Statement of Charles Komanoff
on behalf of the New York Taxi Workers Alliance
before the New York City Taxi & Limousine Commission
re: Proposed Issuance of Additional Taxicab Medallions
January 12, 2004
My name is Charles Komanoff. I am a public-policy economist with over 30
years of experience analyzing policy issues in energy, transportation and
economics. Over the course of my career I have served New York City as a
staff economist with the Environmental Protection Administration (now DEP),
and have testified as an expert witness on behalf of both the City and
State of New York. My publications include four books and hundreds of
consultant reports, articles in scientific journals and essays in magazines
and newspapers. I live and work in lower Manhattan.
I am appearing today on behalf of the New York Taxi Workers Alliance. As a
citizen, I wholeheartedly support the Alliance's ongoing efforts to win
fair wages and humane working conditions for taxi drivers. In my
professional capacity, I wish to advise the Taxi & Limousine Commission and
all New Yorkers that adding 900 taxicabs to the city's medallion fleet is
not in the public interest. This is because the "time costs" of the
increased gridlock from the additional taxi traffic will almost certainly
outweigh the value of the additional cab rides. Nor is issuing more
medallions a prerequisite for raising taxi fares, which can and should be
done regardless, without any linkage to the number of medallions.
The TLC's Draft Environmental Impact Study acknowledges that issuance of
the medallions will result in "significant adverse traffic impacts." (p.
38) But the study neglects to quantify these impacts. I have done so.
Judging from my analysis, the outlook for the millions of people working,
living and traveling in Manhattan south of 96th Street, is downright scary.
Here are my key findings:
-
Adding 900 new medallion cabs to the city's streets will have the same
traffic impact as bringing 27,000 additional cars into the heart of the
city each day.
-
The presence of 900 additional taxicabs will tack an additional 4%, on
average, onto the time required for motor vehicles - not just yellow cabs
but also other for-hire vehicles, private autos, vans, buses and trucks of
all sizes - to make their journeys in Manhattan south of 96th Street.
-
Translating this 4% prolongation of vehicular trips into lost minutes and
hours, issuing 900 new medallions will rob Manhattan motorists (and
passengers) of over 18 million hours a year in lost time.
Lest this seem surprising, please bear in mind that motor vehicles make
over a billion trips a year in Manhattan south of 96th Street. Indeed,
these trips outnumber by 80-to-1 the number of new trips that will be made
by the 900 new medallion cabs. Each new "hail" enabled by issuing the new
medallions will thus come at the expense of ensnaring 80 other trips by
cars, buses, vans, trucks and cabs in additional gridlock.
A 4% compounding of gridlock will, collectively, squander an extra 25,000
"vehicle-hours" on an average day, or a total of 9.3 million vehicle-hours
per year. Since the average vehicle in Manhattan carries two people
(reflecting not just carpools but also buses in the vehicle "mix"), the
extra gridlock from issuing 900 new medallions can be expected to chew up
some 18-19 million person-hours of time each year. Based on standard
estimates of the value of time for different types of vehicles and their
occupants, the time costs to motorists of the additional gridlock that will
be created by 900 new medallion taxicabs can be expected to total $480
million a year.
And this figure doesn't include related costs such as the additional time
that Manhattan pedestrians will need to cross streets, or the time costs to
motorists on bridges and highways leading to airports and other non-
Manhattan destinations due to the additional taxicabs, or the health costs
associated with the additional air pollution, noise pollution and
endangerment from the greater traffic volume.
What about the benefits that the 900 new medallions will bring? I have
estimated these as well, and they appear to be far less than the $480
million in time costs.
The major benefit of the new medallions will come, of course, from the
additional cab rides that the taxi-using public will now be able to take.
This benefit is best measured by taxi riders' willingness to pay, which in
turn can be gauged from what they actually pay for rides. The average
medallion taxi fare (including tip) is just over $8. Clearly, the average
value of these trips to taxi riders must be at least $8 - otherwise, the
riders wouldn't use cabs. (This point applies generally for consumer
purchases; for moviegoers, say, the average value of going to the movies
must be at least as great as the ticket price; else, people would stop
going to the movies.) Some of those $8 cab trips are worth far more than
$8, while others are probably worth only $8, or even less ("Darn, the
traffic isn't moving, I should have taken the train or walked instead.")
Here, I have valued cab rides as being worth twice the fare (including
tip), making the average trip worth a little over $16 to taxi users.
The result is that each new cab can be expected to create around $730 of
daily value for the cab-riding public (calculated as 46 daily trips per cab
x $8.07 average fare x 2), or $266,000 a year per medallion. Multiplied by
900 new medallions, the TLC's proposal can be expected to create $240
million a year of value for riders (calculated as 900 x $266,000). This
figure, while substantial, is only half of the $480 million time cost that
motorists in Manhattan south of 96th St. will bear due to the increased
gridlock.
The other benefit from selling 900 medallions is the $225 million in
revenue the city will reap, according to the study for the TLC. However,
this impressive-sounding figure is a one-shot cash infusion, whereas the
$480 million time cost and the $240 million taxi riders benefit are both
annual and thus recurring. The appropriate way to express the medallion
revenue is as an annuity; at a 6% interest rate, the city will realize
$13-$14 million in annual revenue from selling the 900 medallions (or,
equivalently, the city could retire $225 million in debt, resulting in
annual interest savings of $13-$14 million).
The bottom line for the 900-medallions sale, then, looks something like
this:
Annual Costs and Benefits of Issuing 900 New Taxicab Medallions
| Time costs to Manhattan motorists | 480 million |
| Time costs to Manhattan pedestrians and bicyclists | not included |
| Time costs to non-Manhattan motorists conflict, crashes, etc.)
| not included |
| T O T A L C O S T S | at least $480 million |
| Value of additional cab rides to taxi-riding public | $240 million |
| Revenue stream from sale of medallions, annualized @ 6% | $14 million |
| T O T A L B E N E F I T S | $254 million |
| N E T C O S T S | at least $226 million |
| R A T I O, C O S T S T O B E N E F I T S | at least 1.9 |
The net annual costs to New York City residents and workers from issuing
900 new medallions are, thus, on the order of $225 million, or a quarter-of-
a-million dollars per medallion per year. The cost is "linear," meaning
that the per-medallion cost cannot be diminished by reducing the scope of
the proposed sale. Nor can it be ameliorated by tinkering with signal
timings or applying other standard traffic-management tools.
The only way to truly offset the traffic impact of the additional taxicabs
is to remove an equivalent number of private automobiles from the same area
(Manhattan south of 96th Street). Since the average medallion taxi logs
roughly 30 times as many miles there per day or year as does the average
private auto, adding 900 medallions without worsening traffic would require
eliminating approximately 27,000 private cars from entering and/or
operating within this area. Only when the city administration has presented
a serious plan for doing so should it present a proposal for adding 900
medallion taxicabs.
To conclude: Taxi drivers need and deserve higher wages. Taxi fares can and
should be raised regardless of the number of medallions. The time costs to
motorists from issuing new medallions will far outweigh the value of the
additional cab rides.
(Note: The writer wishes to acknowledge the invaluable and generous
assistance of Brian Ketcham of Community Consulting Services, Inc. in
developing data for this analysis.)
Key Findings
Each new medallion cab will have the same traffic impact in Manhattan south
of 96th Street as adding 30 cars to that area each day.
Adding 900 new medallion cabs to the city's streets will have the same
traffic impact as bringing 27,000 additional cars into the heart of the
city each day.
The presence of 900 additional taxicabs will tack an additional 4%, on
average, onto the time required for motor vehicles - not just yellow cabs
but also other for-hire vehicles, private autos, vans, buses and trucks of
all sizes - to make their journeys in Manhattan south of 96th Street.
Impact of 900 new medallions on vehicle speeds, Manhattan south of 96th St.
| Road Type | Avg speed before | Avg speed after | Slowdown, %
| | Expressways | 25.0 mph | 24.9 mph | 0.4% |
| Arterials (avenues) | 10.0 mph | 9.6 mph | 4.1% |
| Local Roads (streets) | 6.0 mph | 5.6 mph | 6.3% |
Issuing 900 new medallions will rob motorists (and passengers) of an
estimated 18.6 million hours a year in lost time traveling in Manhattan
south of 96th Street, with a collective cost of $480 million hours
annually.
The additional taxi rides enabled by 900 new medallion cabs can be expected
to have an aggregate value to riders of $240 million a year, or half of the
$480 million time cost that motorists in Manhattan south of 96th Street
will bear due to the increased traffic gridlock.
The city will realize only $13-$14 million in annual revenue from selling
the 900 medallions.
On a net basis, selling 900 medallions will create at least $225 million
more in annual costs than in benefits; this figure doesn't include the
additional time that Manhattan pedestrians will need to cross streets, or
the added time costs to motorists on bridges and highways leading to
airports and other non-Manhattan destinations, or the health costs from the
additional pollution and endangerment due to the greater traffic volume.
Adding 900 medallions without worsening traffic in Manhattan south of 96th
Street would require eliminating approximately 27,000 private cars from
entering and/or operating within that area. Only when the city
administration has presented a serious plan for doing so should it present
a proposal for adding 900 medallion taxicabs.
Taxi drivers need and deserve higher wages, and taxi fares can and should
be raised regardless of the number of medallions.
|