Uber Vs Drivers - How The Gig Economy Has Shown Why Capitalism Doesn't Work For Those It Should
This system sucks for those at the bottom.
Photo Credit: Mark Lennihan
Jamie Mah @grahammah
“If proper living wages are instituted, Medicare-for-all is adopted, and taxes are hiked on rich people and corporations to reinvest in infrastructure renewal and a Green New Deal — programs which could create millions of well-paid jobs — people would be less likely to turn to the gig economy and there would be greater pressure to increase the labor standards that those companies have to abide by.” — Paris Marx, author of Freedom From Jobs: How Automation Will Revolutionize the Future of Work
Friday May 10th, Uber will file its IPO. This moment has long been coming. Uber forecasts it will raise upwards of $10 Billion once they file. Its stock has been the golden ticket for many would be investor looking to cash in on what has become a massive year for tech IPOs. Beyond Meat’s explosive filing last week should signal a market ripe for the pounce. Millionaires will be minted overnight. This is exciting times for those with money and the means to invest.
However, as of yesterday, Uber drivers across the world decided to strike as they continued their fight for higher pay and more benefits.
As per Vox:
Any challenge to the drivers’ status as contractors threatens Uber’s bottom line, which is another reason the strikes are so significant.
Uber has been upfront with investors about the risk of a labor revolt. In a new Securities and Exchange Commission filing, Uber acknowledges that giving drivers the same legal rights as employees would “fundamentally change” the company’s financial model:
If, as a result of legislation or judicial decisions, we are required to classify Drivers as employees … we would incur significant additional expenses for compensating Drivers, potentially including expenses associated with the application of wage and hour laws (including minimum wage, overtime, and meal and rest period requirements), employee benefits, social security contributions, taxes, and penalties.
It’s worth reemphasizing this: Uber doesn’t want to pay drivers to take 15-minute rest breaks every few hours because it would cost too much, even though all US employers are required to give hourly workers paid breaks under federal law.
In the filing, the company says that dissatisfied drivers could become a business liability, as recent protests in India, the United Kingdom, and the United States have interrupted business on the platform. Instead of outlining ways to make drivers happy, Uber suggests it will just get worse.
“As we aim to reduce driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase,” the company stated.
That dissatisfaction is leading Uber and Lyft drivers to organize.
Right there in their S-1 filing is the dilemma the company and its now future investors have to weigh as they continue forward with how the company currently operates. “As we aim to reduce driver incentives” is as a strong and horrible a quote.
Debate the merits of how the gig economy works all you want, this type of company cannot and should not exist the way it does. It skirts around government regulations** in the hope that those who suffer won’t have the power to wield a better hand for their livelihoods.
**Currently here in Vancouver, the last major North American city to still not to have ride sharing, Uber and Lyft have warned of not even coming since city and government regulators look to implement strict rules concerning how they would operate. It’s a bad and good thing for Vancouver residents who desperately need and want the service but should be happy the government isn’t just bending over backwards and caving to a company with such a poor labor standards.
Just this week, here in Canada, General Motors struck a deal with Unifor, Canada’s largest private sector union, with a new $170 million dollar investment to stay and continue operating part of its Oshawa plant. 300 jobs will be saved. This all happened because of Unifor and their President Jerry Dias.
Drivers for Uber and Lyft need someone like him to fight for their rights. Unfortunately for Uber drivers, the reality here is that Uber knows they will win this fight as most of their drivers depend on what meager money they do make — taking an extended amount of time off is not an option. This is what owners in sports leagues have done for decades when trying to settle a dispute with employees. Owners have the money and the employees do not. They can wait it out.
This strike by Uber drivers this week will hurt, but not much. The IPO is still going ahead as planned. Drivers will get squat when it does. Pressure is mounting for government to step in and help regulate how companies like Uber operate. Silver linings cities like New York could hopefully lead the way for others to act accordingly. I doubt they all will but a win here or there is something.
When a company like Uber is set to rake in billions with very little going to its workforce, you quickly realize how the system of capitalism doesn’t work for those that it should. Unions and government regulations were set up because of issues such as these. The gig economy is a new phenomenon. It’s time companies such as Uber stop leveraging the lack oversight this type of work produces. Workers need protection or more of this will happen.
The stock market may be up, but inequality is on the rise.
Who’s winning this game?
In the short term some. In the long run, no one.