In this week’s round up, gig workers are revolting and cities and states are taking notice. Is this the beginning of a major change in how gig workers are perceived (and compensated) by companies like Uber, Lyft, Instacart, DoorDash and others? Senior RSG contributor John Ince covers the gig workers’ plight, plus more news on Lyft’s IPO and living a carless life.
Revolt of the gig workers: How delivery rage reached a tipping point [San Francisco Chronicle]
Sum and Substance: Gig workers are fighting back.
By their name, you might think independent contractors are a motley crew — geographically scattered, with erratic paychecks and tattered safety nets. They report to faceless software subroutines rather than human bosses. Most gig workers toil alone as they ferry passengers, deliver food and perform errands.
But in recent weeks, some of these app-wielding workers have joined forces to effect changes by the multibillion-dollar companies and powerful algorithms that control their working conditions.
Last week, Instacart shoppers wrung payment concessions from the grocery delivery company, which had been using customer tips to subsidize what it paid them. After outcries by workers on social media, in news reports and through online petitions, San Francisco’s Instacart said it had been “misguided.” It now adds tips on top of its base pay — as most customers and shoppers thought they should be — and will retroactively compensate workers who were stiffed on tips…
For California gig workers, even more changes are on the horizon in the wake of a ground-breaking California Supreme Court decision last April that redefined when to classify workers as employees versus independent contractors. Gig companies, labor leaders and lawmakers are holding meetings in Sacramento to thrash out legislative responses to the Dynamex decision. Options could range from more workers getting employment status to gig companies offering flexible benefits.
My Take: Carolyn Said of the SF Chronicle is one of the most knowledgeable and astute reporters covering this space. When she writes an article like this, take note – something significant is happening. She pulls it all together in a comprehensive piece that should have Uber/Lyft execs and investors very worried.
A force has been unleashed, and we’ve now reached a tipping point of awareness. The exploitive aspects of the entire gig economy phenomenon are now out in the open and being actively debated in city councils, state legislatures, courts of law and influential publications like the SF Chronicle and New York Times. When these ideas become codified into laws, regulations and court precedents, the fundamental economics of these industries will be changed forever.
Now think about this – if Uber was losing $4 billion/year while getting away with exploitative business practices in their treatment of gig workers, how in the world are they going to make enough money to please prospective investors in a possible IPO? If Uber CEO Dara Khosrowshahi can figure that one out, then maybe he will have earned the $200 million he got when he took the Uber CEO job.
Connecticut legislators to consider minimum pay for Uber and Lyft drivers [CTPost]
Sum and Substance: Prompted by growing numbers of frustrated Uber and Lyft drivers, lawmakers will hold a hearing on establishing minimum pay for app-based drivers. After three separate legislative proposals regarding pay for drivers flooded the Labor and Public Employees Committee, the committee will raise the concept of driver earnings as a bill, said state Rep. Robyn Porter, D-New Haven, who chairs the committee, on Friday night.
A coalition of Uber and Lyft drivers from New Haven has been pressuring lawmakers to pass a pay standard, following New York City’s landmark minimum pay ordinance for app-based drivers approved in December. The legislation, which set an earnings floor of $17.22 an hour for the independent contractors, took effect on Feb. 1.
My Take: When New York City passed its minimum wage law for rideshare drivers awhile back, the speculation was that this could create a wave. Well, surf’s up. Connecticut is now considering similar legislation.
Various proposals are also being debated in San Francisco, Seattle and the California State legislature, all designed to provide relief and a safety net to financially stressed drivers.
The Quiet Death of the Gig Economy [Medium]
Sum and Substance: Disruption, blissfully happy digital nomads, the sharing economy and oh yes — the “Gig Economy” sounded good on paper, but it seems to not be all it was thought it might become. …
With Lyft and Uber set to go public with IPOs this year, that to be part-time drivers with them is somehow desirable or helpful to “make ends meet” has all but dried up, right before supposed autonomous vehicles and self-driving cars start to hit the streets in various ways.
Indeed there does not seem to be much sharing and caring in the ruthless world of Uber, amid legal battles and drivers who make less than minimum wage and are like grunt contract workers of the worst kind, totally unprotected.
In a world where Amazon is miserably harsh to its bottom feeder workers, why the heck did we once think the ‘gig economy’ was some glorious alternative workforce? Why the ‘gig’ economy may not be the workforce of the future after all, with rising minimum wages and a small bump in wage growth in 2019. I personally think the American labor force is screwed with a skill-shortage coming the likes of which we’ve rarely seen, but that’s another story for another day.
My Take: Here we have yet another voice expressing concern and dismay over the directions of the gig economy. How many more articles like this one have to appear before real change takes place to provide gig workers like Uber/Lyft drivers with real economic security?
Lyft Founders Conspire to Take Control of $7.5 Billion Uber Competitor [CNN]
Sum and Substance: The founders of Lyft, John Zimmer and Logan Green, are working on a plan to retain control of the company after it goes public. They will do this by creating a special class of stock that gives the holders “super voting” rights. The votes will allow the CEO and President to have fiat control. Exact details haven’t yet been made public.
Lyft, whose value jumped to $7.5 billion after raising an additional $600 million last June, has raised $4.5 billion since its founding. All that fundraising has left Zimmer and Green with an actual stake of less than 10% in the company. Supervoting is a growing trend in Silicon Valley start-ups. It enables the founders to retain control of their companies even after “going public.”
Formerly, the decisions and actions of the companies were subject to some form of democratic control. Notably, the world’s biggest tech company, Amazon.com, has no such structure. Billionaire Jeff Bezos retains great voting power by owning a large amount of stock. His actual voting power outsizes most other common holders. However, institutional funds hold more than half the company’s shares.
My Take: This is indeed a disturbing new trend in Silicon Valley. Since when did founders become so smart that they deserve absolute control over companies? Sure, Mark Zuckerberg has total voting control over Facebook and Facebook stock has performed well under his stewardship. But Facebook also has been shooting itself in the foot with lots of privacy decisions that have cast a shadow over the company and industry. The old adage stands here. Power corrupts and absolute power corrupt absolutely.
SHOULD YOU DITCH YOUR CAR FOR UBER AND LYFT? WE TRY THE RIDE-HAILING LIFE [Motor Trend]
Sum and Substance: Vehicle ownership per person peaked in 2006 at 0.786 then dipped during the recession, but it has steadily returned to nearly its peak, according to a report by University of Michigan researcher Michael Sivak. But alternative transportation services like Uber and Lyft are trying to change that philosophy of personal car ownership.
According to a Pew Research Center study in fall 2018, 36 percent of U.S. adults said they had used a ride-hailing service such as Uber or Lyft, up from 15 percent of Americans just three years before. But like most trends borne of coastal environs, those who ride-hail tend to be younger, wealthier, and better educated, according to Pew data…
But it’s the actual number of rides happening on these platforms that may shock you. Ubiquitous Uber recently completed its 10 billionth trip, and second-place Lyft just completed its first billion. There appears to be no slow-down in sight. Uber and Lyft have raised billions of dollars in investor capital, and both are preparing for 2019 IPOs that could value them at $120 billion and $15 billion, respectively. Uber and Lyft are also investing in other modes of transportation, such as shared bikes and scooters. Getting you to take that first trip may be just the tip of the iceberg…
Editor’s Note: This article, written by RSG’s very own Harry Campbell, highlights how some people are ditching their cars to exclusively use Uber/Lyft – and other companies. It’s an interesting article, as it goes over all of the “no personal car” options, including rideshare, scooters/bikes, car rental, public transit, etc. When many people think of “ditching their car”, they think about how all those rides with Uber/Lyft add up – not considering cheaper alternatives, like scooters/biking or public transit.
Overall, will the article get everyone to ditch their personal vehicles? Of course not (and Harry goes over the cons of a carless life). But is it an interesting idea, especially in major cities where having a car can be more of an expensive hassle than not? Absolutely.
Readers, what do you think of this week’s round up?
-John @ RSG