Category: Gig Economy

How Convenient

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It turns out that Uber and Lyft were paying community groups to act as AstroTurf in favor of the Gypsy cab companies.

Hoocoodanote?

At the end of February, an impassioned op-ed appeared in The Chicago Crusader, a well-established Black newspaper in the city. Titled “Why Independent Workers Want to Stay Independent,” the op-ed argued that gig economy companies like Uber and Lyft are a “lifeline” to communities of color by providing “a flexible way to work.”

One week later the exact same op-ed was published in the bilingual El Dia Newspaper. Two months later, a version of it appeared again in Crain’s Chicago Business newspaper.

Similar articles and op-eds riffing on the theme of “protecting” independent work have popped up in local publications all over the country, from Colorado to Massachusetts to New Jersey to New York.

In some of these states the articles have a common thread: Their authors represent organizations that serve communities of color and have received recent donations from Lyft, and in some cases Uber or DoorDash.

The op-eds are one facet of a multimillion-dollar lobbying campaign aimed at fighting regulations that would require the companies to treat drivers and delivery workers as full-fledged employees. Over the past several months, news outlets have detailed political action committees set up by Uber and Lyft in New York and Illinois. The Markup found that the practice was even wider spread, occurring in other states and often involving alliances with local community groups.

It’s not an alliance, it’s prostitution.

It’s All of the “Gig Economy” Companies

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Amazon just settled a lawsuit where it stole tips from its drivers.

The short version is, they used tip data to lower rates to drivers in specific areas.

This is the very epitome of how companies like Amazon, Uber, Lyft, DoorDash, etc. use opaque algorithms to cheat their employees:

The US Federal Trade Commission on Friday announced the approval a consent order against Amazon that requires the company to pay $61.7m to resolve charges that for two and a half years it took tips intended for Amazon Flex drivers and concealed the diversion of funds.

………

The tech giant launched its Flex service in 2015, promising drivers – which it classified as independent contractors and referred to as “delivery partners” – that it would pay $18-25 per hour for the delivery of goods from Amazon.com, Prime Now (household goods), Amazon Fresh (groceries), and Amazon Restaurant (takeout).

Amazon’s ads made promises like, “You will receive 100 per cent of the tips you earn while delivering with Amazon Flex.”

However, during the period from late 2016 through August 2019, drivers – who, as independent contractors, paid for their own car, fuel, maintenance, and insurance – saw only a portion of the promised gratuity when customers opted to tip.

That’s because Amazon allegedly, without telling its drivers, shifted to a “variable base pay” rate, which varied by location, wasn’t disclosed to drivers, and was frequently lower than the promised hourly range.

“Under the variable base pay approach, for over two and a half years, Amazon secretly reduced its own contribution to drivers’ pay to an algorithmically set, internal ‘base rate’ using data it collected about average tips in the area,” the FTC complaint [PDF] explains.

………

To make up any difference between the base rate and the advertised minimum, Amazon is said to have used some or all of any tip left by customers to meet its payment commitment. For example, if Amazon set a base rate for a region at $12 and the customer left a tip of $6 via Amazon’s electronic tip collection system, then the company paid the driver only $12 and augmented the payment with the $6 tip, instead of paying the $18.

This is not enough.  People should be going to jail for this, and not just white collar prison.

This should be hard time in a hard prison, not just because of the scope and callousness of the theft, but because the threat of a few years in Terre Haute will get people to turn on higher ups in the operation.

They stole from thousands of their employees, and they did so knowingly, there are numerous internal emails detailing the reputational risk to Amazon.

Today in Hack Journalism

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The New York Times has an article about how how some drivers are trying to form a cooperative to compete with Uber and Lyft.

There are a lot of obstacles that this effort faces, but this paragraph is full of fail:

………

The Drivers Cooperative, which opened for business in New York this week, is the most recent attempt. The group, founded by a former Uber employee, a labor organizer and a black-car driver, began issuing ownership shares to drivers in early May and will start offering rides through its app on Sunday.

The cooperative has recruited around 2,500 drivers so far and intends to take a smaller commission than Uber or Lyft and charge riders a lower fare. It is an ambitious plan to challenge the ride-hailing giants, and it faces the same hurdles that tend to block other emerging players in the industry: Few have the technical prowess, the venture capital dollars or the supply of readily available drivers to subvert an established company like Uber.

(emphasis mine)

Clearly there are network effects, Uber and Lyft have a pool of drivers as well as customers who use theri apps, and both of the gypsy cab company firms have sufficient VC money to operate for years at a loss.  (In fact neither appears to have a path to profitability)

However, the claim that operating a ride share firm requires any significant technical prowess is false, and does not withstand 5 minutes of examination.

The creation of apps with review capabilities has been old school for over a decade.

Claiming that there is a need for specialized “technical prowess”, is a humbug, and it pisses me off.

The innovation of Uber and Lyft were never technical, but regulatory.

Their innovation was that the two firms found a way to break the law and bulldoze authorities into acquiescence, not any technical innovation.

Of Course They Are

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Hoocoodanode?

After making nice to the drivers in order to get Proposition 22 passed, Uber and Lyft have reversed their employee friendly policies, because their drivers are disposable, and they have no more need to make nice with them.

This outcome was completely predictable:

Last year, the ride-hailing service Uber gave its drivers unprecedented control over their fares and working conditions.

The goal was to win drivers’ support for Proposition 22, through which Uber and other gig companies aimed to rewrite California labor law in the companies’ favor.

The firms’ pitch was that the ballot measure would preserve the “flexibility” in hours and earnings that their workers valued, and that they said would be threatened unless the labor law was changed.

Uber’s new options seemed to make that flexibility more real: The company gave drivers more latitude to set their own fares, and more visibility into the trips they were offered before deciding whether to accept them.

Proposition 22 was passed by an overwhelming margin in the November election. Since then, some drivers say, Uber has taken the flexibility options away, and even cut the drivers’ income on many trips.

Lyft executives raised the same alarm during a Wall Street conference call after the firm released its first-quarter financial results on May 4.

Driver advocates have greeted these remarks skeptically, noting that the firms could attract more drivers quickly by improving their pay.

………

But when California codified labor rules to mandate that such workers receive all the benefits of employees, Uber, Lyft and other gig companies drafted Proposition 22 to exempt their drivers, delivery workers and others from the employment rules and allow them to be classified as independent contractors.

After a campaign in which the companies spent more than $200 million, a national record for a ballot measure, Proposition 22 passed with nearly 60% of the vote.

“A huge part of their Proposition 22 campaign was to get the drivers on their side,” says Veena Dubal, a labor law expert at UC Hastings College of the Law and a critic of Uber and Lyft. “So they rolled out these things they knew that drivers would be excited about and would make them feel independent. And of course they’ve thrown them away.”

………

Support for the bill has been waning since organized labor took a closer look at its terms. They discovered that it would bar workers from striking or taking any other job action and forbid local governments from imposing a minimum wage for gig workers.

………

Uber also has sharply cut drivers’ pay for trips originating at Los Angeles International, San Francisco and San Diego airports. At LAX and San Diego, drivers say, they now receive 32 cents per mile, regardless of the distance traveled.

That’s down from about 60 cents before the passage of Proposition 22, drivers say. It’s also well below the 56 cents per mile that the Internal Revenue Service has set as the deductible cost of ownership of cars driven for business use, counting fuel, maintenance, insurance and wear and tear.

It’s like the tale of the scorpion and the frog, it’s in their nature.

You should not be surprised when it stings you.

Of Course They Are Getting Screwed

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That was the whole purpose of the massive funding for Proposition 22 in California, to get a license to treat their employees like crap.

Anyone who says that they voted for Prop 22 because they thought that it would improve the lot of the Gypsy cab drivers and food delivery folks is either a liar or an idiot:

Weeks after Proposition 22 went into effect in California and exempted some major tech firms from fully complying with labor laws, workers for rideshare and delivery apps in the state claim poor working conditions have persisted and pay has decreased.

Drivers and labor groups opposed Prop 22, saying it would allow companies to sidestep their obligations to provide benefits and standard minimum wages to their workers even as they make billions of dollars. But the measure passed at the ballot box.

“It’s clear that as soon as Prop 22 passed, it was open season to start cutting my pay again,” said Peter Young, a rideshare driver for four years in Los Angeles. “I’m looking for other work. I can’t keep doing this at this pay. I’m doing food delivery right now. Everyone is ordering food online so there’s demand. It’s just that what they are choosing to pay me isn’t reliable any more and it’s getting lower.”

………

“I was under the impression that I was going to get an additional $0.30 per mile after Prop 22,” said [Uber driver Ben] Valdez, but he hasn’t received that extra compensation because, according to Uber’s metrics, his pay exceeds their calculation of 120 percent of minimum wage.

A studyby labor economists at the University of California, Berkeley, in October 2019 found Prop 22 guarantees a minimum wage of $5.64 an hour, as only engaged time is accounted for in the wage calculations.

“A lot of drivers were duped because they expected they were magically going to be able to qualify for benefits that the companies made it sound like they were going to pay for up front and that drivers were going to be getting reimbursement for the mileage,” said Valdez. “They also made drivers believe that if Prop 22 didn’t pass then Uber and Lyft were going to leave the state of California because they couldn’t afford to pay drivers as employees.”

It’s pretty simple.  The gig companies won because they lied and because they spent a lot of money.

Start collecting signatures for a repeal, and come back again, and again.

Uber, Lyft, Doordash, and have lots of venture capital money, but no meaningful profits.

Between the lies, and the limits of their VCs, eventually they will lose.