Columns, Opinions

Simshauser ’20: Out of Silicon Valley, a political challenge to an Uberized economy

By
Opinions Editor
Wednesday, September 4, 2019

When Uber was founded in 2009, its prospects for global recognition looked slim. It was a high-end cab service — on-demand black car rides for the Bay Area’s more ostentatious residents. In the ensuing years, however, as the company grew, it became not merely an innovative transportation technology, but an archetype for the many venture-funded enterprises that would follow. Its name became synonymous with an emerging field of on-demand service apps — “Uber for [blank].” As unparalleled convenience spurred consumer demand, similar companies flourished in securing venture funding — Postmates, DoorDash, Grubhub and Instacart being the most successful. A study of 105 personal-service startups by The Atlantic found that these four companies received over $4 billion combined in venture funding, as of March. Venture capital subsidies seem to insulate these startups from the ruthless logic of capitalism. DoorDash can spend years “burning cash,” while being propped up by multiple rounds of venture funding — $535 million from a Saudi-backed fund here, $400 million from the state fund  of Singapore there.

Instead, it is the people who perform the actual services for these companies who endure the sacrifices of profit-maximization. Importantly, these workers are not classified as employees, but rather as independent contractors. This distinction keeps them outside the purview of labor protection laws and denies them benefits received by many employees — unemployment insurance, paid parental leave, health care subsidies, etc. Meanwhile, the companies themselves are lavishly rewarded by this arrangement — labor costs for companies like Uber and Lyft would rise 20 to 30 percent, according to industry estimates, if regulators or courts forced them to treat their drivers as employees. Such is the logic of the servant economy. These companies proffer autonomy and flexibility (Lyft’s website kindly asks if you “want to be your own boss”) while fighting legal battles to deny their workers basic rights and benefits. All the while, ride-app drivers and delivery-app couriers work lonely, isolating jobs for low wages, and without any benefits or direct forms of recourse. They have even been deserted by the federal government: In May, the National Labor Relations Board handed a major victory to Uber when it concluded that its drivers were contractors, not employees.

The California state legislature, however, is looking to pass landmark legislation that would mitigate many of the problems laborers face in a service-app economy. Assembly Bill 5 would entitle these workers to employment benefits and grant them the right to unionize. The bill, which was proposed by former labor organizer Lorena Gonzalez, would codify into law a 2018 California Supreme Court ruling known as Dynamex, which laid out a restrictive set of criteria for classifying a worker as an independent contractor. AB5 is expected to pass the state senate on September 13 and to be signed into law by Democratic Governor Gavin Newsom, and would pose a major challenge to service-app companies, who could be compelled to treat their supposed contractors as employees. Newsom even penned an op-ed in the Labor Day edition of the Sacramento Bee  in support of the bill. “Creating new ways for workers to organize,” he writes, “is a key component of tackling the level of inequality that undermines our entire economy and threatens our children’s future.” While this bill would not be a panacea for the disenfranchised workers of the gig-service economy, it provides a model that other states may follow and helps to shelter service-app workers from inevitable legal challenges in the future.

And as AB5 garners national attention (Elizabeth Warren, Bernie Sanders and Kamala Harris have all given public endorsements), it suggests an expanded conversation of labor rights for app-service workers. Certainly, the relationship between labor and management is increasingly fraught in many sectors, as union membership declines, automation looms and wages stagnate. But few industries are more wanting for strong unions than the on-demand service industry. Labor is entirely disconnected from management; while Uber drivers and Grubhub couriers certainly aren’t their own bosses, they also have no contact with any person of authority. The atomized drivers lack a community in which to bond with co-workers. Nor do they have any line of contact with management to discuss contractual or structural changes. A union among an app’s laborers could provide many material benefits through collective bargaining: higher wages, contractual stability, secured benefits. But just as importantly, a union would create a tenuous community for these isolated workers, a respite from their inherently alienating jobs. As the gig economy continues its ascent — a 2018 Gallup survey found that 36 percent of American workers have some form of “gig work,” either as their primary or secondary job — a conversation of its workers’ rights must follow. Gonzalez’s bill is a promising start, and will hopefully catalyze further legislation and discussion around service-app labor. It is a radically dislocating form of labor, and as such, merits swift action. And the necessary moves will certainly not come from the tech companies themselves: They would much rather pour resources into automating the laborers away than on improving their conditions. The onus is instead on legislators and judges, as Assembly Bill 5 shows, to quell service-app profiteering.

Derek Simshauser ’20 can be reached at derek_simshauser@brown.edu. Please send responses to this opinion to letters@browndailyherald.com and op-eds to opinions@browndailyherald.com.