Taxi Firms Lack Scrutiny, Report Finds

The city of Los Angeles has failed to properly regulate its taxi franchises, effectively abandoning cabdrivers to a life of excessively long hours, poor pay and health troubles, according to a study to be released today by UCLA researchers.

The report, called “Driving Poor” and written by law professor Gary Blasi and urban planning professor Jacqueline Leavitt, paints a bleak picture of the lives of the city’s roughly 5,000 taxi drivers.

The typical driver makes $8.39 an hour -- less than the city-mandated “living wage” -- and 61% have no health insurance, according to a survey of 302 drivers conducted as part of the study. On average, they drive 72 hours a week and show signs of extreme stress and chronic back and leg injuries, the study found.

The report also found that drivers lack the protection of wage, hour and workers’ compensation laws; many own their cabs but can lose them at any time; and they retain little control over their working lives, even being told by the city what they can wear.

The study describes a co-op ownership system gone bad -- one in which drivers have been increasingly forced to spend heavily for services provided by those who run or contract with the co-ops. The project was launched last spring after drivers began complaining to city officials about their working conditions.

“My assumption going into the report was that taxi drivers were reasonably successful small-business people,” said Blasi, the coauthor. “Instead, they are something like sharecroppers on wheels, working incredibly long hours for very little money.”

The report concludes that although city officials devote considerable energy to policing the customer service and habits of drivers, they have ignored their duty to protect drivers. The city also has failed to combat illegal “bandit” cabs that compete with the 2,303 legal taxis and has set fares that do not reflect current gas costs, the researchers assert.

The study follows the release of city data Friday showing that drivers cheated passengers 50% of the time in a sting operation involving 30 taxi trips -- data labeled misleading by some drivers and taxi company administrators. The UCLA research suggests that drivers are driven to cheat by rules that limit their earning power, quoting an unnamed city official as saying, “Of course they are rigging meters. What do you expect them to do with gas prices this high?”

For 30 years, Los Angeles taxis have run on a co-operative model, with many drivers owning their vehicles and paying fees to the co-ops for a variety of services, such as marketing and dispatch. But the system has grown more complex and opaque over time.

Drivers have “no meaningful access” to the financial records of co-ops of which they are ostensibly members and owners, the report says, and suggests that a lack of transparency makes corruption likely.

“The systems through which fares earned on the streets are diverted to managers and outsiders are of dizzying complexity even if completely legal,” the report states.

William J. Rouse, general counsel and general manager for the Administrative Services Co-Op, which oversees several taxi co-ops including two that operate in the city of Los Angeles, said such criticism was unfair. His business does not handle cash -- drivers have ATM cards and are required to make deposits themselves -- and pays for extensive audits.

Rouse, who had not seen the report, said he shared some of the authors’ concerns, particularly about health insurance. Rouse said he had brought insurers into the co-op offices so they could meet with drivers about health plans and was making another effort this week. But it is up to drivers to decide whether to purchase insurance.

“I think if the drivers would just listen, I think they’re going to find a good deal there,” he said.

It is clear that the city needs to raise fares to keep up with cost increases and that the city has failed to rein in bandit cabs, Rouse added.

Some city officials who regulate cabs declined to comment on the report.

Tom Drischler, the city’s taxi administrator, disputed the report’s contention that the city was failing to regulate the industry.

“Regulators are here to protect the public,” he said. “We don’t get involved in internecine disputes among companies.”

Bruce Iwasaki, a member of the five-person city Board of Taxicab Commissioners for less than six months, declined to address the report, saying, “My experience on the commission makes me very concerned that the taxi business be transparent and accountable, that the work conditions of the drivers be improved and that the overall service to the public be as good as possible.”

Bruce Schaller, a consultant who advises cities across the country on taxi regulations, said that although self-reported income figures are “notoriously unreliable,” if the report’s income figures are accurate, they would be “very low” compared with drivers across the country.

Anything below $10 is low, he said. New York City cabdrivers make about $15 an hour.

The report recommends changing the formula for fare increases to better reflect gas prices. It urges tougher city action and penalties against co-ops whose management practices exploit drivers, including a city ombudsperson to handle driver complaints and a requirement that each company submit an independent financial audit to the city.

City Councilwoman Wendy Greuel, who helped the UCLA researchers get access to the drivers at an airport holding lot, called the report “an important document.”

“We’re going to look top to bottom about what is the best way to regulate the industry,” she said.

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