A taxi medallion, also known as a Certificate of Public Necessity and Convenience (CPNC), is a transferable permit in the United States that allows a taxicab driver to operate. Several major cities in the US use these in their taxi licensing systems, including New York City, Boston, and Chicago. The medallion system is a government-created intentional constraint on the supply of taxicabs, and because cities have historically increased the number of medallions at a slower rate than the growth in demand for taxis, medallions have generally been considered a valuable investment. However, the increased supply of cars for hire created by ridesharing companies has been eroding the value of medallions.
Historically, medallion prices have been high. For example, in 2013, the price of a medallion in Boston was $625,000, and in 2014, that price had risen to around $700,000. However, shortly thereafter, medallion prices began to sharply decline. By the end of 2018, the value of a Boston Taxi Medallion had collapsed, and prices had fallen to around $40,000.
The medallions worth has plummeted, leaving the thousands of drivers who purchased a medallion in hundreds of thousands of dollars in debt, and financially ruined. The average debt owed on medallions by taxi drivers is $600,000. The tumultuous state of the medallion can be traced back to its artificial inflation. In 1937, New York City created the medallion system and placed a limit on the amount of medallions that could be sold, making one rare and valuable. By controlling the supply, demand for owning a medallion soared among taxi drivers who bought into the city’s promise that a medallion would bring them financial stability and a pathway to achieve the proverbial American dream. The medallion’s drop in value is due in part to the overwhelming demand for ride-share services.
