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Driving Poor: Taxi Drivers and the Regulation of the Taxi Industry in Los Angeles

Driving Poor: Taxi Drivers and the Regulation of the Taxi Industry in Los Angeles

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Published by Unk
Six years ago, the City of Los Angeles granted new taxi franchises for the first
time in a quarter century. At the time, the Los Angeles Business Journal estimated that
more than $3 billion dollars in business was at stake.3 A lobbyist for the taxi industry
was quoted as saying, “Millions upon millions of dollars are at take for these companies.
And what is decided in the next few weeks will also determine the livelihoods of
thousands of taxicab drivers.”4 In this report we examine what has happened to the
livelihoods of those drivers since 2000, as well as how the structure of the taxicab
industry has evolved. What we have found is troubling.
Six years ago, the City of Los Angeles granted new taxi franchises for the first
time in a quarter century. At the time, the Los Angeles Business Journal estimated that
more than $3 billion dollars in business was at stake.3 A lobbyist for the taxi industry
was quoted as saying, “Millions upon millions of dollars are at take for these companies.
And what is decided in the next few weeks will also determine the livelihoods of
thousands of taxicab drivers.”4 In this report we examine what has happened to the
livelihoods of those drivers since 2000, as well as how the structure of the taxicab
industry has evolved. What we have found is troubling.

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Published by: Unk on Dec 02, 2008
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1
Driving Poor:
Taxi Drivers and the Regulation of the
Taxi Industry in Los Angeles

Professor Gary Blasi
UCLA Law School and
UCLA Institute of Industrial Relations

Professor Jacqueline Leavitt
Department of Urban Planning
UCLA School of Public Affairs

2
Table of Contents
I. EXECUTIVE SUMMARY............................................................................................ 4

II. INTRODUCTION AND BRIEF SUMMARY OF METHODS.............................. 12 A. The Survey of Taxi Drivers.................................................................................. 13 B. In-Depth Interviews with Drivers......................................................................... 15 C. Interviews with Company Representatives and Others........................................ 16 D. Interviews with Interested Parties and Key Informants........................................ 16

III.
THE TAXI BUSINESS FROM THE BOTTOM UP: THE LIVES OF TAXI

DRIVERS AND THEIR FAMILIES................................................................................ 17 A. Overview................................................................................................................. 17 B. A Demographic Profile of Los Angeles Taxi Drivers: Middle-Aged Immigrant

Fathers........................................................................................................................... 17
C. Becoming (and Staying) a Taxi Driver................................................................... 18
D. Hours of Work and the Hidden Costs to Families and the Public.......................... 21
1. Low Earnings Drive Long Hours......................................................................... 21
2. The Impact on Drivers......................................................................................... 22
3. Impact on Families and Children.......................................................................... 23
4. Impact on the Safety of Drivers, Passengers and Public..................................... 25
E. Income and Economic Security............................................................................... 25

1. Lease Drivers....................................................................................................... 26 2. Owner/Operators.................................................................................................. 27 3. The Impact of Fuel Prices.................................................................................... 27

4. Other Indicators................................................................................................... 28 F. Lack of Health Insurance......................................................................................... 29 G. Health Status and Health Consequences of Driving a Taxi in Los Angeles........... 32 H. Job Stress.................................................................................................................. 35 I. Percent Reporting....................................................................................................37 J.Interaction of Long Hours, Low Income, Poor Health, and Job Stress...................... 41 K. Pride and Resilience................................................................................................ 44

IV. THE TAXI BUSINESS FROM THE TOP DOWN: TAXICABS IN THE

ECONOMIC AND REGULATORY SYSTEM............................................................... 45 A. The Place of Taxicabs in Los Angeles Transportation Planning............................ 45 B. The Regulatory System........................................................................................... 46

1. The Award of Taxi Franchises, Politics and Campaign

Contributions. ....... 47 2. Administration of the Franchises: Overview...................................................... 49 3. Areas of Regulation Under the Franchise Ordinances........................................ 52 4. City Regulation of Service to LAX through ATS ... 54. Enforcement of Laws and Regulations Regarding \u201cBandit Cabs\u201d and \u201cTown Cars\u201d and Limousines Operating Illegally\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026.. ..........................................................................

...................................................................................................................................56
3
V. THE TAXI BUSINESS FROM THE TOP DOWN: The \u201cCo-operative\u201d in the Los

Angeles Taxicab Business................................................................................................ 59
A. C. Arnholt Smith, the Las Vegas Connection and the Repeated Collapse of Yellow
Cab of Los Angeles\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026.. ....................... 59
B. Emergence of the Co-operative Form in 1977: UITD and ITOA.......................... 61
C. The Los Angeles Olympics and LA Taxi Company............................................... 64
D. Yellow Cab Becomes a \u201cCo-operative\u201d: L.A. Taxi, Yellow Cab, and the
Administrative Services Co-operative\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026.. ................... 65

VI. WHERE \u201cTOP DOWN\u201d AND \u201cBOTTOM UP\u201d MEET: WHY DO TAXI

WORKERS EARN SO LITTLE?..................................................................................... 66
A. The Need for Responsive Regulation of Meter Rates \u2013 and Reasonable Reponses
to Meter Rigging........................................................................................................... 67

1. The \u201cTaxi Cost Index\u201d ostensibly used to set meter rates is seriously flawed. ... 67
2. The City Has Not Been Responsible in Timely Adjusting of
Meter Rates. .. 68

3. The Rigging of Taximeters, However Prevalent, Is Inexcusable But Provides No
Excuse for the City to Delay Meter Increases.\u2026\u2026\u2026\u2026\u2026.................................... 69
B. Illegal and Other Competition................................................................................. 70

1. Bandit Cabs. ......................................................................................................... 71
2. Limousines and \u201cTown Cars\u201d Operating Illegally............................................... 72

C. POTENTIAL INCOME LOST TO SHARP PRACTICES AND CORRUPTION 73
1. Opportunities for Self-Dealing and Kickbacks and the Lack of Financial
Transparency\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026.. ......................... 74
2. The Lack of Financial Transparency through Simple Withholding or Destruction
of Records: The Case of UITD................................................................................ 76
3. The Lack of Financial Transparency through Complex Business Structures: The
Case of the ASC Co-operatives\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026.\u2026\u2026...77

VII. Conclusions and Recommendations. .................................................................... 83

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