The argument would be that the union's negotiations established a wage floor, and uber drivers get a freerider benefit. If uber's funding dried up, and they only paid drivers from what paasengers pay, they would have a lot more pressure to lower rates. Furthermore the union probably makes the wages sticky, rather than able to be lowered if competitors exit the market.

Though hailing cabs is inconvenient there probably is some socal utility to the medallion system beyond just rent seeking for the owners. For example the supply of cabs being steady at odd hours, and better compliance with ruling on serving all areas of a city.