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City of Seattle Paves Way for Rideshare Driver Organizing

Thursday, January 14, 2016 12:15
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(Before It's News)

Ridesharing, that scourge of the taxi industry, is about to get an upgrade, union-style.  On December 14, the Seattle City Council voted 8-0 to authorize union organizing of independent drivers for Uber and similar livery services.  The ordinance, the result of pressure from a Teamster local and several drivers, would authorize a union to force such businesses to hand over lists of their drivers for organizing.

Labor activists argue that drivers, though classified as contractors, are treated as employees and thus should be able to collectively bargain.  Yet this view ignores the possibility that unionization would undermine things about ridesharing that make them attractive to customers, while diminishing driver flexibility in scheduling, routes and other work issues.  The Seattle ordinance also has implications for the larger “crowdsourcing” economy. 

The rise of ridesharing as an alternative to taxicabs and other modes of transportation has been one of the more remarkable trends of this young century.  Ridesharing is based on the premise that booking a ride should not involve long waits or high costs.  With ridesharing, a person pressed for time can schedule a ride as quickly as ordering a book or compact disk online.  Driver and customer interactions take place via smart phone.  And customers, via map app, can track the location of the vehicle scheduled to arrive.  The leader of this fledgling industry is Uber.  Founded in 2009 and backed with venture capital from such sources as Microsoft, Goldman Sachs, Google and Amazon multibillionaire Jeff Bezos, the San Francisco-based company now operates in more than 250 cities around the world and by the end of last year had amassed a valuation of $62.5 billion – higher, in fact, than General Motors.  Uber, along with its main competitor, Lyft (also San Francisco-based), are veritable job machines.  Uber alone contracts with 400,000 part- and full-time drivers (“partners”) in America and another 700,000 in other countries – and those numbers are growing by the month.     

Central to the ridesharing business model is its loose employment structure.  Drivers formally are contractors, not employees.  In this way, they can set their own hours and operate within their preferred territory.  They can drive for more than one company.  And they can keep most of their fares; in Uber’s case, the figure is about 80 percent during peak and off-peak hours.  Drivers tend to be satisfied.  In January 2015, Uber released the results of a survey of its drivers.  According to the report, authored by Princeton University economist Alan Krueger (who until August 2013 had been a top Treasury Department official and then an Obama White House adviser) and Uber policy research director Jonathan Hall, 78 percent of the roughly 600 respondents were “satisfied” with their job situation; 71 percent reported increases in their incomes; and 73 percent preferred the Uber employment model of “a job where you choose your own schedule and be your own boss” over “a steady 9-to-5 job with some benefits and a set salary.” 

It isn’t just drivers who benefit.  Rideshare contractors like the arrangement because they can avoid complying with wage, overtime, health care and other government mandates.  And they don’t have to contribute to Social Security, Medicare, worker’s compensation or unemployment insurance.  Riders also enjoy shorter waiting times and reasonable prices.  Even though they are likely to pay a good deal extra during “surge” periods, at least they have advance knowledge of what their ride will cost.  What’s more, they don’t have to leave a tip.   

Ridesharing, unfortunately, can be a source of economic insecurity for those behind the steering wheel.  Drivers have to provide their own vehicle.  They have to pay for their own gasoline, maintenance and insurance.  And as their numbers proliferate in any given city, their revenues per driver will fall, an outcome accelerated by falling prices.  And falling prices is something already happening.  In Washington, D.C., Uber recently cut its prices by 15 percent, making its basic service, UberX, about 30 percent cheaper than a D.C. taxi.  In Seattle, around 100 UberX drivers in August quit in protest of fare reductions.  And in Los Angeles, according to Uber driver John Billington, company-dictated fares in that city, not too long ago $2.50 per mile and 35 cents per minute, are now $1 per mile and 18 cents per minute.  As a result, his weekly revenues have declined from the $1,500-$2,000 range to $700-$800, and without even taking into account gasoline, maintenance and depreciation.  “They treat us like employees, but we get none of the benefits,” remarks Billington.  “They’re telling us what rides we have to pick up.  They dictate fares.  We don’t get a say in what the fares will be.  They keep close track on your ratings, and they threaten to deactivate you over various things.” 

This is where organized labor comes in.  Unions believe Uber and similar firms have a traditional employer-employee relationship all but in name.  Their drivers may be classified as “contractors,” but for all intents and purposes they do the same things that taxi drivers do:  pick up riders; collect fares at preset rates; and hand over a portion of their receipts to their sponsors.  The designation of “contractor,” charge labor officials, is a subterfuge for exploitation, especially because the National Labor Relations Act covers employees, not contractors.  “I think of them as robber barons,” says San Francisco Cab Drivers Association President Barry Korengold of Uber.  “They started off by operating illegally, without following any of the regulations and unfairly competing.  And that’s how they became big.  They had enough money to ignore the rules.”   

Organized labor sees opportunities.  That’s especially true in progressive Seattle, which in 2014 became the first U.S. city to enact a $15 per hour minimum wage.  Leonard Smith, chief organizer for International Brotherhood of Teamsters Local 117, for the last couple years has led a campaign to organize ridesharing drivers in that city.  Though federal labor law exempts contract employment from coverage, he notes, the scope of state and local coverage is open to interpretation.  And support for unionization among rideshare drivers, while far from overwhelming, is there.  Smith notes that earnings for an Uber or Lyft driver often amount to less the federal minimum wage after deducting for gasoline, insurance, maintenance, repairs and depreciation.  Wilma Liebman, a member of the National Labor Relations Board during 1997-2011 (starting in 2009 she chaired NLRB) and a Teamster lawyer during the Eighties, is a strong supporter of the campaign.  “We haven’t significantly changed our labor laws since 1947 and there’s no national consensus on how to change them, so workers and their advocates are turning to local governments to innovate,” she said in November.  “People are experimenting, and Seattle is a leader.”   

Having established Seattle as organizing turf, Teamster organizers still needed a rideshare driver who could dramatize their case.  They found such a person in Takele Gobena, a 26-year-old Ethiopian immigrant who had left his job at nearby Sea-Tac Airport to drive for Uber, Lyft and Sidecar.  Dissatisfied with his net income, he wanted union representation.  Along with Teamster handlers, he and other drivers took their case to the Seattle City Council.  They discovered they had an ally in Council Member Mike O’Brien, who would sponsor a bill authorizing collective bargaining for contract workers in the city.  “We’re trying to balance the playing field,” O’Brien said last November.  “We have this multi-billion dollar company trying to monopolize the taxi industry around the world, and then we have drivers making less than minimum wage.”  Though initially skeptical – two other council members had sent a letter to the Federal Trade Commission in late October asking whether the proposed ordinance would be in violation of antitrust laws – eventually the council was won over.  On December 14, members voted unanimously, 8-0, to approve the measure. 

Similar movement is occurring elsewhere.  On the federal level, Sen. Mark Warner, D-Va., these last several months has been advocating the creation of a new employment category, a hybrid of employee and contractor.  In this way, rideshare drivers and other contract workers can be protected from employer exploitation.  A former tech entrepreneur and venture capitalist himself prior to entering politics, Warner explained his position this way:  “Right now you are either a W-2 or 1099.  I don’t believe in the future that it’s just going to be a binary choice.  There may need to be a third classification.”  Meanwhile, on the West Coast, three Uber drivers have sued the company in San Francisco federal court for recognition as employees.  On September 1, U.S. District Judge Edwin Chen granted the group class-action status.  He added, however, that Uber drivers who began their work after May 2014 must opt out of an arbitration agreement in order to join the suit, a move that will ensure that only a small portion of the well over 150,000 drivers in California would be eligible.        

Taxicab companies and their drivers are the unions’ de facto allies.  They see ridesharing startups as a threat to their livelihood and to the public safety. 


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