A medallion—what is it exactly? It’s usually something shiny that’s worn around the neck. Kings, queens, princes, and princesses wear medallions—even pop stars like Jay-Z will sometimes wear decorative medallions. But did you know that taxi drivers also “wear” medallions? No, not around their neck, but on their taxis! Confused yet? Let us explain.
In most large cities, anyone who owns a taxi (those bright yellow cars that take people to places), must purchase a medallion from that city. It’s a sign that that specific taxi is allowed to operate in that city.
But why purchase a medallion if you can just drive a taxi for a taxi company, right? To some drivers, owning a medallion means the freedom to own and operate their own taxi. Every penny made from a ride goes directly into their own pocket rather than into their boss’ pocket.
But cities don’t allow just anyone who wants a medallion to buy one. The medallion system was put in place to limit the number of cars on the road. For that reason, only a set number of medallions are offered for purchase each year. In 2013, a New York taxi medallion cost a driver over one million dollars. It was expensive, but those who could purchase a medallion believed it was a good investment. After all, people always need rides!
Although people do need rides, taxi drivers are now seeing a lot more competition from alternative ride-hailing services such as Lyft and Uber taking over many metropolitan areas, including New York City. (Recognize that pink mustache on the right?) Now, anyone with a driver’s license, a car, and insurance can become a “taxi driver.” And instead of someone saying “let’s grab a taxi,” they might say “let’s grab a Lyft” or “let’s Uber!” Taxi drivers who paid upwards of a million dollars for their medallion are now struggling to pay off the loans that they took out to pay for the medallion. It’s a shock to them, but it turns out that people don’t always need a ride—at least not from a taxi.