The Taxicab: An Urban Transportation Survivor

By Gorman Gilbert; Robert E. Samuels | Go to book overview

8
THE ECONOMICS OF
TAXICAB OPERATIONS

As a private, nonsubsidized carrier, the taxi industry depends upon its ability to generate revenues in excess of its costs. Its survival depends on this ability. For taxicab operators, therefore, economics has a realistic and essential quality.


THE ORGANIZATION OF THE INDUSTRY

Taxi firms are organized in three ways: employee-driver, lessee- driver, and owner-driver. The employee-driver drives a car that is owned by the company, and he is usually paid on a commission basis. The key element of this arrangement is the employer-employee relationship, which requires that the employer guarantee the driver a minimum hourly wage and pay Social Security taxes, payroll taxes, and other benefits. Commissions are usually in the range of 43 to 50 percent; with the addition of fringe benefits payroll costs amount to over 50 percent of revenues for employee-driver operations.

The lessee-driver and owner-driver arrangements avoid the employer-employee arrangement by making the driver, in effect, an independent contractor. Under a lease arrangement, a driver will pay a daily, weekly, or monthly fee for the use of a vehicle. An ownerdriver owns his or her vehicle. Under either the lessee-driver or owner-driver arrangement, the driver may contract with the firm for such services as advertising, fuel, dispatching, and maintenance.

One special case of the owner-driver firm is the single-taxi firm, sometimes called an "independent" or "owner-operator firm." These

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The Taxicab: An Urban Transportation Survivor
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • TABLES AND FIGURES ix
  • Acknowledgments xiii
  • 1 - Myths, Misconceptions, and Neglect 3
  • 2 - European Ancestors of the Taxicab 8
  • 3 - The Development of the Taxicab 25
  • 4 - The Birth of Taxicab Fleets 38
  • 5 - The Depression and Regulation 61
  • 6 - War and Recovery 74
  • 7 - Federal Involvement 86
  • 8 - The Economics of Taxicab Operations 103
  • 9 - Service Innovations 123
  • 10 - Regulation and Deregulation 141
  • 11 - Dimensions of Change 156
  • 12 - The Survival of Private Enterprise in Public Transportation 170
  • Notes 181
  • Bibliography 187
  • Index 191
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