For some frustrated cabbies, high gas prices — and worsening tips — are final straw

Cabbie Nick Seversen: "It seems like everybody's broke."
MinnPost photo by Mike Mosedale
Cabbie Nick Seversen: “It seems like everybody’s broke.”

Like a lot of taxi drivers, Nick Seversen was drawn to the profession by the allure of fast cash and freedom from indoor work. When Seversen, a loquacious 38-year-old Twin Cities vagabond, started driving cab eight years ago, it delivered on those promises — and then some.

In his first year, working in the southern suburbs of Apple Valley and Burnsville, Seversen figures he cleared around $50,000. His earnings dropped consistently in the years that followed, and he experienced his share of the usual hack hassles — runoffs, drunken and belligerent customers, even the occasional physical altercation. But Seversen never gave much serious thought to getting out of the racket.

In 2006, after years of driving leased vehicles and dabbling on the management side of the business, Seversen decided to go whole hog and became an owner-operator with the St. Paul-based Green and White Taxi. Acting on advice from a veteran cabbie, he attended the Hubbard County Sheriff Department’s vehicle auction, where he purchased a used 2003 police edition Ford Crown Victoria.

“They live forever. You can’t kill them,” Seversen said. The vehicle cost $8,000 to purchase, paint and outfit with a company computer. Closing in on 350,000 miles, his Crown Vic is still running strong “with the original motor and the original tranny.”

But a slowdown in business combined with increased competition from other drivers, worsening tips and — most of all — skyrocketing gas prices have Seversen planning to get out once his current license expires next year. And if his cab breaks down before that, he said, he’ll quit sooner. 

Ugly math
Seversen still relishes “the wild adventure” of driving cab, especially the occasional (and lucrative) long-distance runs to places like Milwaukee and the odd and entertaining encounters with customers. “I don’t think a cop or a social worker gets the same window into people we get. They tell us the truth because we’re cab drivers, and why not?” he said.

But the math, Seversen said, has simply become too ugly. When he started driving cab, Seversen typically paid around a $1.10 a gallon for gas. Since then, gas prices have nearly quadrupled while the meter rate has risen by only 30 cents a mile. Although the St. Paul City Council recently authorized another 30-cent hike (with the Minneapolis council expected to follow suit), Seversen said that’s too little too late.

“From three years ago, I’m paying $2 more per gallon. Well, I burn about 20 gallons per day. So compared to three years ago, I’m making $40 less per day, seven days a week. That’s $280 a week,” he said. On a typical day, Seversen figures he pays $60 a day in expenses to Green and White and does about $200 in business. After gas, he said, he often comes home with only $40 profit.

“I smoke cigarettes. I eat food. I drink pop. That’s 20 or 30 bucks there. So I clear 10 bucks,” he said. “You can’t pay a cell phone bill on that and you sure can’t make a house payment.”

Last winter, after he was unable to meet his lot payment at the Rosemount trailer court where he lived, Seversen found himself homeless. He kept driving — probably a mistake, he now thinks — and for two months he stayed in motels and hotels.

Short of money, he called his younger brother looking for a loan. His brother didn’t give him the cash, but instead offered up a couch in the back of his northeast Minneapolis poster shop. Seversen has been staying there ever since. That is, when he’s not working, which is most of the time. He said he typically drives 12 to 15 hours a day, seven days a week.

Complaints are common
At the Minneapolis-based Red and White Taxi, general manager Pat White said times in the industry are as tough as any period he can recall. “There are days when drivers have to take money out of their own pockets to pay the lease, especially in the summertime,” said White, who has worked in the business since 1979.

Increasingly, White said, the industry is dominated by newcomers, especially Somalis, who make up about 80 percent of Red and White’s approximately 150 drivers. And increasingly, he said, those newcomers are getting a nasty crash course in modern cab economics.

“A lot of the new drivers can’t make ends meet. They usually find out in the first week or two. I’d say about 50 percent get out of the business right away. A few years back, almost no one bailed that quickly,” White observed. “I think this is just going to become a lot more of a transient business.”

While the high gas prices remain the top complaint among cabbies, other factors are contributing to their woes. A general slowdown in the economy has hurt both ride volume and tips. “It seems like everybody’s broke. Pretty regularly you hear people say, ‘I’d give you more but I’ve only got 14 dollars to my name,'” said Seversen. “People in the service industry still tip because they understand tipping. But they are the only ones you can still count on. Waitresses, bartenders and other cab drivers.”

Adding to drivers’ troubles is an increase in the number of licensed cabs in Twin Cities, which has made competition for fares more intense. In 2006, for instance, Minneapolis initiated a phased increase on its cap of 343 taxi licenses. The city has added 45 new licenses each year since then, and the cap is set to entirely expire in 2010.

“If we eliminated one third of the cabs on the road, we could get by without a meter increase,” said Ken Kormendy, the owner of the Bloomington-based Gopher State Taxi. “The cab business has gotten bad because they relaxed the requirements and let all these new drivers in.”

Kormendy, who still drives cab to make ends meet, said many drivers are making so little money these days that they qualify for welfare. “If you go to office of adult economic assistance in downtown Minneapolis, you’ll see a lot of cabs there. And they’re not there to pick up customers. They’re getting assistance,” he said.

The high gas prices are also changing the way cabbies do business. Cruising for fares in a Crown Vic, which gets around 18 mpg, is no longer an economical practice, so many drivers just wait at cab stands.

Will the RNC help?
Opinions are divided about how much the upcoming Republican National Convention in St. Paul will boost business. “If you have 100,000 people in town, that’s got to help. Any driver who knows the business should make some money,” said Fred Anderson, the finance manager for the Minneapolis-based Rainbow Taxi.

That said, Anderson acknowledged that conventions don’t always deliver on the promise of a big up-tick in fares. When Minneapolis hosted the International Convention of Alcoholics Anonymous in 2000, for instance, the city was flooded with extra cabs and charter buses and that cut deeply into cabbies’ earnings.

White, the Red and White GM, said he expects a similar problems with the RNC this year. “I’m sure there will be more money, but traffic is going to be a real hassle and getting to the convention center is going to be almost impossible,” said White. He suspects that many would-be cab patrons will probably turn to other forms of transit when they discover they can’t get the door-to-door service they expected. 

Getting out
Some industry insiders think the current exodus of cabbies from the business would be even greater if it were not for the overall weakness in the economy. A half dozen laid off construction workers took jobs with Rainbow last winter, said finance manager Anderson; unable to find new work in construction or elsewhere, some are trying to tough it out in the taxi racket.

But with current costs and business model, Nick Seversen doesn’t see much of a future in cabs.  “It used to be a lot of suburban and inner-city working class people, people who grew up here, drove cab for 20 or 30 years,” said Seversen. “You could put your kids through school, you could pay for a house. Now you make 50, 60 bucks a day, if you’re lucky.”

Because he has built up a base of loyal customers, however, Seversen has settled on another plan for the future: the limo business. He figures he can save $1,200 a month on the insurance, dispatch and company name fees he currently pays to Green and White. Driving a town car, he would be freed of the fixed mileage rates and, in the event of further oil price increases, could tack on a gas surcharge.

There are other advantages as well. “I could do parties and, with a limo plate, I could legally pick up customers anywhere, not just St. Paul,” he said. Seversen admits that it’s still a gamble, especially with the $18,000 to $20,000 he will have to invest to purchase the used Signature L Lincoln Town Car he has his eyes on.

And, he said, he will probably have to tweak his approach to the business.

“In my cab, there are three rules. Don’t shoot the driver, pay your fare and no male nudity,” he explained. “If I start driving limo, I might have to get rid of that third rule. I guess I’ll just have to figure out what I need to charge if a guy takes out his junk in my car.”

He paused for a quick calculation and added with a laugh: “Maybe an extra $200.”

Mike Mosedale reports on the environment, Indian affairs and other topics.

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Comments (1)

  1. Submitted by Ron Gotzman on 08/06/2008 - 12:40 pm.

    Inflate those tires! We can inflate our way out of these high fuel costs!

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