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Uber and Employment

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Stephen Greenhouse has your must-read long-read of the day in his exposé of Uber and the argument that their drivers are not employees. He discusses several key points that observers of the Uber economy have noted–that there is nothing new about this employment relationship, that despite their claims, Uber and other companies control almost everything about this employment relationship, that if Uber drivers were classified as employees instead of independent contractors there is no reason why Uber would have to follow through on its claims of placing people on set schedules, and that the lack of any benefits is a major problem throughout this economy. Greenhouse also discusses how much worse conditions are getting for Uber drivers.

Parmar, 53, who immigrated to the U.S. from India at age 16, receives no benefits through Uber, but he says he is fortunate because his family gets health insurance thanks to his wife’s job at a bank.

He, too, did well in his first year with Uber, but then the company dropped its New York prices by 30 percent. His pay receipts show that he used to average around $2,000 a week, driving 2 p.m. to 2 a.m. six days a week—but by last summer, his weekly gross fell to about $1,500 a week. From that he had to subtract around $100 a week for gas, around $100 a week for tolls, and $400 a week to rent a Toyota Camry with insurance.

For Parmar, grossing $1,500 a week for 70 hours of driving comes to around $21.50 an hour, before factoring in his many expenses. That was substantially less than the $28 an hour that two researchers—Alan Krueger, a Princeton economist, and Jonathan Hall, Uber’s director of policy research—found to be the median gross pay for Uber drivers in New York in an analysis of October 2014 data. (The $28 an hour they found comes to $58,000 a year for a 40-hour-a-week driver, and is far below the $90,000 a year that Uber was boasting its drivers in New York averaged in 2014.) According to Krueger and Hall’s Uber-backed study, the median gross pay for Uber drivers in 20 cities was around $17.50 an hour—including $16 in Chicago, just under $17 in Los Angeles—and that was before subtracting the drivers’ costs and before Uber further reduced fares in 48 cities in January 2015.

“I went personally to Uber’s office in Queens and I said, ‘How do you justify this 30 percent cut in fares?’” says Parmar, who recently cut back his Uber hours to part-time so he could also drive for a friend’s black-car service. “They said, ‘Since we’ve dropped the price, we’re going to have more customers.’

“I told them, ‘I’m not selling apples, I’m not selling donuts. I’m driving a car. I can do 15 or 16 rides a night. If the price is 30 percent less, I get paid 30 percent less.’

“They said the cheaper the price, the more customers you’ll have. I can’t drive 100 customers a night. I’m not a machine. I cannot work 18 hours a day.”

In other words, there is nothing here that you don’t see from other employers. They are going to drive down wages as steeply as possible. Denying they are even employers is a neat trick to doing this. Hopefully the courts step in here.

The Seattle City Council recently voted 8-0 to allow Uber and Lyft drivers to unionize. Several hundred are interested in doing so and the Teamsters are organizing them. And not surprisingly, Uber treats these unionizing workers like other employers and tries to fire them for organizing:

Last August 31, Takele Gobena, an Uber driver, stood alongside Seattle City Councilman Mike O’Brien at a news conference, complaining that his Uber earnings came to less than the federal minimum wage after factoring in gas, insurance, and other costs. At the press conference, Gobena, a 26-year-old immigrant from Ethiopia, hailed O’Brien’s plan to introduce legislation that would allow Seattle’s Uber and Lyft drivers to unionize and bargain collectively, even though those companies insist their drivers are independent contractors and not employees. A half-dozen drivers flanked O’Brien, holding signs saying, “Drivers need a voice.”

Toward the end of his remarks, Gobena, a member of the App-Based Drivers Association, said, “I know Uber will probably deactivate me tomorrow, but I’m ready because this is worth fighting for.”

It didn’t take that long. At 6:50 that evening, a few hours after several websites posted stories about the news conference, Uber emailed Gobena to notify him that he had been deactivated as a driver. The reason Uber gave: His auto insurance had expired.

Gobena rushed to inform the news media and Councilman O’Brien about his being deactivated (Uber-ese for dismissed). Not only that, Gobena sent them iPhone photos of his insurance certificate, which wasn’t to expire until December. Several reporters contacted Uber to ask about the sudden deactivation, and as if by magic, Uber re-activated Gobena around 9 p.m. (Uber denied deactivating him, even though news websites later posted a screenshot of Uber’s deactivation message on Gobena’s phone.)

The story of the fired worker rehired because of public attention is a nice one. But how many are being fired without this public attention? Hard to know.

In any case, there is no reason why Uber, Lyft, and all these other services shouldn’t be held under traditional employment law. The more we know, the more exploitative these companies seem. Let’s hope politicians and the courts see this too.

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