Well, at least Uber’s CEO Tried
Dara Khosrowshahi’s proposed fixes to the gig economy are, in a word, insufficient.
Last fall, before a global pandemic upended work and life as we knew it, sociopolitical comedian W. Kamau Bell, who hosts and executive produces the CNN docuseries United Shades of America, traveled to Austin, Texas to learn more about the gig economy — the system of independent workers paid by the task, the consumers who need a specific service and the companies that connect the consumer directly to the worker.
“Lots of us think the gig economy is a new idea because tech bros told us it is. It’s like how that WeWork guy convinced us he invented office space. But gig work is old as this country,” Bell wrote in an op-ed about the episode. “America was built on people — literally on people, who moved from job to job with low pay (or no pay at all). The technology in this industry may be new, and we may call them gigs instead of jobs, but the work and the way those workers are treated? That’s as old as the railroad, the cotton fields and the Triangle Shirtwaist Factory Fire.”
There’s so much to despise about gigs. Workers are unable to earn a predictable income due to an overreliance on tips and excluded from benefits like health care, sick leave or paid vacation. “The whole idea of the gig economy is that it is solving problems, but really, most of the problems that it solves are for the people who use the app, not for the people being used by it,” Bell wrote.
But you wouldn’t know any of this from reading Uber CEO Dara Khosrowshahi’s recent op-ed in The New York Times calling for Congress to pass laws that offer gig workers the flexibility of independent contractors with some of the aforementioned benefits employees enjoy.
“Our current employment system is outdated and unfair. It forces every worker to choose between being an employee with more benefits but less flexibility or an independent contractor with more flexibility but almost no safety net,” Khosrowshahi wrote. “Uber is ready, right now, to pay more to give drivers new benefits and protections. But America needs to change the status quo to protect all workers, not just one type of work.”
The timing of Khosrowshahi’s op-ed is interesting. The same day it was published, a San Francisco judge ruled Uber and Lyft must reclassify their California drivers as employees under a preliminary injunction. Uber and Lyft promised to immediately appeal the preliminary injunction. (The two companies are in favor of a California ballot measure that would keep drivers as contractors while providing them with some benefits.) Shares of Uber and Lyft dropped about 1.3 percent and 2.1 percent after the ruling was announced. A spokesperson for NYT did not respond to a request from The Supercreator for comment on how the decision was made to publish the op-ed on Monday or if the California ruling had any influence.
Khosrowshahi argued that drivers don’t want be employees because they have “total freedom to choose when and how they drive, so they can fit their work around their life, not the other way around.” He pointed to a recent survey commissioned by Uber and other companies which found that two out of three app drivers would stop driving if their flexibility is compromised. But as I reported in this article, the average Uber driver earns $9.21 per hour, which equals less than $10,000 a year ($9,578.40) for part-time drivers without paid time off for vacation or sick days. Even on a full-time salary of $19,156.80, drivers would fall below the poverty line in all 50 states. (A spokesperson for Uber did not respond when asked to confirm how much average drivers earn per hour.) No one is questioning that drivers, like most workers, want more flexibility, not less. But what good is that flexibility when your quality of life prohibits you from actually enjoying it?
To provide workers with cash they can use for the benefits they want, Khosrowshahi proposed gig companies be required to establish “benefits funds” that gave workers money for every hour they put in and would be transferable if workers switched between apps. Khosrowshahi said Uber would have paid $655 million in 2019 if a benefits fund had been required in all 50 states. It’s unclear though how Uber and other gig companies would determine how much an worker earned in benefit funding — Uber did not respond to a request for clarification. And even though Khosrowshahi estimated that a driver in Colorado averaging over 35 hours per week would have earned approximately $1,350 in benefits funds last year, data from Uber found that 80 percent of drivers work fewer than 35 hours a week across 20 of its largest markets and more than half only drive between one and 15 hours each week.
Besides, according to Edward Ongweso Jr at Vice, Khosrowshahi’s proposal is a distraction from what Uber already owes to New Jersey for unpaid unemployment insurance taxes from 2014 to 2018. “Additionally, more than 5,000 Uber and Lyft drivers in California have collectively filed over $1.3 billion in wage claims (each company burns through hundreds of thousands of drivers each year). Uber and Lyft are also estimated to owe California $413 million in unpaid state unemployment insurance taxes from 2014 to 2019,” Ongweso Jr wrote.
Finally, Khosrowshahi said that if critics like me got our way then Uber would only have full-time jobs and be able to operate in fewer cities than today, rides would be more expensive and less available and drivers would lose flexibility. But the convenience Uber offers riders is a luxury, not a utility. And riders should expect to pay a premium for it. The problem is that Uber hasn’t differentiated itself enough to make its business defensible. As I wrote in my first article on Uber in January, “Riders would laugh Uber into obscurity while loading Lyft or another competitor if the former attempted to raise prices, forcing it to bare-knuckle for every ride.” And even though this isn’t the workers’ fault, they’re the ones who suffer because of it.
On Wednesday, Khosrowshahi told MSNBC’s Stephanie Ruhle that Uber would likely shut down temporarily for several months if its California court’s recent ruling is upheld on appeal. “If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly.” This would no doubt has an unfavorable impact on the more than 100,000 Uber drivers in The Golden State — and I’m sensitive to their reality. But if a company can only survive with a model that exploits workers then I’m unsure it deserves to exist in the first place.
Originally published at https://thesupercreator.com on August 13, 2020.
