The right to own and operate one of New York City's signature yellow taxi cabs is symbolized by the possession of a medallion from the Taxi and Limousine Commission. For many who immigrate to the United States, medallion ownership is another step toward the American Dream. However, this dream comes at a price. Winning bids at a recent taxi medallion auction reached up to $965,000. While this is a record-high sum for the right to operate a taxi, it is still below the going retail price, which hovers at about $1 million.
The taxicab medallion auction offered up 168 permits for wheelchair-accessible vehicles, adding to the 232 that are already in existence. All the medallions at this auction were for individuals, meaning the owner and taxi operator must be the same person. The last auction of individual medallions was in 2008, at which the minimum bid was set to $189,000. Since then, the minimum has jumped to $650,000, reflecting the industry growth. The auction received 297 bids and raised a total of $145 million, which will go toward Mayor Bill de Blasio's budget. All ties were settled the old-fashioned way, with a hand-cranked bingo machine.
Worth the money
Despite the sticker shock, cabbies say that owning a medallion is much better than the alternative. Many cab drivers must pay fees to medallion owners to lease their taxi-driving rights for a 12 hour shift. These can often be very high monthly fees, so even if a cab driver has to take out a loan to cover the $805,000 – $965,000 price tag of medallion ownership, those monthly payments may be less than the payments they were making previously to rent a medallion for a shift. The price is often managed even further through cost sharing agreements between two drivers who have agreed to break up the work into a day and a night shift.
The benefits of being a taxi medallion owner have driven up the price dramatically in recent years. The allure of owning their own business is worth the high upfront costs for many drivers. In many respects, bidders at this auction were competing for a piece of the American Dream than anything else.
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