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NYC Yellow Taxi Medallion Crisis, Explained

What is medallion debt and why were taxi drivers on strike? Here is how New York City manufactured the taxi medallion crisis.

On a picture-perfect early November afternoon, dozens of yellow taxi drivers danced and feasted in a celebration outside City Hall. They had just endured an arduous two-week-long hunger strike and a nearly three-month-long encampment to demand an equitable city debt relief plan, also known as the “Taxi Medallion Crisis”. It all culminated when the de Blasio administration announced that it has reached an agreement with the New York Taxi Workers Alliance (NYTWA) and Marblegate Asset Management, the largest medallion lender, to initiate a taxi medallion debt restructuring plan that would provide affordable repayment rates to drivers as well as ensuring a city-funded guarantee on the principal and interest for medallion loans.

For the cabbies celebrating, the mayor’s announcement, as well as the overwhelming public support they received, served as a vindication of their decades-long struggle for survival. Traditionally, yellow taxi have served as the international icon of New York City and its drivers are often been viewed as the city’s unofficial ambassadors. At one time, the profession was, for many immigrants, a solid pathway towards building the “American dream”. Yet, over the past decade, driving a yellow taxi has now become a never-ending nightmare due to the taxi medallion crisis.

How NYC Inflated Prices and Manufactured the Taxi Medallion Crisis

Since 2011, yellow taxi revenues have dropped by more than 30%. At their height in 2014, yellow cab medallions were selling for $1 million. The value of medallions soared due to the City’s artificial inflation of medallion values to drive up revenue. But since the proliferation of Uber, Lyft, and other rideshare apps beginning in 2011, the medallion value has plummeted. As of September, taxi medallions are a meager $80,000. Highly regulated, as of 2014, the City had limited the number of yellow cabs available to about 13,500.

But rideshare vehicles had no such limits; the amount of them on the streets tripled between 2010 and 2019, from 40,000 vehicles to over 120,000. With Uber and Lyft flooding the market and the City’s failing to quickly regulate ride-share apps, yellow cabs couldn’t compete. 

Cab drivers were left struggling to pay hundreds of thousands of dollars in accumulating debt for medallions that became virtually worthless overnight. On average, cab drivers owed $600,000 medallion debt; a nearly impossible sum to pay back as they worked in a dying industry. Some succumbed to the intense financial pressure. As of 2018, eight drivers have died by suicide

The taxi medallion crisis began in 2004 during the Bloomberg administration when cab drivers across the City were lured into purchasing medallions by alluring ads placed strategically in immigrant newspapers that promised drivers a way to buy into the American dream. The fliers read: “Do you want to own a piece of New York?”

Yellow Cabs Were a Path to a Middle Class Life

For many drivers like Victor Salazar,  who spent so many countless grueling hours behind the wheel of their cabs and barely getting by, the opportunity to be an owner of their own business was too good of any opportunity to pass up. Thus, in 2004 after seeing one of the ads promoting an upcoming medallion information session at a LaGuardia Airport hotel ballroom, he made sure to attend. As he describes it, the ballroom was packed with over 100 interested cab drivers, all eager to learn as much as they could. To Salazar’s surprise, Bloomberg himself was there to give a few brief words of encouragement. 

“Bloomberg mentioned that the American dream was just a step away from us and we were buying a piece of New York,” says Salazar. “He promised that the City of New York would guarantee our investment and that it would be solid.”

In 2019, a bombshell New York Times investigation exposed a City-sponsored scheme to raise municipal revenue by artificially inflating the value of medallions by over 500 percent. The City also manipulated public medallion price data. By 2014, the City was able to inflate the price of medallions to over $1 million and had made nearly $855 million off the backs of the mostly immigrant workforce.

In 2011, Gary Roth, a TLC policy analyst during 2010 and 2011, penned a damning internal memo that forewarned a possible taxi medallion crisis. With the rapid rise of medallion sales prices from 2003 to 2010, Roth worried that the value was in danger of outpacing the growth of the taxi industry.

“If the price of medallions dropped significantly, it could force recent medallion buyers underwater, meaning the value of their outstanding loan is greater than the current selling price for a medallion,” Roth wrote. “In this case, owners may default on their loan, and have the medallion repossessed by the bank.”

Facing mounting debt, drivers like Chima Gyatso, a Tibetan immigrant from Sunnyside, Queens, were forced to choose between paying off their debt or supporting their families. To stay afloat, Gysato had to cut corners to survive.

“It’s been difficult,” Gysato said. “We went from eating three times a day to only two times. Sometimes only one time.”

Gyatso has been driving a cab for so long he can barely remember when he started. He guesses he has been behind the wheel of a cab for at least 22 years. In 2009, after years of penny crunching, he was able to buy his first medallion. In 2014 he was able to buy a second to rent out. But, by the time he purchased his second medallion Uber and Lyft began to grow ever more popular.

His industry was left in the dust and drivers were in crisis. With his business once flowing strong, by 2015 it had dried up to merely a trickle. Once working 10 hour days and five days a week, Gyatso was forced to work 16 hour days and seven days a week to be able to make ends meet. But even with the extra hours and days, he wasn’t able to keep up with his mounting loan payments and was forced into bankruptcy. 

From the beginning, Gyatso says he saw the writing on the wall and blamed the mayor for not responding to the plight of yellow cab drivers as well as opening the door for rideshare apps.

“After 2014 this de Blasio brought in this Uber and Lyft virus,” he said. “With these two viruses, we were done. Since then it was the beginning of our pandemic.”

The New York Taxi Workers Association Fights Back

As cab drivers faced intense competition from ride-share apps and the value of the medallions began to spiral into a free fall, in 2019, the NYTWA launched a militant campaign to demand debt relief for drivers. By 2019, the crisis hit a bleak milestone when there were more medallion bankruptcies in that year than in all of 2015, 2016, and 2017.

Over the ensuing years, yellow cab drivers engaged in multiple direct actions across the City to bring awareness to their plight. In 2020 and 2021, immense caravans of yellow cabs blocked both the Brooklyn Bridge and Queensboro Bridge for several hours choking vital city arteries. Cab drivers in 2020 also took over Times Square and shut down Madison Ave. In the same year, New York cab drivers along with hundreds of cab drivers for other states lead another caravan to our nation’s capital. 

Despite all the various actions, cab drivers’ pleas seemed to continue to go unanswered. Nevertheless, with the pandemic putting the final nail in the coffin of whatever was left of the yellow cab industry, in September, the City was finally forced to respond. The mayor announced a $65 million grant relief program that allowed for $200,000 in debt forgiveness and a reduced monthly payment of  $1,500 per month or less.

The mayor’s office told Documented that since September the program had already distributed $16 million in debt forgiveness to 102 drivers thus far and an additional 1,000 others are in various stages of renegotiating their loans under the program. 

“Ultimately, it could achieve as much as a half a billion dollars in debt relief,” de Blasio said in a statement at the time shared with Documented. “And we see, I think we’ve got already over a hundred drivers have signed up and there’s a thousand in the pipeline. This is something that’s going to make a huge difference.”

The mayor’s announcement served as a slap in the face the NYTWA who had been demanding that the de Blasio administration support their own, more equitable, Medallion Debt Forgiveness plan which called for the City to guarantee the medallion loans, cap driver’s debt to no more than $145,000, and maximum monthly payments of $800 as well as the restitution of all foreclosed medallions to their owners. 

“The City must guarantee all owner-drivers’ outstanding debt so that in the event of default, the City will cover any remaining balance on their loan,” said TWA spokesman Matthew Thomas. “This is a liveable plan that will give drivers and their families their lives back.”

In September 2021, the Union Escalates the Fight

After two years of sustained protests, NYTWA felt pushed to take more radical measures. Beginning on September 19th, about 50 immigrant yellow cab drivers, camped outside the gilded gates of City Hall, in hopes that the City will accept the NYTWA plan. For over a month the drivers endured weeks of drastic fluctuations of heat, cold, and rain that have become a common part of the City’s chaotic autumn weather.

Yet, after 31 days of sustaining the encampment without any response from the mayor, the drivers felt forced to switch tactics. On October 18th, the workers decided to raise the stakes and launched a hunger strike in what seemed to be a game of chicken played by the TWA and the mayor. Each one was waiting to see who would flinch first and one had less to lose than the other. 

NYTWA co-founder and President Bhairavi Desa told Documented that the organization felt that it was left with no other choice and the hunger strike was the only weapon left in its arsenal. 

“We have done every action possible,” she says. “We have been shutting down bridges and having rallies and we have been camped outside of City Hall 31 days straight but still there has been no movement. In that waiting game, City Hall has been thinking they are going to tire us and we were just going to walk away. We want to send a message back that we are determined.”

After the mayor announced the deal with the NYTWA, triumphantly, President Desa declared the taxi medallion crisis over.

“After seven years of terrible suffering and loss, New York’s taxi medallion crisis has finally come to an end,” she said.”We are enormously grateful to Mayor De Blasio for heeding taxi drivers’ call for meaningful debt relief. Today’s agreement fulfills the city’s obligations to the workforce that keeps it running.”

Days before the driver’s victory, when City Hall remained tight-lipped on the issue, Salazar sat in a quiet corner in City Hall Park wondering if the mayor had even bothered to look out his office window or if he bothered to listen to their chants. In a city built on the backs of immigrants like himself, Salazar questioned whether New York, a city that he loves and has given so much for, will ever give back. Salazar quickly reasserted his intrinsic belief that the drivers will win despite his brief moment of melancholy reflection. 

“We invested, served, and believed in New York City,” he said. “Why help Uber and Lyft? I don’t know what’s in the mayor’s mind, however we are determined to win and we are going to come out victorious. This is what I believe.”


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