This is a note to Mr. Burton Wolfe. In response to your August 1999 article “The Independent Contractor Racket” (WFP issue 40), let me say that I agree with your assessment, but not your remedy.
There is no question that most taxi drivers are employees who have been swindled out of their rights as employees. I would like someone to explain how a person can be an independent contractor when they have no right or authority to negotiate the terms and conditions of the contract they are being asked to agree to. This is the result of the NLRB, the IRS, and other agencies completely falling down on the job. In all of these cases, so-called independent contractor drivers are refused licenses of their own by the regulating authorities. Licenses to operate taxis are issued to companies, or a limited number of individuals, setting up a situation requiring that the rest of the taxi drivers must be employed by license holders.
This scheme was crafted in the 1920's and 1930's when communism and fascism were viewed as the saviors of mankind, and forceful government involvement was seen as the only remedy for the failure of capitalism. So, government regulation of taxi markets was designed to run small or independent operators out of business, and concentrate the market into the hands of a few large operators, who then could be more easily controlled by government. This scheme also forced independent operators to either become employees of larger concerns, or leave the industry completely.
Taxi Regulation is Outdated
Fascism failed. So did communism. But their ghosts live on in the modern American taxi regulatory racket. And a racket it truly is. Think about it. What other industry is regulated this way? What other industry requires employees to pay for the privilege of working, without any voice whatsoever in the operation or conduct of the business, with nothing more than a take it (in the shorts) or leave it relationship, with obviously fraudulent contracts?
Would lawyers tolerate being treated this way? Forced to pay for the privilege of working with no power whatsoever to negotiate the terms of their contracts? The thought of thousands of lawyers rioting in the streets almost brings tears to my eyes. But you know that they would never allow such a scheme to be perpetrated on themselves. So why is this considered by management and government to be the best way to control taxi drivers? ~o reasons: Greed and bigotry, the same two vices propelling slavery on the North American continent for four hundred years.
The fact that greed motivates the taxi regulatory racket cannot be disputed. By greed I mean not just the normal desire to make a good living in your chosen profession. What I mean is the evil intent to take away from other people what is rightfully theirs, even if the consequences are negative for both parties. The primary motivation of the taxi industry and regulators is to cheat the system, not just to make money. Cheating is at the heart of the regulatory nightmare that afflicts the industry today. The drivers cheat on their trip sheets. The companies cheat the drivers out of their rights, and thereby their property. Both of them cheat the tax collector.
System Designed for Swindling
Bigotry is a little harder to pin down. But look at what the taxi industry has become. As late as the 1970's, most taxi drivers were indigenous to their market, and largely middle class. Today, large numbers of taxi drivers are either black, Hispanic, or alien, almost all are either poor, lower class or lower middle class. In the case of American taxi drivers, they tend to be poor, poorly educated, and generally not well suited to deal with the complexities of the relationship they find themselves in with the taxi companies. They, like the alien drivers, have no real understanding of the meaning of employment versus independent contractor status, or how any of this is decided, and whether their employment designation is in their best interest. In short, they don't have a clue. All they want is a job. What they get is a swindle.
My experience in the industry is that the management of the taxi companies have gone out of their way to force educated drivers out of the industry completely, in favor of gullible poor and foreign labor. The reason the blacks and Hispanics show up more frequently now than they did twenty years ago is that there is still a large enough percentage of those populations available to occupy the, less than desirable jobs. Plus, taxi driving is a no-skill, entry-level job as far as rookie drivers are concerned. Veteran drivers know how much skill is involved. But most companies just want warm bodies who pay up on time.
One more point on bigotry. The bigotry I mention is not necessarily racial bigotry. It is the way that affluent people traditionally despise those less successful or well off than themselves. This contempt for the poor is as old as history. The traditional method of dealing with the poor has been to blame them for their plight. This gives the non-poor a convenient way of excusing themselves from any complicity in the situation. While poor people are not poor because rich people are rich, as communism presumes, in the case of taxi drivers, poor cab drivers are poor because rich managers, legislators and regulators have made them that way. People who manipulate and abuse their victims often despise them as well. It is a sort of sadism. Cruelty, really.
This is also an element of laziness in all of this. In the case of greed, they think to themselves, “Why should I work for mine when I can just steal yours?” Bigotry excuses the bigots from the hard work of thinking and caring.
Let Contractors Be Independent
The remedies to this situation actually start by getting government out of the industry, not more involved. There is still a need for a legitimate independent contractor designation. But ultimately, the market will decide the future of employment in America, not the NLRB. If people accept the swindles companies like Xerox perpetrate, then that's their choice. Companies that abuse the independent contractor status do so primarily to evade laws and regulations that effectively mandate expenses, and restrictions on their activities. They have found it to be cheaper to twist the law out of all recognition than to challenge the law directly. Their actions are understandable, not ethical.
The other remedy is to give taxi drivers the choice of signing up with a company or going independent. Most drivers will stay with their companies because of dispatch services. If the abuses grow too severe, or lease fees go too high, then significant numbers of drivers can leave the plantation and strike out on their own. This will help keep the industry honest. As it is, the drivers' only option is to give up their livelihoods. This is not a reasonable alternative, and demonstrates the viciousness of the entire system. It is similar to saying that every slave who didn't want to be a slave any more could always kill himself. Therefore, one would conclude (wrongly) that any slave who was not dead was happy to be a slave.
Independent drivers and operators will not destroy the industry. Some industrious outsiders will eventually offer serious competition to the existing companies. And that would eat into profits. That's exactly why they all want to be so heavily regulated. They prefer to trade liberty for profit.
Guy L. Evans
Guy Evans was a taxi driver in Denver from 1979 to 1998 and has been fighting the independent contractor battle since 1984.
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