Imagine seeing your retirement account balloon to $1.3 million and then crash to $140,000. That’s essentially what’s happened to thousands of New York City taxi drivers.
Each NYC yellow taxi needs a medallion, which is like a license, in order to operate legally. Drivers can lease or buy them. New York City and state cap the total number of medallions, and there are less than 14,000 of them available today.
For decades, that scarcity made medallions a seemingly safe investment. Cab drivers who saved up a 10 percent downpayment could finance a medallion through a credit union. As long as the medallions kept increasing in value, the drivers could build equity, which they could then use as collateral to buy a house or send their kids to college. Once they reached retirement age, they could lease the medallion to another driver for anywhere from $3,000 to $3,600 a month, or sell it and keep the profits.
New York City periodically auctions off new medallions (the last one was in 2014), but most sales involve existing medallions.
But medallions are worth only as much, or as a little, as buyers are willing to pay for them. And with the rise of Uber, Lyft, and other competitors that don’t require costly permits, many medallion owners are facing a a disturbing reality: medallion prices have plummeted in the past three years.
VICE News met with three medallion owners to see how the crash in medallion prices is affecting their lives.