Raise DC Cab Fares; Don’t Create a Cartel

by Josh Barro

For a few years now, Washington D.C. cab drivers have been trying to get the city to impose a medallion system that would cap the number of cabs that may operate in the city. Medallions are a terrible idea that makes it harder to find a cab (in what other businesses do we cap the number of operators?) but unfortunately they are used in many other jurisdictions.

The effort in Washington stalled a couple of years ago when the medallion bill’s chief sponsor, Jim Graham, saw his chief of staff arrested for taking bribes from cab companies. But the idea is back again, and Marc Scribner of CEI flags an interesting provision in the latest proposal:

Of the 4,000 medallions, 150 will be set aside for residents who have lived in D.C. for at least 10 consecutive years and will be first-time cab drivers and operators. This is clearly targeted at Ward 5, Ward 7, and Ward 8′s residents — many of whom have lived in D.C. far longer than the recent gentrifiers residing in wealthier northwest Washington.

It’s true that D.C.’s newcomers tend to be wealthier than its longstanding residents, and that few of them live in Wards 7 and 8 east of the Anacostia River. But affluent new residents aren’t the relevant competition for working-class incumbent residents who might be interested in driving cabs. Rather, this should be thought of as an attempt to privilege Washington’s longstanding working class (mostly African-American) population over the (mostly African) immigrants who tend to drive cabs there today. It’s “dey took urr jerbs,” Washington edition.

On the proposal more broadly: the stated goal of establishing a medallion system is to help cab drivers make more money. Of course, it’s incompatible to say that cab drivers are underpaid and Washington has too many cabs. Still, there is a much more appealing option to make cab-driving a more profitable occupation in Washington: raise fares. D.C. has some of the lowest cab fares among major American cities, at $1.50 per mile. Fares are $1.80 per mile in Chicago, $2.00 in New York City, and $2.70 in Los Angeles.

A fare increase should both increase cabbies’ incomes and induce more people to drive cabs, making it easier to find a taxi. Also, if you frequently use cabs in Washington D.C., you may have noticed that the city’s cabbies are uncommonly unpleasant compared to taxi drivers in New York and other cities. I support a fare increase because I suspect an efficiency wage would stop Washington’s cabbies from being so angry all the time.

Of course, even better than a mandated fare increase would be deregulated cab fares. Particularly, an option to charge higher fares might encourage cab operators to invest in newer cars, instead of the decrepit sedans with 200,000+ miles that currently dominate the DC market. But that may be a bridge too far–I’d settle for a fare increase and the continued lack of a cap on the number of taxi operators in the city.