The economics of driving a taxi in Las Vegas
I'm in Las Vegas right now for the Blogworld and New Media Expo and took a cab, as I often do, cruising around from hotel to hotel, party to party. This time the driver, Frank, was in a talkative mood and revealed some very interesting information about the economics of being a cab driver here in Las Vegas.
Wondering how these guys get paid? Turns out that one of their biggest sources of revenue is dropping fares off at strip clubs. In fact, there's a "price war" going on with the strip clubs here in Vegas and a cabbie can earn up to $100 per person for dropping people off at the door.
They drop fares off, get a "chit" from the doorman, and then park and come back to get the cash. Meanwhile, the people going into the club find out that there's a "cover" charge (of up to $100) to cover the cost of paying off the cabbie.
I'm thinking that's going to skew their recommendations regarding which club to visit, don't you think? Do they have to disclose that according to the new FTC regulations?
The picture's even more interesting because this particular cab driver, Frank, also explained how the meter revenue is split. The cabs are all owned by the cab companies and employees get health benefits and (some) vacation time, but more importantly, some companies require the drivers to split the cost of gas, while others cover it 100%.
The goal of the companies are to maximize meter-on time, and the driver (with this particular company at least) gets 40% of the meter up to the first $100, then 50% of the remainder of whatever they earn for the night, along with all of the tips.
That's not too bad if you think that a typical 15 minute cab ride generates a $14 meter fee and a $2-3 tip. Do that three times an hour for an eight hour shift and you've just earned 45% (to make this easy) of $336 (24*$14) + $72 (24 * $3), or $222/night. Drop off a few fares at a strip club and even if it's not the top-paying club, that's another $150 or more, so we're talking about $375 or more. Add a few airport runs, or increase the fare because you have more people in the car and it's an easy $400/night, or $2,000/week. Not bad at all for driving around in circles all night.
Still, my Dad was a cab driver (in London) and I know from his stories that it's a tough gig. There are jerks, drunks, people who realize they've no money once you arrive, and hostile folk. There's also quite a pecking order with cabbies in most towns too: When I was last in Chicago my driver rolled down the window and started swearing at another taxi driver while we were going 50mph or so. Complaining that the other guy had cut the taxi rank, not cool. But I was sure we were going to crash.
Anyway, very interesting to learn more about the curious financial world of taxi drivers here in Las Vegas, Nevada. Now if they could only keep the cabs from smelling musty and smoky...
Posted by Dave Taylor at October 17, 2009 9:12 AM
That's one thing that's always bugged me about taxis - the more riders they have, the more money they make. That's why so many of them drive like maniacs. The driver that took me back to my hotel the other night from the Bellagio.. good grief, he was screaming out of the parking lot and nearly taking corners on two wheels.
I wish all of that were true - about the big bucks. If it was, I would not have quit driving taxi in Las Vegas a year ago. Many nights in Las Vegas these days it is hard to get more than 10 rides in the required 12 hour shift. The rides average less than $10, unless the driver uses creative routes, which is encouraged by most of their employers. The door persons at the hotels want at least 50% of the strip club payouts if they load a cab from there, and most of the time they just divert customers to their limo buddies who split the take with them. Then there are all the dirty tricks that cabbies use to steal rides and drive like idiotic maniacs to beat other drivers into line. Then there all the fines and tickets and fees paid by the cab drivers who make money by being aggressive.
The real story is, that the only way to make half decent income driving taxi in Las Vegas, is by either long-hauling or being a pimp, because the oligarchy system for taxis in Nevada makes all drivers employees of big companies, which are regulated by the Nevada Taxicab Authority, which is a Nevada State agency that has policies making it impossible for decent honest cabbies to make good money. If you think being required to work 60+ hours a week for less than $600/week is good income, then you may disagree with me.
Don't quit your job and move to Vegas to drive a taxi because of this article. :)
I'm sure your driver was lying--cab drivers don't make that much or even half as much as he says, probably not even one-third. And if they did I'm sure they'd be tight-lipped about it to keep competition away. Any unskilled person can migrate to LV & make more than $1000 a week working part-time? $2000+ full time? It seems unlikely
