Uber and the "gig" economy

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Uber and the "gig" economy

And yet even as Uber talks up its determination to treat drivers more humanely, it is engaged in an extraordinary behind-the-scenes experiment in behavioral science to manipulate them in the service of its corporate growth — an effort whose dimensions became evident in interviews with several dozen current and former Uber officials, drivers and social scientists,




A new study from the McKinsey Global Institute (MGI), finds that the “gig” economy model popularized by Uber has a lot in common with the economies of poor countries today, as well as the US and Europe before the Industrial Revolution.



progressive17 progressive17's picture

I worked as a "commission" courier for a company which shall remain nameless in Toronto, Ontario. If I was lucky I would gross $400 a week for a 14-hour day including commute time. I had to use my own car, which got a lot of damage in the process. I had to pay a lot of money at Canadian Tire to get it fixed, on my time off of course. Oh, of course and $40 worth of gas every day. Not only that, but you are violating your car insurance contract.

It is the worst job you can get. In the ad, it said I could make an "easy" $800 a week. Pure lies. Bosses who don't pay their workers a fixed legal wage are scum.

You can thank Mike Harris for abolishing the Ontario Labour Board.


In a ruling with potentially sweeping consequences for the so-called gig economy, the California Supreme Court on Monday made it much more difficult for companies to classify workers as independent contractors rather than employees.

The decision could eventually require companies like Uber, many of which are based in California, to follow minimum-wage and overtime laws and to pay workers’ compensation and unemployment insurance and payroll taxes, potentially upending their business models.


laine lowe laine lowe's picture

Good to hear about this ruling. I definitely agree that it's a trend that promotes employment insecurity and unfair remuneration for workers. Maybe it's cool for someone who is only topping up their income from other sources and enjoys the work but it's a completely different story for people trying to earn a living.



Uber Technologies Inc. v. Heller - An agreement saying an UberEats driver had to go to arbitration instead of suing in Ontario was so unfair it was invalid, the Supreme Court has ruled: https://scc-csc.ca/case-dossier/cb/2020/38534-eng.aspx…


Uber, Lyft, DoorDash, Postmates, and Instacart convinced nearly 60 percent of Californian voters to support Proposition 22, which excludes “gig workers” from basic labor protections. The companies overwhelmed the opposition and muddled the truth with a record-breaking $200 million campaign, pelting voters with misleading ads that framed the proposal as a social justice cause. It marks a dangerous new phase in big tech’s onslaught against workers, and a pivotal test of whether labor can push back.



I really hope Harris was not connected with that in any way.


No.  She opposed it.



With Prop 22’s Passage in California, Tech Companies Are Just Writing Their Own Laws Now



After a $200 million propaganda blitz, California voters passed the Uber- and Lyft-backed Proposition 22 on Tuesday, permanently excluding online “platform” workers from labor protections. Unsurprisingly, the companies are now talking about extending such legislation nationally.

A ride-share driver displays a sign reading "The Uber Initiative Hurts Drivers" during a car rally by Uber and Lyft drivers calling for basic employment rights at Los Angeles International Airport (LAX) on August 20, 2020 in Los Angeles, California. (Mario Tama / Getty Images)

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On Tuesday, California voters passed Proposition 22, a ballot measure backed by app-based “gig” companies that exempts them from classifying their estimated three hundred thousand workers as employees. Included in Proposition 22’s fine print is a requirement that the measure cannot be modified with less than seven-eighths of the state legislature’s approval, all but ensuring it cannot be overturned.

The measure’s success is a landmark in the story of rule by the rich. Were there any doubts before, Proposition 22’s success proves that capitalists can write their own laws — you can expect every executive in the United States to take notice.

Companies including Uber, Lyft, DoorDash, Postmates, and Instacart poured $205 million into the “Yes on Prop 22” effort to pass legislation that exempts them from labor law requirements relating to health care, unemployment insurance, safe working conditions, and other benefits (potentially including workers’ compensation, such as death benefits, as detailed in this harrowing Los Angeles Times story). The opposition to Proposition 22, largely composed of unions and allied labor organizations, raised $20 million, leaving it outspent ten to one.

The proposition’s backers bombarded Californians with misleading mailers, ads, and in-app notifications in the lead-up to the vote. As the Los Angeles Times reports, Yes on Prop 22 spent $628,854 a day: “In any given month, that ends up being more money than an entire election cycle of fundraising in 49 of California’s 53 House races.” In addition to hiring nineteen public relations firms, some of which made their name working for Big Tobacco, the companies bought surrogatesdonating $85,000 to a consulting firm run by Alice Huffman, the head of California’s NAACP, effectively allowing them to cynically present themselves as on the side of racial justice, even as the measure will further immiserate drivers, the majority of whom are people of color. This veritable flood of money makes Proposition 22 not only the most expensive ballot measure in California history, but in the history of the United States.

The crux of the measure is about exempting gig-economy companies from AB 5 (Assembly Bill 5), a state law that requires companies to grant workers employee status based on the “ABC test.” Laid out in the California Supreme Court’s Dynamex case, the ABC standard says that a worker is an employee, rather than an independent contractor, “if his or her job forms part of a company’s core business, if the bosses direct the way the work is done or if the worker has not established an independent trade or business.” Despite tech executives’ insistence that their companies are mere platforms rather than employers, drivers for gig-economy companies clearly meet the ABC test, which led to the race to write an exemption.

This boutique carve-out is an existential question for gig-economy companies, which is why they were willing to shell out so much cash to secure it. None of these companies turn a profit. Uber lost $4.7 billion in the first half of 2020. Their entire business model is based on labor arbitrage: it won’t be profitable until they can adopt technology that automates drivers out of their jobs — meaning they will never be profitable, given how far this technology is from being workable — but in the meantime, they operate at a loss, subsidized by venture capital, by evading the liability and risk that comes with employer status. As markets opened yesterday morning, Uber saw a 9 percent jump in shares, while Lyft rose 12 percent.

Protesters hang a banner during a demonstration in front of the home of Uber CEO Dara Khosrowshahi in San Francisco. (Justin Sullivan / Getty Images)

Were these companies required to comply with labor law, they’d sink. For example, as the Prospectreports, Uber and Lyft’s refusal to pay into California’s unemployment insurance fund has saved the companies “a combined $413 million since 2014.” Instead of paying for the benefits and protections that the law mandates, these companies will now only be required to offer limited benefits and a wage that works out to $5.64 an hour — rather than the $13 an hour they’d receive as employees under the state minimum wage law — according to researchers at UC Berkeley’s Labor Center.

There’s reason to think even this historic victory won’t be enough to save the likes of Uber. The company, the most visible of gig-economy parasites, is facing opposition across the United States and around the world. As Edward Ongweso Jr writes, governments at both the national and state level are fighting to force Uber to pay billions in evaded taxes, and a 2019 strike on the day of the company’s public offering was followed by further worker action in Brazil, Mexico, Chile, Argentina, and Ecuador. Further, “Uber is losing legal challenges in FranceBritainCanadaItaly, where high courts have either outright ruled Uber drivers are employees or have opened the door to lawsuits reclassifying them as such,” writes Ongweso Jr.

But even if Proposition 22’s advocates are ultimately doomed — a big if, and one that doesn’t much matter for the countless drivers currently relying on their algorithms to pay their rent — their quest to shirk responsibility for workers is not unique to gig-economy companies. The tech industry is united by its foundation in labor arbitrage, the exploitation of legal loopholes. This is their claim to innovation. And that doesn’t only affect low-wage workers: the majority of Google’s workforce, much of it white collar, is composed of independent contractors. This is the future of work for all of us if Silicon Valley has anything to say about it.

The enshrining of a new category of workers whose hard-won rights no company is bound to respect won’t remain restricted to gig-economy serfs in California, either. Since the Proposition 22 result came in on Tuesday night, the heads of the victorious companies have announced their intent to export the model nationally. “Now, we’re looking ahead and across the country, ready to champion new benefits structures that are portable, proportional and flexible,” said DoorDash CEO Tony Xu shortly after the ballot measure passed. Lyft sent out a celebratory email, calling the law “a groundbreaking step toward the creation of a ‘third way’ that recognizes independent workers in the U.S.” “Prop 22 represents the future of work in an increasingly technologically-driven economy,” proclaims Yes on Prop 22 in a celebratory statement posted to their website.

There is little organized opposition among elected officials to these executives’ intent to take their success in California and federalize it. These companies launched their offensive in Nancy Pelosi’s own district, and the House leader didn’t prioritize fighting them. While Joe Biden and Kamala Harris say they oppose Proposition 22, there is little evidence of Biden ever sticking his neck out to fight for workers’ rights if it wasn’t for a campaign photo op, and Harris has unprecedented ties to Silicon Valley. After all, such affinities run in her family: Tony West, her brother-in-law and a high-ranking official in the Obama administration, wrote the gig economy companies’ legal strategy for misclassification.

No one is coming to save workers. The future hangs on working-class people organizing themselves to defend their rights, even as capital deploys an effectively infinite slush fund to stop them from succeeding. Unity among workers, both unionized and not, employees and independent contractors alike, has never been more pressing. If Proposition 22 is anything to go by, the future of even the limited democracy still exercised in the United States depends on it.




I really hope Harris was not connected with that in any way.


"Kamala Harris' brother-in-law and advisor, Tony West, led the campaign for CA, Prop 22, which denies labor protection to Uber drivers. Her niece, Meena Harris, is on Uber's diversity team and her ex-campaign strategist advises Uber on labor relations."



I guess Joe Biden has a drug problem because Hunter does.


josh wrote:

I guess Joe Biden has a drug problem because Hunter does.

Of course not. However he does like to take regular dips in a river in Egypt. We all know that most people with addiction problems can be trusted to not engage in illegal financial transactions.


On Tuesday, Uber said it would reclassify more than 70,000 drivers in Britain as workers who will receive a minimum wage, vacation pay and access to a pension plan. The decision, Uber said, is the first time the company has agreed to classify its drivers in this way, and it comes in response to a landmark British Supreme Court decision last month that said Uber drivers were entitled to more protections.



laine lowe laine lowe's picture

It's about time Uber plays by the rules. I hope that means that they are also paying into employment insurance programs as most employers do in Canada. The best thing about legitimizing their labour costs is that it also provides some insight into their profits and what should be reasonable corporate taxes rather than the offshoring approach most of these gig economy operators have been using.


My wife works for 2 of these types of companies. One, pays a hourly wage with tips for its couriers. The other a fee per order which by and large, it still pretty good compared to a lot of them. The none hourly wage one makes each experienced employee amake 'risk' assessments for each offering. Is it worth it to accept this? Or say no