The Medallions Around Our Necks
Why the Medallion Crisis will spread to the rest of us
We’re driving off the edge of a cliff in a big yellow taxi, and our policymakers won’t take their foot off the gas.
Promises of financial security are beginning to elude Americans. Education, homes, and other investments no longer provide the assurance of basic comfort they once did.
New York City’s taxi drivers feel it.
Taxi medallions, the licenses to operate a private yellow cab, were once the golden ticket to social mobility for hoards of immigrants and low income New Yorkers. Medallions cost hundreds of thousands of dollars and are a bigger investment than the average American home. Prices peaked at $1.3 million in 2014.
Investing in a medallion was similar to buying a house. It generally required a large loan, repaid over decades, and eventually led to full ownership. Driving a taxi in New York is big business, so a medallion was an investment that often paid for itself.
At retirement, drivers could expect to sell their medallions. The city controls supply, so demand continued to increase medallions’ value. Cabbies could often use the money to support themselves once they hung up the keys.
That’s changed.
Foreclosures on medallions are rising, and the $1.3 million investment four years ago might now only snag $250,000 at auction.
Many drivers no longer make enough to make the loan payments for their medallions. In an effort to stave off bankruptcy and default, they work longer hours with fewer days off.
It’s not just medallions
Cab drivers aren’t alone. For generations, Americans have sought financial security from big investments, like cars and homes. We also invest in ourselves, hoping for similar payoffs.
American views of education and social mobility still place a high premium on education, but few get the bang for their buck previous generations experienced. As tuition rises, more young adults commit to astronomical debt. Like the investment in medallions, it made sense. College graduates make more money than those with only a high school diploma, but the employment landscape is changing.
Young Americans willingly enter into huge debt with the promise of more and better work opportunities.
National student loan debt exceeds one trillion dollars. Students assume employment and higher wages will catch them, but the return on this investment stagnated after the Great Recession.
Like the New York yellow cab drivers, spending money for future prosperity made sense. With wise investment and hard work, anyone can succeed. But college costs are ballooning past their value.
It seems that there are no safe investments
40 thousand Uber drivers in London became suddenly unemployed when Transport for London banned the service. Policy decisions can change, but technological advancement cannot be undone.
Uber’s executives acknowledge the impending shift to autonomous vehicles once they’re available, a move that would echo the situation in London across 1.5 million Uber drivers worldwide.
The alarms are ringing, and this is not a drill. Autonomous vehicles will be on the road in the foreseeable future, and job disruption will inevitably follow. Automation will only amplify it across all employment sectors.
Our economy is about to become one of futile catch up attempts unless we address this now. We are already having trouble training displaced workers faster than robots can learn, and most estimates argue artificial intelligence could match human learning capabilities by 2050.
Whether it’s homes, diplomas, or medallions, we’re all in debt to trinkets of outdated models of prosperity.
What would it take to save us all from the weight of the medallions around our necks? Our leaders need to start having conversations about how to shed that weight, so we can move toward something better. We can and must invest in our future before it is also devalued.
