You Know You Are A Crappy Company When You Are Paying About 50% of Your Workers Less Than Minimum Wage
Recently MIT/Stanford researchers began to expose a very inconvenient truth. Approximately 41% to 54% of Uber drivers are making less than minimum wage. Shortly thereafter, another study popped up showing very similar results that in Australia ~50% of drivers were making less than minimum wage as well.
The CEO of Uber, Dara Khosrowshahi took to Twitter to both insult MIT and share one of the lamest retorts I have ever seen in the past two decades of working in tech. You can see my comments on the sidebar when you are on a desktop computer. How does a company with over 100 data scientists pretend to not even know its own numbers? They are obfuscating the data like usual. If the numbers aren’t good, which it seems apparent that they aren’t, then they don’t share them publicly. All indications point to them having something to hide.
As a tech CEO who has hired 70 people, let me tell you that this is unsettling to me. Seeing a multi-billion dollar company continue to treat its workers with such cold disdain rubs me the wrong way. Honestly, it’s not hard to take advantage of people, especially if they work for you. If you have power over others, there are a slew of things you can do to them. But you shouldn’t. You should respect the power and financial advantage that you have been given and respect the people you work with.
There is no reason that Uber can’t simply build a better organized and equitable $20B company rather than a greedy one whose only goal is to IPO and make their founders, advisors and relatively small number of employees insanely rich. This is absolutely a problem of company architecture. This company has been built from the ground up with a lack of morals. They have established a two tier employement system. The haves and the have nots. The full time workers in the plush corporate offices get free lunches, equity, and health insurance and the full time drivers get none of these things. I would argue that Uber may be one of the worst architected tech companies of our generation. Honestly, there is no reason why drivers for a multi-billion dollar company should be sleeping in their cars. There is no reason why the first 100 drivers shouldn’t all be millionaires by now and should have the ability to share in the growth of the company. The first drivers who are still around are actually making less money now than when they first started. It is simply bad company architecture.
There has been a constant stream of unethical actions from this company. Everybody in the tech industry knew that Travis was an asshole. We didn’t need to see him yelling at his own overworked and underpaid Uber Black driver to realize that. But let’s be honest, we were all slightly hopeful about Dara. Maybe things will be different we thought to ourselves. He said he would “make things right.” That is turning out to be false and Dara is turning out to be just as uncaring and shady as the last guy. What we are seeing from Dara is fake platitudes and hypocritical virtual signaling t-shirts. Dara seems to be no more than a corporate stooge put in place to ram this badly architected company towards its IPO. I honestly don’t think he cares.
I was a driver. I know exactly what this feels like. I drove for over two years with thousands of customers and thousands upon thousands of miles, I had numerous shifts where I would make three dollars an hour. It was horrible. I was extremely frustrated that there were no standards set to prevent this. Supply was maximized at Uber HQ to decrease wait times and increase market share but no consideration at all was given to drivers. Remember, drivers aren’t participating in a marketplace. Never in the history of Uber has any driver ever set his own price. Go to eBay or Craigslist if you want to see a marketplace. There is where people have complete control over the price they set for their goods and services.
I had my income cut ~40%. They just emailed and basically said, “hey, you are getting less money, deal with it.” I continued to speak to drivers. I remember it clearly, when one full-time driver spoke honestly to me and said he could no longer feed his family because of all the income cuts. He used to make about $3,500 a month working full time and his income was cut and he could no longer feed his family on $2,300 per month. Fast forward to a month ago and Travis walked away with $1.4B. What a sham.
Let’s shoot straight. This is a multi-faceted problem. Should the drivers pay better attention to their mileage and true costs? Of course. Should the drivers fire Uber and get better jobs if they can? Yes, absolutely. However, it it is not always that easy. Many full-time drivers are lower-income immigrants who speak English as a second language and don’t just have the ability to magically snap their fingers to get a higher paying job. Many weren’t given a free laptop at age 13 like I was and many of my friends were. Many speak English as a second language. We have to look at these challenges realistically.
Is this honestly the best that we can do as a tech community? Why is it that the “largest startup” in the tech industry is also the most shady. I’ve spoken to a number of Uber employees, former employees and investors and I still haven’t found much empathy around this issue. It is a brutal reality that many higher ups in this ridesharing ecosystem just don’t care. I’ve reached out to Kara Swisher to request that she ask Dara at ReCode what is his plan to address and fix this situation. I look forward to hearing his response . Although honestly, I’m not going to hold my breath.
There are a few key data points that Uber hides from the press and the public. These important data points are essential to the discussion around future of Uber and the future of work. What is the exact percent of Uber drivers that are making less than minimum-wage? What percent of full time drivers are having trouble making a living wage and can no longer feed their families? What is the current number of full-time drivers on the Uber platform and what is being done to help these drivers? We have seen from previous studies that 48% of Uber driving is done by full time drivers. Put simply, what is being done to make sure that Uber doesn’t take advantage of these full time workers.
Enter MIT.
Recently Steven Zoeph from MIT has begun closely studying the true net income of drivers. We finally have the beginnings of some research on some of these data points. The data isn’t perfect, however he is beginning to show that approximately 41% to 54% of all drivers make less than min wage once you take out expenses. It is important for drivers and journalists to realize that it cost about $.35 cents per mile to drive an average vehicle for UberX. This data point is essential as many drivers, as I would estimate over 95% do not know their actual true costs.
Drivers absolutely have their own free will. They are 100% in charge of making their own decisions. Once the numbers are clear, they can make a personal decision if they want to continue driving. In the same way, politicians, and policymakers can also decide if they want to continue to sit idly by while a large company like Uber is employing drivers to work for them for often less than minimum-wage.
So I say to the drivers who are reading this, I hope this recent MIT study makes you think. I hope you are using MileIQ or Quicken mileage tracker to keep a close eye on your miles. Once you have your miles, you can then simply multiply them by $.35 cents a mile and see your true net income. A hundred mile shift in which you make $100 in fares is actually only $65 in net income. Is that worth it to you? If it isn’t, you might just want to fire Uber and move on.
If you are an Uber employee, thank you for reading this. Does this stuff bother you at all? I would love to hear from you and understand your point of view on this. Feel free to privately DM me on Twitter if you would like. Everything is confidential.
Dara if you are reading this I would hope you make the right decisions about this going forward. Are you going to continue to underpay the very staff that power your company, especially the full time drivers? Also what is your strategy for firing all these folks when your self-driving cars come to fruition. (and hopefully stop killing people) Have there been any discussions on humane ways to fire your workforce of over 300,000 US drivers?
To the advisors and VC’s reading this, I would like to honestly know if this doesn’t bum you out just a little. Is this the best we can do in tech? Do you have no moral framework for your firms that prevents backing these types of predatory companies? I am an investor myself and I can’t support this unethical company. It has no standards, no morals when it comes to worker rights. And I’m not at alone. Many other tech leaders such as DHH, Sarah and Anil have publicly spoken out against this company. We have reached out to advisors such as Naval and Ferriss who plan to make a 3,600X return on Uber. Their silence speaks volumes and shows their true colors on the issue. These investors value putting money in their pocket and turning a blind eye to the very humans that power this company. The way I see it is that these investors are directly profiting off of an unethical company. It doesn’t have to be this way. This could be architected so much better.
What Are We Going To Do About It?
We can all see that clearly there is a big problem here. The problem is multifaceted. The drivers need to more closely watch their numbers, the companies need to stop being so shady, governments/officials need to wake up and take a hard look at this and we as the tech community need to voice our concerns when we see bad actors participating like this in our community.
As of today, I publically renew my commitment to not support Uber in any way until Dara is able to clearly show some basic human respect to the very workers that power his company.
In today’s challenging times for workers, we need CEO’s who actually care. Not ones whose only goal is to line their pockets and the pockets of their investors at the expense of their workers.
I would challenge you, the reader, as well. Do you feel right driving around with someone who is possibly making less than mininimum wage? Does that sit well with you? There is a reason that these fares are so incredibly low. Do you consider tipping every time. I try to do so for each ride.
If you are full time driver I hope you see the writing on the wall. Let me be frank, these companies don’t give a shit about you. If you died of a heart attack before finishing the end of this article they wouldn’t even care and they probably wouldn’t even notice. Self-driving cars are already here. They are already on the roads in Phoenix and are coming to Atlanta and San Francisco. The clock is ticking on this industry.
What I wish we could see is more companies like ManagedByQ. This company gives 5% of the equity to the blue-collar workers. This type of high standards is what we need more of in the world. Companies like ManagedByQ are architected in an equitable way. They are built from the ground up diffently. We need more ManagedByQ’s and fewer Ubers. We can clearly see that we all have a long way to go to improve.
I leave you with one simple question. Is this really the best we can do?
Thanks for reading and please let me know your thoughts on this piece. I honestly would like to hear your thoughts on it. As part of my goodness project commitments, I promise to keep my DM’s open and I commit to not blocking a single person this year. Would be happy to chat with you.
