September 12, 2014 |
Last week in Long Island City, a waterfront neighborhood in western Queens, over 1,000 Uber drivers went on strike, protesting against several recent policy changes that directly cut into their wages. LIC is cab country, home to countless car service companies, and it can sometimes feel like every passing vehicle is a taxi of some sort: a classic yellow cab, a town car, a green taxi or, more likely than not, a ridesharing car. So it came as no surprise that drivers who work for Uber—a smartphone app that connects drivers with people looking for a ride—chose the company’s Long Island City headquarters to protest their labor practices.
One driver grievance was the decision to extend a summer discount, where the base price for standard rides was slashed from $12 to $8, into the fall, requiring drivers to work more hours to make the same money. The other is slightly more complex, but just as damaging to workers’ earning potential. There are several distinct tiers of Uber service (UberX and Uber XL, the cheapest services offered in New York City, and UberBlack and UberSUV, the higher-end black car services), and drivers for the higher-end versions earn more, in part to compensate for the higher costs of their vehicles, which they must supply themselves. Without any advance warning, the company told drivers for “Black” and “SUV” that they would now be sent cheaper fares as well, and that declining those fares could lead to their deactivation from the service.
The coordinated outcry from their workers got Uber’s attention, and, in an abrupt turnaround late on Friday morning, the company sent a mass email to their New York drivers giving them permission to decide if and when to receive UberX requests. Though this conflict may seem like a minor technical issue, it speaks to the increasingly fraught dynamic between the San Francisco-based company and its international network of independently contracted drivers.
Uber has built its reputation on providing reliable, safe rides at any time and at any location in the urban centers where it operates. In 205 cities in 45 countries across the world, it is now possible to take out your phone, select a car from a map showing nearby Uber vehicles, and have a cab waiting at your doorstep in under five minutes. Because customers’ accounts are linked to their debit or credit cards, payment is seamless. The convenience and usability of the app have inspired devoted fans, and few would argue against the practicality of Uber and its ever-expanding list of peers, including Sidecar, Lyft, SheTaxis and Halo. But in their focus on customer service, ridesharing companies have pushed the concerns of their workers aside.
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Since it’s founding in 2009, Uber has become the poster child for the sharing economy, a nebulous concept that basically boils down to companies taking on the role of middlemen. Companies like Uber, Airbnb and Snapgoods use technology to connect people to various goods and services (apartments, cars, ball gowns, bikes) that they can rent temporarily. The sharing economy has been heralded as a resource-saving, efficient, collaborative system that allows people to make a profit from items they wouldn’t otherwise be using. In another light, it can be seen as a sign of our economically insecure times. People who don’t make enough at their day jobs can try to cover expenses by renting out an extra room of their apartments, or driving strangers around a few afternoons per week. It is evidence of the fragile finances of people who are underpaid for minimum wage work or cobbling together full-time schedules from an assortment of temporary and seasonal gigs.
Investors love this economic model, for obvious reasons. Because these service providers are tech companies first and foremost and do not own the products being rented, much of the business risk, from upkeep to scheduling, is shifted to the workers. Companies like Uber—which received a valuation of $18.2 billion back in June—can make enormous profits while washing their hands of any responsibility to their employees.
Uber has exploited their position as middleman in two principal ways, both of which have a serious impact on people who drive cabs for a living. One, they claim that they are “disrupting” the overly regulated, outmoded taxi industry in the name of competition and the free market. What goes unmentioned are the thousands of full-time taxi drivers, many of whom belong to associations that help them fight for decent wages and other benefits, being put out of work by the rise of ridesharing companies. Furthermore, for a company that so values competition, Uber has systematically worked to quash their rivals in cities across the country, engaging in underhanded tactics to poach drivers from other car services.
The other way Uber takes advantage of their middleman status is in their treatment of workers. Uber drivers are not technically considered employees. Instead, they are “independent contractors,” meaning that they don’t receive any of the benefits or protections employers are typically expected to provide. The company tries to play this both ways. On the one hand, they claim that Uber drivers—or “partners,” as they’re known—typically work part-time, and drive as a way to make some extra cash. Yet the company also markets itself as a job creator and promises drivers the opportunity to make up to $90,000 a year in places like New York—no one’s idea of pocket change, if it is in fact true.
The contractor model has been tested by a number of corporations that want to do away with the inconvenience of having to be accountable to their labor force. In one recent example, FedEx Ground lost a landmark court case for misclassifying their drivers as “contractors,” saddling them with the burden of providing their own healthcare, FedEx-brand equipment, gas, insurance and much more. FedEx may now have to pay hundreds of millions in backpay. By shifting much of the risk and cost of operations onto the workers, companies like FedEx and Uber are relieved of the responsibility of dealing with the day-to-day hazards of running a business. In a blog post about the downsides of the sharing economy, Maureen Conway of the Aspen Institute, a centrist think tank, writes:
“If someone gets sick in the car and that driver has to spend the rest of the day cleaning the car, that’s not Uber’s problem….The risks associated with illness, injury or just the ups and downs of customer demand are largely borne by workers.”
Uber drivers use their own vehicles, pay for their own gas, parking and repairs, receive no benefits or worker’s compensation, and, once they are hired, have hardly any interaction with the company for which they work. Taken together, these additional costs make a significant dent in what workers bring home at the end of the day. Yet the company and its acolytes promote Uber as a source of well-compensated, stable employment. Uber CEO Travis Kalanick announced last week that they are adding 50,000 new “driver jobs” each month, and they have hundreds of thousands of drivers in their network. In promotional materials, Uber brags that their drivers can make salaries in the upper five figures in particularly busy markets like New York and San Francisco, and that they earn far more on average than taxi drivers. This would all seem to imply that the company acknowledges that drivers operate vehicles for Uber as their primary source of income. As the recent protests in New York City (and Los Angeles, and Santa Monica) suggest, many of the people who work for Uber consider driving their full-time job and are struggling to make ends meet.
Yet the company also markets itself as a form of part-time employment, a stopgap measure between full-time jobs or a way for grad students or stay-at-home moms to make a few extra bucks. This is certainly the case for some drivers, who enjoy the ability to create their own schedules and serve as their own employers. Nina Beck, a sunny 26-year-old from the Bay Area, told me in a phone interview that she started working for Uber because she was getting married and needed a job with flexible hours. Maria Vargas, an Uber driver who lives in Brooklyn’s Borough Park neighborhood, began working for the company when her kids moved out and she no longer needed to work at her full time job sewing for a garment factory.
“I love it,” she said. “You can go on vacations. They don’t care if you’re working or not. The money is never enough, but for me, it is.”
For many others, it is not. Haroon, a Pakistani immigrant who has been working for Uber for two years, told me that he works 12-hour shifts six days per week in order to support his wife and two young sons. Most of the drivers who he knows from Uber, and from a previous stint working for Lyft, work full-time, often clocking far more than 40 hours per week. Anyone hoping to earn a decent income as a ridesharing driver should expect to treat it as a full-time job, whether or not the company admits it. Though Uber is surely aware that casual part-time workers aren’t the reason the company has been able to move into scores of new markets at a blistering pace. No corporation would function with a labor force of individuals who only worked for an hour or two a day. Uber’s popularity is based on its reliability and availability, and the company needs knowledgeable, friendly drivers working on a steady basis to ensure that they maintain it.
Bhairavi Desai, Executive Director of the New York Taxi Workers Alliance, NYC’s union for yellow taxicab drivers, put it to me this way: “Ridesharing companies like Uber are informalizing driver labor. Throughout the world, whenever workers’ labor is deprofessionalized, they lose protections and rights…As much as Uber supporters talk about their model being something modern, I really think it seems quite backwards as far as workers’ rights are concerned.”
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The ability to make “enough” as a ridesharing driver depends largely on where Uber drivers are located geographically. They can earn much more in cities with high customer demand, like San Francisco and DC, but the issue has become more complicated by Uber’s recent fare cuts. As a means of boosting ridership and offering customers the cheapest possible rates, Uber has drastically cut fares in many states, including New York and New Jersey. Customers are understandably thrilled by the cheaper prices, but a lower fare translates to a pay cut for drivers, who earn 80% of the cost of each Uber ride. The company says that drivers will benefit from this system since they will get many more trips as a result of the spike in rider interest. Drivers don’t seem so sure.
“You can’t keep cutting people’s rates in half and telling them, ‘Oh, you’re going to get twice as many customers!’” Jonathan Cousar, a part-time Uber driver who runs the website Uber Driver Diaries, told me in a phone interview. “There are only so many people that you can physically drive around in one hour. It basically translates to drivers doing more work for more time while making a smaller profit.”
Another barrier to earning a decent wage is the surplus of drivers. Because Uber is desperate to prevent other ridesharing services from hiring new drivers, and because their business model relies on providing people with cab rides anywhere and at any time, the company has far more drivers than Uber workers say they actually need. This cuts into business both for traditional cab drivers and for ridesharing drivers. The Uber driver thread on Reddit is flooded with posts by drivers upset about their lack of trips. “I haven’t had a single fare this weekend (sixteen hours online),” user ImagineFreedom, who is based in San Antonio, fumed in a posting. “All of a sudden it seems like driver numbers have quadrupled and ads are still being posted for drivers.” On a recent afternoon, my Uber app showed six available cars in a two-block vicinity on a quiet corner in the Brooklyn neighborhood of Crown Heights.
Cousar, who operates in northern New Jersey, told me that when he first joined the company, he easily made his goal of $500 per week to supplement the income he made from his web hosting business. But now it’s impossible to make that much thanks to the combination of fare cuts and the surplus of drivers on the road.
“It makes me wonder how reliable this is as a future full-time or even part-time income. They’ve already brought in far more drivers than the market can support, and they’re still recruiting so aggressively.”
This is where the lack of accountability comes in. Uber doesn’t care if drivers are only getting one fare an hour, as long as all of their customers are getting picked up on time. It’s not their problem if drivers have to work longer hours to make the same money, or to waste hours waiting around for a trip that never comes. Uber’s concerns are customer satisfaction and profit, and in those regards, they’re doing as well as any company could hope to.
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If Uber drivers are fed up with this lack of consideration, traditional taxi drivers are in despair. The highly regulated industry has strict requirements that determine standards for licensing, rates and training. Uber isn’t subject to these regulations, meaning its drivers have a significant advantage over taxi drivers who have to comply with county and state regulations that specify when and how a for-hire car can be booked. Kalanick, the CEO, has scoffed at the taxi industry as a “protectionist scheme,” and blames excessive regulation for strangling competition in the field.
There is certainly some merit to his claims, and customers have plenty of legitimate complaints about the traditional cab industry (the difficulty of finding a ride at odd hours, high prices, a lack of options). Ask why people use Uber and they’ll respond with complaints about cabbies talking on the phone while driving, taking unnecessarily long routes to jack up the fare, or subjecting them to unwanted flirtations.
Beck, the San Francisco-based Uber driver, told me, “Personally I’m not really concerned about taxi drivers losing their jobs. I can’t tell you how many creepy cab drivers I’ve had in my life; it’s just like ‘good riddance.’ They never innovate. I guess that’s not the fault of individual cab drivers but the industry itself.”
This last line is key. Why are we blaming individual taxi drivers for the effects of strict regulations they had no part in creating? And isn’t it a bit unfair for people to write off an entire industry based on a few negative experiences? Imagine passing judgment on the food service industry based on the one time a waiter happened to be rude to you. Moreover, most of the regulations that “encumber” the taxi industry are designed to protect consumers. Taxi commissions exist to control fares, enforce training, licensing and safety standards for drivers, and to provide a platform for customers to file complaints or report lost property. Most of the negative press about Uber has involved customer complaints: female riders being sexually harassed by drivers or passengers being charged exorbitant rates under the surge pricing system, where fares go up, sometimes dramatically, during times of increased demand. In August, Uber riders in San Francisco took to social media to rail against the $400-plus fees they were being charged to get to and from a popular local music festival. Clearly, consumers expect some degree of liability and oversight from the companies with which they do business.
So who are the people who are so vigorously applauding Uber’s fight against industry requirements? A March Daily Beast article, which recounts a visit from Republican Senator Marco Rubio to Uber’s DC office, gives us some indication.
“Regulation,” Rubio told the gathered group of Uber employees, “should never be a weapon used by connected and established industry to crowd out innovation and competition, and this is a real world example.”
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Uber’s cutthroat tactics are not restricted to the taxi industry. In a remarkable scoop at The Verge, Casey Newton details the underhanded methods the company uses to hurt the business of other ridesharing services. The anecdotes read like the pages of Roald Dahl’s Charlie and the Chocolate Factory, except instead of sending spies to steal recipes from rival candy manufacturers, Uber sends undercover “brand ambassadors” to convince drivers from Lyft and Sidecar to switch companies. Their campaign against Lyft, their main competitor, is particularly underhanded and systematic. CNN reported in August that the company had employees around the country order and then cancel 5,560 Lyft rides, disrupting the company’s operations and causing Lyft drivers to lose business.
Cousar, the Jersey-based driver and blogger, expressed his discomfort with these aggressive tactics. “I think they’ve done some terrible things. From a moral standpoint they make me cringe, and they make me less proud and more leery about working with them.”
For now, at least, the legality of Uber’s tactics hasn’t been seriously questioned. As any defender of the company will tell you, all competing companies try to hire each other’s workers and undercut each other’s business. But Uber is already the colossus of the ridesharing industry, with a budget and international presence that far surpass any of its rivals. Though Kalanick and other Uber reps constantly preach the gospel of competition to reporters, their methods are as anti-competitive as they come. As Andrew Leonard at Salon puts it, “There’s little doubt that Uber is the closest thing we’ve got today to the living, breathing essence of unrestrained capitalism….This is how robber barons play.”
After all, wasn’t the whole reason that Uber came into being to shake up the taxi industry monopoly and open it up to new ideas and innovations? Basic economics tells us that competition is essential to provide companies with an incentive to keep prices reasonable, ensure quality and moderate supply. So do we really want Uber to be our only option?
People lover Uber because it’s reasonably priced, it’s reliable and it’s easy to use. But we love plenty of products and services that depend upon the exploitation of workers: disposable fashion from H&M and Forever 21, fast food from Wendy’s, discount furniture ordered on Amazon. The traditional taxi industry may suffer from an excess of regulation, but regulations exist for a reason. If we want workers to be protected from exploitation, have stable, full-time jobs, and benefit from decent working conditions, we need to treat them like the employees that they are. If Uber turns out to be the industry-transforming technology it claims to be and becomes the new universal model for hiring taxis, we need to seriously consider some of these questions. Because if the sharing economy is the way of the future, the future of full-time, permanent work is at stake.