The real taxi squeeze play

A familiar drama played out in the Boston City Council chambers yesterday, where taxi drivers and city regulators accused rideshare drivers of operating illegally, and called for sweeping regulations of services like Uber and Lyft. It was a milder rehash of an episode that played out six months ago in Cambridge, when taxi interests tried to regulate taxi alternatives out of business. And although the episodes make for good copy — WBUR quotes one taxi driver today saying Uber is “sucking the blood of the taxi drivers” — they also miss the real squeeze play taxi drivers are caught in. The real conflict now isn’t between taxi drivers and rideshare drivers; it’s between taxi drivers and the failing economics of an outdated medallion system.

For the better part of a century, the taxi industry has enjoyed lucrative local monopolies: Cities place limits on the number of taxi medallions in the market, and the owners of the scarce medallions grow rich off them. The Washington Post noted this summer that medallions in New York cost $1 million apiece, with medallions in Boston trading for around $700,000 (well more than the cost of a secondhand liquor license). A Globe Spotlight Team investigation last year showed that the concentration of scarce taxi medallions in a few hands had made it nearly impossible for taxi drivers themselves to make a decent living. The Globe found cab dispatchers collecting bribes to put drivers on the road, and noted that medallion owners rent out their cabs to drivers at rates that are so steep that it takes most of a driver’s shift to break even. The paper found drivers working long hours, and barely cracking the minimum wage.

Uber and Lyft, which allow riders to hail rides from a smartphone app, have wreaked havoc with the taxi industry’s business model. The Post found that taxi medallions, once the most lucrative investment in America, were cratering in value: A Chicago auction last fall attracted no takers for 50 new medallions. A recent New York Times analysis found medallion prices dropping by 17 percent in New York and Chicago, and at least 20 percent in Boston. And those are the prices on medallion trades that actually happen. A spokeswoman for the Boston taxi drivers union told the Times medallion owners are having trouble selling medallions at far steeper discounts, saying, “Nobody’s touched them.”

Last year, Felix Salmon argued in a post on Reuters that the decimation of the taxi medallion business should be a great thing for both riders and drivers. Uber and Lyft are booming because they’re far cheaper to ride than traditional taxicabs, but they’re also allowing drivers to make more money, because the companies are collecting a far smaller cut of fares than taxi drivers pay when splitting fares with medallion owners, or paying medallion owners hefty upfront fees.

The shift of riders from taxis to ridesharing services is shrinking the pool of customers for taxi drivers, and making it even harder for them to eke out a living. That’s what had longtime Boston taxi driver Malik Abbas protesting outside Boston City Hall yesterday, and telling WBUR, “Financially, we cannot make money. I don’t want UberX coming over here stealing our jobs.” The problem is, the old model wasn’t very good for drivers in the first place. Now it’s breaking down. And for anyone who doesn’t have millions of dollars tied up in taxi medallions, things can only get better.

PAUL MCMORROW

BEACON HILL

Gov.-elect Charlie Baker and Gov. Deval Patrick split on the Beacon Hill pay raise report, which proposes sharply boosting the pay of the state’s top officials. The report recognizes the power of the House speaker and Senate president, two officials who are elected by their districts but wield immense influence because of their Beacon Hill positions. The report recommends the speaker and Senate president earn more than some constitutional office holders who are elected statewide.

Steven Syre says there should, in contrast, be nothing controversial about giving a hefty pay raise to Michael Trotsky, chief of the state pension fund, who has overseen healthy returns saving state taxpayers hundreds of millions of dollars.

The Patrick administration fires Peter Antonellis, an employee at Elder Affairs who criticized in the press his agency’s oversight of assisted living facilities.

Peter Lucas, a Sun columnist, examines Patrick’s calls for pardons and commutations.

Worcester officials say Patrick’s proposed cut in local aid would slice $1 million from the city’s budget, the Telegram & Gazette reports.

MUNICIPAL MATTERS

Their “authentic, compelling environments” are the competitive advantage that the state’s gateway cities need to leverage to revive their economies, writes Paul McMorrow.

A Probate Court judge has ordered the city of Quincy to repay $720,000 for mismanaging a trust fund established by John Adams several years before the death of the Founding Father.

Lowell Mayor Rodney Elliott says he plans to hang in City Hall his own official portrait as well as the more unconventional portrait of his predecessor, Patrick Murphy. Murphy’s portrait is of him, his wife, and child from the rear as they walk down a leaf-lined alley. Some councilors think the Murphy portrait is disrespectful because his back is to the camera.

In the wake of the eighth fatal pedestrian accident in Brockton this year, the City Council has reversed itself and approved increasing the nearly depleted police overtime budget to add more safety and crime patrols.

The eight candidates in the Fall River recall election will meet in three debates between now and the December 16 election plus a forum at a local bar that will feature each candidate singing a karaoke song of their choice and getting three minutes to address the crowd. Really.

NATIONAL POLITICS/WASHINGTON

President Obama plans to ask for $263 million for police body cameras and training, NPR reports.

Obama taps Ashton Carter, the deputy secretary of defense, to take over the top spot following the resignation of Chuck Hagel and, befitting his University of Oxford education, the Pennsylvania-born Carter tweets out that he is “honoured” to be chosen.

ELECTIONS

In Vermont, the race for governor was so close that it’s still not over; the legislature will declare a victor when it meets in January, Governing reports.

A group is formed in Saugus to support four selectmen who are facing recall for their vote to oust town manager Scott Crabtree, the Item reports.

BUSINESS/ECONOMY

Boston Olympics backers are eyeing the New Boston Food Market, a 20-acre site that is home to meat and fish wholesalers, as a possible location for an Olympic stadium, an idea that is not sitting well at all with those who now make their living there.

Anti-casino forces are regrouping and considering what sort of role, if any, they will play as the state enters the casino era following last month’s defeat of a ballot question that would have repealed the law authorizing three full-fledged gambling halls and one slot machine facility.

Somerville officials are considering doubling the size of the planned redevelopment of Assembly Square.

If you have any money left after Black Friday, Small Business Saturday, and Cyber Monday, the nonprofit world wishes to remind you today is Giving Tuesday.

EDUCATION

Greater Boston interviews a couple advocates for later start times for schools; the advocatescite studies showing the early bells are detrimental to teen health and achievement.

John Portz, a member of the Watertown School Committee and a Northeastern University professor, decries the diminished role of local school boards under education reform.

HEALTH CARE

A health advocacy group is criticizing a recent report from a Tufts University center on the costs of developing new drugs, questioning the objectivity and methodology a report that the group says will be used by the pharmaceutical industry to justify ever higher prices for drugs.

US drug overdose fatalities double between 1999 and 2012, Time reports.

Doctors and patients are struggling to understand a rash of cases of limb weakness among children that seems to connected to the onset this fall of a common virus that hit this fall with unusual force.

ENERGY/ENVIRONMENT

Kinder Morgan unveils a possible new route for its proposed natural gas pipeline; the route would put most of the new pipe in southern New Hampshire instead of Massachusetts, the Telegram & Gazette reports. Meanwhile, National Grid puts a moratorium on new natural gas connections in eight Cape communities in order to upgrade transmission equipment.

A Quincy city councilor gave the city a $350 “gift” as a protest to pay for what he estimates was the amount the city spent on issuing him an elevation certificate to help reduce the premium for federal flood insurance, a certificate he says is useless and should not have involved taxpayer money.

CRIMINAL JUSTICE

President Obama wants to see changes in policing in the wake of the Ferguson, Missouri, shooting, including the wider use of body cameras by officers. Boston Mayor Marty Walsh gave the body camera idea a cool reception, but other Massachusetts officials sounded more positive notes about the idea.

Robert Kraft and Bill Belichick could be called as witnesses in the upcoming murder trial of former Patriots player Aaron Hernandez.

The head of the Pee Wee football league in Gloucester is charged with embezzling funds, the Gloucester Times reports.

MEDIA

Kevin Cullen surfs his way to a new noontime Fox News show featuring Scott Brown, and comes away very impressed with the wisdom of New Hampshire voters, and Massachusetts voters (on their second try) before them.

The New York Times offers lucrative buyout offers in a bid to convince 100 staffers to retire.