Ride-sharing giant Uber has been backsliding into ignominy as its executives have gotten entangled in scandal, its corporate offices have face sexual-harassment claims, and its operations have run into protests by angry displaced cabbies across Europe. As the company once vaunted as a dynamic “disruptor” faces public backlash, the rideshare business model is also coming under greater scrutiny.
The rideshare app industry has invested the bulk of its political capital in building top-down monopoly power, according to new research on Uber and other ridesharing companies’ anti-regulatory crusade. Lifting a page from the playbook of Big Tobacco and the firearms industry, Uber and Lyft lobbyists have blocked, bribed and cajoled their way out of regulations and tax codes in city after city.
According to an analysis of Uber and Lyft by the National Employment Law Project (NELP) and Partnership for Working Families (PWF), the ridesharing apps pursue a two-track strategy of, on the one hand, reshaping politics through legislative lobbying and, on the other, running slick public-relations campaigns that associate their brands with consumer choice and empowering drivers to “be their own bosses.” Ultimately, both strategies act to lock in a market structure that preempts collective-bargaining rights and local consumer and worker protections.
To circumvent federal labor protections and other local and state regulations, the rideshare industry lobby has been “pushing legislation that exempts their drivers from state labor laws, such as unemployment insurance, workers compensation, and minimum wage.” The result is lower costs per ride, perhaps—but typically at the expense of drivers forced to self-finance their cars, insurance, and whatever road-safety and occupational-health hazards they encounter on long shifts with volatile pay rates and often inconsistent ride pick-ups. Drivers have to contend with no disability pay, no paid sick days, and no protection from abusive or discriminatory customers (not even when the CEO himself is throwing a tantrum in the backseat).
By controlling drivers’ labor conditions without granting employee rights, the ridesharing apps put drivers in a difficult situation, especially when they face the dreaded account deactivation. Workers have little recourse to challenge a deactivation because they lack coverage under the federal Fair Labor Standards Act and other protections that normal employees are entitled to. By extension, “drivers no longer have access to redress or benefits afforded to other workers” under state law. On top of the legal barriers to demanding your job back from something that is, at the end of the day, just software on your device, a deactivated driver is also left without unemployment insurance or any form of severance pay.
As part of a new legion of “on-demand” workers, or so-called “non-employees,” drivers also lack federal civil-rights protections, making it more difficult for workers to seek damages for issues like gender or racial discrimination in hiring or promotions. According to PWF attorney Miya Saika Chen, “Statewide TNC [Transportation Network Company] laws are the ultimate special-interest legislation: further enabling their monopoly or duopoly in the entire for-hire sector, frequently with far less regulation than that traditionally applied to other vehicles-for-hire.”
Just as tobacco giants worked their political connections decades ago to blockade any serious health regulation against cigarettes, according to the report, which focuses on Florida, Pennsylvania, Texas, and Washington, Uber “bullies” municipalities through “an overwhelming number of well-connected lobbyists.” As of 2016, “Uber had 370 active lobbyists in 44 states, dwarfing some of the largest businesses and technology companies.” During recent political battles in Texas, Uber and Lyft suspended services in various areas, including Houston and Austin—holding both consumers and drivers hostage—until Governor Greg Abbott signed a business-friendly state preemption law that limited localities from enacting any regulations tighter than those on the statewide level.
Some grassroots efforts to organize drivers have emerged, including the Teamsters-backed app-based Drivers Association in Seattle and the New York City Taxi Workers Alliance, which mobilizes traditional cabbies and rideshare drivers across the city. But the driver groups have had to vie with Uber’s in-house “drivers guild” in New York, a pilot project launched in collaboration with the Machinists Union, which claims to substitute for actual unions by offering a grievance mechanism and other nominal representation for drivers, without actually allowing collective-bargaining authority.
Outside captured state or local legislatures, drivers could assert their rights through the courts, but they are constrained by outmoded antitrust precedents that bar independent contractors from taking collective industrial action. The US Chamber of Commerce has sought to defuse the drivers’ legal claim by counter-claiming that granting employee status to “independent” drivers would enable them to organize not unions but “cartels” that would enable “horizontal fixing of prices.” But drivers, in turn, say they simply want the ability to press for fair compensation and freedom from exploitative work schedules.
The bad deal for drivers turns out to be exploitative for customers as well. If rideshare apps are not considered formal employers and circumvent corporate tax codes, they effectively corner the for-hire driver market, while draining the city of tax revenue that might otherwise be invested in public transit. Both these patterns deepen transportation barriers for vulnerable communities, including the poor, segregated communities of color, and people with disabilities.
As the report explains, “Disability rights advocates contend that TNCs [Transportation Network Companies], by failing to provide wheelchair accessible vehicles, are in violation of laws protecting people with disabilities. Weak state laws generally only require the TNCs to have a non-enforceable ‘policy’ against discrimination.”
Ironically, Uber’s public-relations campaigns revolve around an image of disrupting outmoded incumbent cab monopolies, and removing bureaucratic barriers to modernization and market access for newer drivers, including many from immigrant communities and communities of color.
But Uber’s iconoclastic brand image, according to NELP Senior Counsel Rebecca Smith, is as much of a commercial mirage as its false promises to drivers of independence—for both its workforce and its riders, the aim is to drive markets for rich investors, not to serve the public: “When Uber convinces mostly-white legislatures to override the rights of mostly people-of-color workforces, it adds yet another piece to the existing structural racism at a time when our policies should be reversing structural racism.”
Uber’s scorched-earth strategy for barreling into cities is overshadowing efforts by urban communities to innovate more democratic and community-oriented urban-development strategies. As long as Silicon Valley mows down regulations with the rideshare hegemony’s aggressive expansion, communities will be derailed from efforts to build toward the common good.