hispanic neighborhoods. 

But as an expert in the urban environment and transportation policies, Landsmark sees cabs as a crucial step up for many immigrant families. 

Ted Landsmark: I think it's essential that as a city's demographics change, all of the new people in the city ought to have an opportunity to become part of the businesses that work within that city. 

Over time, a number of those new arrivals were able to expand their medallion holdings. They would buy two, then three, then dozens, stockpiling medallions and thus wealth for future generations. This was how the taxi industry grew. And as it grew, it developed its own codes of conduct and factions and hierarchies. 

Ted Landsmark: And to a large extent it has been dominated by a limited number of families or investors who've often passed along the business in an intergenerational way, and only among certain people. 

People like President Trump’s former lawyer, Michael Cohen, who got into the taxi business in the 90s through his father-in-law, an immigrant from the former Soviet Union. Along with a partner, Cohen operated a fleet of more than 250 cabs. Later Cohen got involved with Gene Friedman, New York’s so-called “Taxi King”. Also a convicted tax evader. All of this ended real well for Cohen, who is currently on house arrest. For evading taxes on amongst other things, his taxi medallions.  

The 90s were a real turning point for medallions. It was when they started to be viewed not just as essential components of family businesses, but also as hot little moneymakers. The city sat up and took notice. And that, Miriam Rosin says, is when things started to change. 

The couple noticed more and more onerous regulations imposed on cab drivers at the time. Miriam remembers they had to get their cab inspected at least three times a year and that cost money. And god forbid they find something wrong with your cab. 

Miriam Rosin: If they check the cab and if the seatbelt is not going to be straight, you will be failed. They remove the medallion from your thing. And you won't be able to work until you fix it and they will tell you come in a week or 10 days, that’s loss of work, it’s just stupid regulation. 

Now I’m all for safe taxis, thanks very much. But for drivers, the increased regulations courtesy of the Guiliani administration seemed oppressive. 

Miriam Rosin: They would come up with another thing, another scheme to get money out of them. And it was very hard to make a living.

Then in the early 2000s, Miriam started to notice another change — the value of the medallions was increasing. By a lot. 

Miriam Rosin: We knew it was a bubble. We knew that this is not legit. But we didn't know, you couldn’t put your finger. I mean, eventually, we found out what was happening. But we couldn't figure it out. Because it just did not make sense. 

Miriam and Eli — who died in 2016 — tried to unload their medallions when they saw the price continue to climb. They didn’t want to get stuck holding medallions when the bubble eventually burst. 

In 2011, TLC analyst Gary Roth got his first real glimpse of the medallion bubble as it floated on by. He had been asked to look into whether leasing rates for taxis were too low. Basically, operations like Michael Cohen’s leased medallions to drivers. Kind of like a car rental. And much to the chagrin of many fleet owners, there was a limit to how much they could charge drivers per day — a rate that was set by the Taxi and Limousine Commission, or TLC.

So medallion owners were hoping to extract some more money by punching up the lease rate. 

Gary Roth: I basically looked into the numbers and I saw that the current leasing amount was not nearly enough to pay for the medallion as it was. So all that would happen if they increased the value of the lease, then it would just push up the value of the medallion, which was already very high.

This was Roth’s first indication that the industry was perched right atop the bubble. As the value of the medallions went up, the medallion owners wanted to find a way to make more money off of their appreciating assets. And since cabs were bringing in the same amount of money they always had been, there weren’t many avenues for increased income. 

To me, Lauren Ober, casual observer, the lease price induces heart palpitations. At the time, it was $800 per week minimum for drivers who didn’t own their own medallions. That’s at least $3200 monthly for the pleasure of renting a cab. And that doesn’t even factor in the price of gas and maintenance and all the inspections that the city required of the taxis. 

Things weren’t looking great for cab drivers. But they were about to get so much worse. 

Gary Roth: I rang the bell in 2011 and prices kept going up and up. I mean, it's similar. I said, like Amazon stock. I mean if you look around, I'm sure there are people ringing bells that Amazon stock is going to decline. You don't know who's right until later. 

The year that Roth sounded the alarm about medallions was the same year that rideshare giant Uber rolled into town. And man, that did not go over well with the cabbies and medallion owners. 

See, here’s the thing about medallions — they were meant to be exclusive. If you wanted to pick up a passenger on the street, you needed a medallion. Remember back in 1937? The whole point was to keep unlicensed taxis off the roads.

But then ridesharing came along and it was 1937 all over again, except with GPS and more comfortable cars. Uber and Lyft laid waste to the idea that medallions were exclusive and worth anything close to a million dollars. 

In a blink, ride-hail services had tens of thousands of cars on the road that directly competed with cabs. Taxis have always had competition in the form of black cars, livery cabs, limos, and of course your Uncle Donny who would sometimes agree to give you a ride downtown. But Uber and Lyft were different. 

David Yassky: Once Uber and Lyft come along, then all bets are off and all the economics, whatever you knew or thought about the economics of the industry before that, it was no longer applicable.

That’s David Yassky. He was the chair of the TLC from 2010 to 2013.  

David Yassky: There's just a lot less money coming into the fleets, the owner drivers, everybody.

But figuring out how the yellow cab industry in New York drove off a cliff is a little like asking a bunch of toddlers who colored on the wall and each of one of them saying “He did it!” while pointing to a different kid. 

Bhairavi Desai is the co-founder of the New York Taxi Workers Alliance, a 21,000-member union. She describes the cab crisis like this: 

Bhairavi Desai: This is a play in many acts. And you know, certainly, I’m a Bollywood girl. You can have more than one villain.

What happened to the cab industry in New York is a real cluster, but let’s see if we can’t flesh things out a bit.

Cab medallion prices rose steadily from the 30s to the 90s and their value was largely based on how much money a cab brought in. There was a limited number of medallions and the medallions conferred special rights to pick up a street hail. Then in the 90s a few things happened — the Guiliani administration found all kinds of inventive ways to nickel-and-dime drivers to fill the city’s kitty, speculators figured out taxi medallions could be sold to investors just like real estate, AND the city auctioned off the first new medallions in 60 years. 

As the medallion-as-asset schemes grew more popular, the value of the medallion became artificially inflated.

Bhairavi Desai: The medallion went from being a tool of the trade to a pure financial asset. And so the value was no longer rooted in how much revenue could it earn and therefore sustain in payments. 

A medallion’s value now corresponded to whatever people were willing to pay for it. Still though, if you were a driver and you wanted to buy a medallion (even at those outrageous prices), you could still hustle up the financing and make your payments. The taxi industry still had a monopoly of sorts and you could still make good money from driving. But then Uber and Lyft came along and everything you ever knew about the cab industry went the way of the buggy whip. Three years after rideshare’s arrival, the yellow cab business hit the biggest pothole it had ever seen. 

Brian Rosenthal: All of a sudden in late 2014, the prices start going down very, very quickly. 

Just before this crash in 2014, cab drivers who didn’t own medallions were increasingly pushed to buy one at $7, $800,000 per medallion... often by brokers who were also lenders. Yoi. 

And the loans these brokers were pushing, ugh don’t even get me started. Some were interest-only. Meaning the drivers would never even come close to chipping away at the principal. Some were balloon loans that would come due after three years, which would mean the drivers (who were, let’s be real, never going to pay off $800k in three years) would have to refinance. The subprime mortgage market had come to the taxi lending business.

The folks borrowing money for a medallion were not that different from the folks getting snared in subprime loans — working class or low income, new Americans or people of color, without a lot of resources. An average taxi driver in New York makes around $30, $40,000 a year. And they were being persuaded to carry debt in the hundreds of thousands of dollars. Here’s David Yassky, former TLC chair: 

David Yassky: None of the ordinary stuff that applies to employees ever since the New Deal, a minimum wage and maximum hours overtime, good working conditions, safe working conditions. None of those things apply in the taxi industry. 

So if the taxi medallion crash is a play with many acts, here they are: first, the inflation of taxi medallions skyrockets; then an overleveraged, exploited workforce gets pushed into bad loans; and finally an industry disruptor in the form of Uber and Lyft arrives. Yeah, things aren’t looking good. 

Brian Rosenthal: The bubble burst as bubbles do and the banks realized that this asset didn't make any sense. And so they stopped writing loans. And that led everything to kind of collapse.

In an instant, those medallions fell from their sky-high million dollar value. Their worth became much more reflective of their value as a transportation option. And that value was falling fast thanks to the tens of thousands of on-demand Ubers and Lyfts jamming up the streets. All those drivers who took out breathtaking loans were suddenly underwater. Just like so many homeowners in the mortgage crisis six years before. 

After the crash, all of New York’s cabbies were vulnerable. But none more so than the 3,000 or so owner-drivers — folks who owned their own medallion and taxi and drove for a living. 

Bhairavi Desai: They are all in danger of losing their medallion, which is their job. Or being forced to file for bankruptcy, which means that not only would their credit in the future be affected, but for some of these families, it means that they could lose their house, which may be a second mortgage with the medallion. 

2018 saw a spate of taxi driver suicides. It’s impossible to know for certain why each driver took his own life. But the eight deaths brought the story of financial ruin and the depth of driver despair to the public. The average owner-driver was carrying $600,000 of debt from his medallion purchase, Desai says. And losing income every year.

But just when you thought it couldn’t get any worse… coronavirus comes to town. And we all know what happened then. Nobody leaving their houses meant nobody needed a cab. And nobody needing a cab meant that thousands of taxis sat empty on the streets, their drivers at home collecting unemployment if they were lucky. 

Hari Singh is one of those drivers. For the past 20 years, he’s leased a medallion from a fellow immigrant who drove for years until he retired. Singh worked the night shift, six or seven nights a week. It was hard work, but at least it was work. 

Hari Singh: This is my first time in my life...I go to work even I have 102 temperature. You know I go to work, because I like to work. That's my job. But since last three months or four months, I stay home because I take precaution for my health.

Staying home means waking up at 3 pm in the same one-bedroom apartment in Queens where he’s lived for 35 years. He keeps the same hours as when he was driving so he can talk to his wife and two kids many time zones away in India. He’s getting by with unemployment, but barely. 

Hari Singh: My life is a very struggling life. If I think about these things, you know, I go to depression. So I just think positive things, you know, I just think about the future. Forget about the past. 

Before COVID curbed New York’s cabs, Singh noticed that his daily wages were dropping. They’ve been decreasing ever since Uber arrived. Pre-pandemic, Singh was making less than $10 an hour after the cost of leasing and maintenance and all that. Meanwhile, minimum wage in New York City is $15 an hour. 

Hari Singh: If I don't go to work, I don't make money, how I can survive and how I can make my family a better life, you know? It’s a big struggle. 

Singh is lucky in a way. He’s not up to his eyeballs in debt and he wasn't bamboozled by unscrupulous lenders who preyed on new arrivals. And unlike Miriam Rosin, he’s not yoked to medallions that are barely worth the tin they’re printed on. 

But this isn’t what the American Dream was supposed to look like — a 70 year-old cab driver working the night shift for less than minimum wage, living in a one-bedroom apartment oceans away from his family.

New York’s once-mighty taxi industry has endured dramatic shocks in the past decade. Bhairavi Desai thinks that the city sat idly by and allowed it all to happen. 

Bhairavi Desai: I think they treated this industry like a used rag. You know, they used it to clean up the financial mess in the aftermath of 9/11. And then they threw it out into the dustbin. Right? But like what they didn't clean up was like all the blood and the sweat of the drivers that they left behind. And that's what we're still reeling with.

It’s anyone’s guess what happens with New York’s yellow cab industry moving forward. Desai’s group is working on a debt forgiveness campaign for owner drivers who are underwater with their medallion loans. And they’re trying to address drivers’ basic needs right now while the city’s taxi industry is sidelined due to the pandemic. 

But there’s still the Uber and Lyft problem, one that won’t be going away any time soon. And later down the road, the arrival of autonomous vehicles. When that happens — and it will — what will become of this most quintessential part of the Manhattan cityscape? Yellow taxis are as much a symbol of America’s biggest city as the Empire State Building or the lights of Times Square. But they could soon be just that — a symbol, a replica, their only home on a toy collector’s shelf.

Spectacular Failures is a production of American Public Media. It’s written and hosted by me, leadfoot Lauren Ober. Pedestrian Whitney Jones is the show’s producer. Our editor is carpooler Phyllis Fletcher. Future Uber driver David Zha is our assistant producer. Our theme music is by the delightful David Schulman. Other original music this season comes from Jenn Champion and Michael Cormier. Kristina Lopez is our Audience Engagement Editor and Lauren Dee is our executive producer. Concept by Tracy Mumford. The general manager of APM Studios is Lily Kim. Super special thanks to all the current and former cab drivers and medallion owners who shared their taxi stories with us. Especially the one and only Taxi Dave. 

Lauren: For your radio show, what was your sign on or your sign off, how did you do it? 

Dave Pollack: I used to, I used to say, gotta go now. [whistle] taxi!

Lauren: Oh my God, that's such a good whistle. so impressive.

Dave Pollack: Hey, if you're a New Yorker, you got whistle like that.