As the “sharing economy” rapidly transforms into the “share-the-crumbs economy,” multi-billion dollar companies like Uber and Airbnb are profiting from tax and legal loopholes while full-time, living-wage jobs disappear at an alarming rate. Learn the ugly details in Steven Hill’s Raw Deal – order your copy today by making a donation to Truthout!
What are U.S. workers to do about the problems presented by the gig economy?
The past year saw a number of prominent liberals offer policy ideas to mitigate the worst elements of precarious employment. Former U.S. Labor Secretary Robert Reich proposed that companies pay into a common benefit fund for the gig workers they employ. Left-leaning think-tank executives, academics and even a few union leaders signed on to a manifesto declaring that portable benefits were the solution to easing the lives of precarious workers.
They’re off the mark. A lasting solution can’t simply address the obvious lack of benefits – it must tackle the real problem: the power differential between gig economy workers and the big businesses that control their labor.
For a good example of how to address that problem, look to Seattle. Last month, after more than a year of organizing, community protests and grassroots lobbying by drivers for Uber and other app-based companies, the Seattle City Council unanimously adopted a new law granting drivers the right to collectively bargain over their wages and working conditions.
As 2016 gets underway, workers elsewhere are beginning to take note of the Seattle rights victory, and California legislators are considering similar legislation for all gig economy workers in the Golden State. 2016 could emerge as the year that worker organizing rights – not just better wages – re-gain a much-needed focus in the national discourse.
The first-in-the-nation win for Seattle’s app-based drivers represents an important breakthrough for those advocating just working conditions in the modern economy. And it represents a distinct shift from focusing on the economic inequalities embedded in the new precarious employment relationships. The Seattle bargaining law recognizes that policies around better pay or mandated benefits alone won’t solve matters. Since the problem originates from the overwhelming power and control held by Uber and its ilk, the solution is for workers to win a voice to counter corporate control.
Where Our Worker-Friendly Policies Come From
Emerging technologies can be tools for social good – leveling wealth, improving services, reducing the workweek, giving working families much-needed flexibility – or they can be employed to squeeze workers and accelerate corporate profit-taking. The venture capitalists and executives behind Uber and its tech-driven cousins recognize that they can turn these technologies into immense profit machines, but only by tilting power in employer-worker relations. They set out to do precisely that.
For the past 80 years, the dominant work arrangement in the U.S. has been between employers and workers. Power lay with employers, who coerced worker discipline through their ability to hire and fire. Individually, workers had little power in this arrangement.
Workers countered employers principally by banding together and exercising their collective power: Hence the labor movement. And over the years through political and economic pressure, unions and allies won a spate of federal and state laws that provided important rights and benefits – union organizing rights, unemployment and workers compensation, overtime limits, anti-discrimination protection, Social Security and Medicare.
Most of these rights were inadequate, diluted over time by political leaders keen to cozy up to business, and unevenly enforced by government agencies and courts. But at least they existed and, under the proper circumstances, could be taken up as effective tools to compel employers to respect basic rights and standards. They represented a brake on unfettered profiteering and exploitation.
The Uber business model disrupts this entire system. It declares its workers to be independent contractors (factual evidence notwithstanding), thereby placing them outside protection of these laws. In doing so it also removes business from the liabilities and risks that come with employing people.
A generation ago, U.S. labor rallied against corporations that busted unions and moved jobs to the non-union South and to other countries where workers had even fewer rights and government oversight was minimal. Uber’s business model goes beyond those corporate forerunners, seeking to ship the work beyond the legal reach of any meaningful oversight, in the U.S. or elsewhere.
Uber hires and fires its drivers, sets their fares, collects the money, and takes a percentage of driver income. But Uber makes the drivers pay for their own cars, insurance and gas, and resists liability should a driver, passenger or pedestrian be injured in the course of work. Uber requires drivers to sign away their rights in non-negotiable contracts.
The Rise of Uber
How did Uber shoot up so rapidly? The for-hire taxi industry was ripe for disruption. For decades, taxis in most cities operated as regulated monopolies. Governments set fares, limited the number of drivers, made sure drivers and vehicles were safe, and collected licensing fees and taxes. Customers groused about service and the fixed rates. Drivers were unhappy with the high cost of entering the business, the tight margins and the long hours.
The taxi model of the last century didn’t fit the needs of today’s cities. It badly needed to be changed.
Backed by billions in financing from the likes of Microsoft, Google and Goldman Sachs, Uber flooded into cities, recruiting far more drivers than were needed, pushing down prices for customers and bumping taxis to the curb. But Uber’s celebrated technology is not what’s disruptive; you can, after all, hail a Yellow Cab on your smartphone just as you can request a ride from Uber-X.
What’s different is that Uber has replaced public regulation over rates and labor supply with private regulation. And by controlling prices, the company can move swiftly from market entry to dominance much the same way that Walmart drives local stores out of business to gain monopoly market control. Once the billionaires decided to wrest control of the for-hire industry, it was never a fair contest: With Uber’s market valuation listed at more than $62 Billion, the taxis didn’t stand a chance.
There’s very little that’s new-fangled about this. It’s just old-fashioned corporate greed, recycled for the 21st century and wearing a hipster mask.
In laissez-faire economic theory, the capitalist is entitled to reward because by putting up his capital, he’s risking loss along with potential gain. Yet Uber’s model offloads not just business costs such as the cost of compensating and protecting workers adequately, but also the downside risks inherent in running a business.
Gas prices rise? That’s on the workers. Get into an accident while driving for Uber? You’d better have good insurance. Last month, Uber distributed new contracts to its workforce that required drivers to give up their legal rights to band together in class-action lawsuits.
And, of course, it’s not just new lines of business, freelancers and task-rabbits that are honing new precarious employment relationships. That FedEx driver who delivered your holiday package? An independent contractor. That new Nissan car that drove past you? Built in Mississippi, mostly by long-term temp workers.
What’s remarkable about these new business models is not the use of technology. It’s how profoundly the models have slanted the playing field in favor of employers and against workers. The fix is in: The bosses are playing a game they can’t possibly lose – and workers can’t possibly win.
No Quick Fixes
Into this breach in economic relations step policy ideas to cushion the blow for workers in the gig economy.
Former Labor Secretary Robert Reich has proposed that for workers with multiple employers, the one paying more than 50 percent of the worker’s pay should shoulder the cost of benefits and job protections. The idea has popped up on the presidential campaign trail. And this fall, a group of 39 business and labor executives and think-tank leaders issued a set of principles, “Common ground for independent workers,” in which they called for portable benefits for all workers, regardless of employment status.
The principles riff off of a summer 2015 Democracy article by David Rolf, an SEIU vice president and founder of a labor “innovation lab,” and venture capitalist Nick Hanauer. The two propose “Shared Security Accounts” to provide gig economy workers with basic benefits like sick and vacation days, health insurance, unemployment and workers compensation protection, Social Security and Medicare. Under their proposal, the accounts would be universal across all forms of employment, and they would be portable so that benefits follow the worker from job to job.
There’s nothing wrong, of course, with advocating benefits to cover basic human need. If anything, it points out the economic inequities and insecurity inherent in Uber’s business model. But these proposals make the same mistake as Obamacare by doubling down on the idea of linking benefits to employment and trusting business to respect the law. In doing so, the proposals surrender on the fundamental question of whether basic social protections are human rights worthy of universal application, or narrowly-construed benefits tied to an employment relationship. And in today’s economy, what good are employer-funded vacation days and healthcare insurance if you’ve just been fired – “de-activated,” in Orwellian Uber-speak?
Taking these proposals a step further, Hanauer and Rolf suggest that “Shared Security Accounts” could be administered, if not by government, then by private institutions “analogous to the old Blue Cross and Blue Shield.” Or, they suggest, “It might even be the bank or the credit union with which you’ve already set up a direct deposit.” You can imagine where this is headed. Have they learned nothing in the last eight years from what happens when private interests control our retirement funds and healthcare system?
No, workers do not need another Rube Goldberg benefits machine conjured up with scant attention to the vital role of workers’ collective voices. What workers need is to build a powerful movement to challenge the Uber business model.
Beyond a paucity of benefits, workers in the gig economy face a wide range of problems far beyond what any of the government policies being proposed by these liberal reformers can address – unilateral pay cuts, unjust firings, abusive supervisors, capricious scheduling, a lack of proper training and equipment and unsafe working conditions, among others. Want to fix those, along with benefit and income inequality? Stand with workers to win organizing rights.
Workers Have the Power
The good news is that Uber’s disruption of economic relations forces the labor movement to confront a fundamental question: What sort of economy are we fighting for? Is labor content to focus on harm reduction for workers, or does it have an affirmative vision for a just economy?
What’s needed is not new public policy that concedes the permanence of Uber’s business model – and the permanence of precarious lives for workers – but a vision that offers a powerful counter-narrative: Technology that serves society, stabilizes jobs, and improves the lives of workers and their families, along with universal social benefits and protections.
That starts with worker organizing, because it’s the frontline workers who are best positioned to articulate how to harness technology to serve the public good. Collectively, they’re the ones who produce the wealth for Uber’s executives and investors. They have power – if they unite and exercise it.
Social benefits that most people take for granted these days – Social Security, minimum wage laws, child labor laws, anti-discrimination protections – did not drop out of the sky, conceived by creative think tank experts and granted by munificent political leaders. They came into being because workers organized, fought for, and demanded these things from the political establishment.
The benefits were political concessions to popular movements that were unafraid to strike, march and disrupt economic and political life to advance their bold ideas of a more just society. The imperfections in those benefits merely reflect where popular movements bucked up against the resistance of political and business elites. The benefits continue today only to the degree that popular will compels politicians to honor them.
Likewise, the struggle with Uber is about power. The economic inequality that we see in the Uber business model is simply a product of power inequality. It will take worker organizing, not benefit policy fixes, to rebalance that power.
A little more than two years ago in Seattle, drivers for Uber, Lyft and other for-hire companies began organizing with support from the Teamsters union. Drivers rallied, held street protests, lobbied elected officials, and even conducted brief strikes. When the workers presented their call for bargaining rights to elected officials, it was backed by a broad swath of community groups and the local labor movement (including Rolf’s union, SEIU 775).
The drivers’ bargaining rights emerged as an important litmus test in last fall’s election, in which all nine City Council seats were up. Given the strength of grassroots worker organizing, the Council’s unanimous approval of the new law in early December was not surprising.
It gets harder from here, of course. Uber and other business interests have pledged to fight the newly won worker rights in court. But the Seattle drivers already have won an important victory, regardless of the litigation: They have changed the public conversation about what’s needed, and demanded a voice in the new economy.
The drivers also have raised expectations among their colleagues well beyond Seattle. In the days following the Seattle win, “Our office was flooded with calls from drivers around the country wanting to know what we were doing here and wanting to replicate it,” said Leonard Smith, organizing director of the Seattle-based Teamsters Local 117.
That’s important, too, beyond the U.S. Uber is a global company, seeking to impose its will in India, China, Latin America, Europe and Australia. If gig economy workers in the United States demonstrate that it’s possible to fight back, that a future of permanent precariousness is not inevitable, they will inspire and give hope to their counterparts around the globe.
As other local and state organizing efforts draw inspiration from the Seattle law and take up similar bargaining demands, either directly to the companies or through legislation, we could see in 2016 renewed national attention on the right of workers to organize, framed within a bold vision of a different sort of economy – one designed to benefit working people and communities, not big business.
That would represent a welcome advance. The 39 business and labor executives, in issuing their declaration on portable benefits last fall, argued that “society and the economy are served best when workers have both stability and flexibility.” True enough. Yet stability and flexibility won’t be achieved through clever policy fixes conferred by government. To win those things – and much more – it will take workers organizing to claim power and a voice in the gig economy.