UNIONS representing delivery riders met at ITF (International Transport Federation) House in London to plan how to take on exploitative ‘gig economy’ employers, the ITF revealed on May 30th.
Companies such as Deliveroo, Foodora and Uber Eats have expanded rapidly over the last few years as to meet the increased demand for food delivery.
However, this new sector has become notorious for its precarious pay and working conditions, as well as for systematically miscategorising the employment status of riders as a way of shirking labour costs.
Nevertheless, workers are organising to fight back for fair treatment. At the ITF delivery riders forum, representatives from the Transport Workers Union (Australia), BTB/UBT (Belgium), 3F (Denmark), FILT CGIL (Italy), STF (Sweden) and IWGB (Britain) met to share their achievements to date and exchange strategies.
Baker Khundakji, ITF young transport workers officer, said: ‘Young workers are disproportionately affected by precarious employment, and we need to turn our focus to new areas of the economy where exploitation is rife.
‘With delivery riders facing similar challenges across national borders, the ITF is committed to working together with unions to coordinate a transnational response to the gig economy. Every rider should be a #UnionRider.’
Meanwhile, a central bank report has revealed that the so-called gig economy is creating extreme financial hardship for millions of American workers, even as the overall economy continues to expand.
According to the Federal Reserve’s latest report on economic wellbeing in the US, which was released on May 23, in 2018 workers who supported themselves through the gig economy struggled financially far more than the average person.
58 per cent of full-time gig workers said they would have a hard time coming up with $400 to cover an emergency bill — compared to 38 per cent of people who don’t work in the gig economy.
Both numbers are worrying, but the gap suggests that this informal economy is far more destabilising than Silicon Valley investors care to admit.
The Fed said: ‘Overall, the financial experiences reported by the 11,000 adults surveyed in 2018 were largely positive, and many families have experienced substantial gains since the survey began in 2013, in line with the nation’s ongoing economic expansion. When asked about their overall economic well-being, 75 per cent of US adults said they were ‘doing okay’ or ‘living comfortably’ – up 12 percentage points from 2013.
‘The survey also asked how they would pay for a hypothetical unexpected expense of $400. Sixty-one per cent said they would pay the expense with cash, savings, or a credit card paid off at the next statement; 27 per cent would borrow or sell something; and 12 per cent would not be able to cover it. In 2013, only half of adults said they would pay with cash or its equivalent.
‘Despite the improved finances of many adults, the survey continued to detect areas of financial distress as well as persistent differences by race, education level, and, in some cases, geography.
‘Nearly 8 in 10 whites reported doing at least okay financially, compared to two-thirds of blacks and Hispanics. A similar difference exists by education: among those with a Bachelor’s degree or higher, 87 per cent were doing at least okay, compared with 64 per cent of those with a high school degree or less. Of those who live in middle and upper-income neighbourhoods, 8 in 10 reported overall satisfaction with their community, compared to 6 in 10 of those living in low and moderate income neighbourhoods.’
The Fed report was based on the the Board’s sixth annual Survey of Household Economics and Decisionmaking (SHED), which was conducted in October and November 2018.
Among the report’s other key findings:
- Changes in family income from month to month remained a source of financial strain for some individuals. Three in 10 adults had family income that varied from month to month. One in 10 struggled to pay their bills at some point in the prior year because of monthly changes in income. Financial support from family or friends to make ends meet was also common, particularly among young adults.
- Most adults are working as much as they want to, an indicator of full employment; however, some remained unemployed or underemployed. One in 10 adults were not working and want to work, though many were not actively looking for work. Four per cent of adults in the SHED were not working, wanted to work, and had applied for a job in the prior 12 months, similar to the official unemployment rate of 3.8 per cent in the fourth quarter of 2018. Two in 10 were working but said they wanted to work more. Blacks, Hispanics, and those with less education are less likely to be satisfied with how much they were working.’
Not much is known about the gig workforce. Economists have a tough time measuring it because it can cover many different ‘alternative’ work arrangements.
The Fed survey defines it as people working as independent contractors or on temporary contracts (with or without a mobile app involved).
That includes well-known jobs, like driving for Uber and running errands through TaskRabbit, but also less obvious ones, such as house cleaning, child care, and selling unwanted items for money.
The annual survey, which polled 11,000 people in autumn 2018, found that the vast majority of gig workers don’t make a living from it — they just do it to make some extra money.
But five per cent of those surveyed said gig work is their main source of income.
That group was the most likely to report financial distress, and the least likely to have health insurance, paid time off, unemployment benefits, and basic labour protections.
Financial hardship prompted thousands of Uber and Lyft drivers to go on strike in recent months.
In May, as Uber prepared to make its debut as a publicly traded company, its drivers launched dozens of protests in the US and around the world demanding higher pay and recognition as employees, not independent contractors.
That didn’t happen, but their collective outrage was a likely factor that sent company stock prices plunging and renewed scrutiny of the industry’s role in fostering economic inequality.
The ride-hailing giant’s first day of trading on the New York Stock Exchange in May began with a drop from its initial public offering price of $45, and its stock closed down 7.6 per cent.
By the end of Friday May 10th, Uber’s market capitalisation, accounting for stock options and restricted stock, stood at $76.5 billion — barely above the $76 billion that private investors pegged it at last August.
When tech startups in Silicon Valley began promoting their new app-based personal services, they often talked about how it would revolutionise work and empower people with the flexibility to set their own schedule.
For example, the ride-hailing service Lyft entices potential drivers with the question, ‘do you want to be your own boss?’
TaskRabbit, which allows people to hire a handyman (or woman) for individual tasks, makes a similar pitch to workers: ‘Find jobs you love … at rates you choose … make a schedule that fits your life.’
The reality is far less rosy. As gig economy startups struggled to turn a profit year after year, it became clear that the profit model of these app-based services was dependent on all the money they saved from skirting US labour laws.
Uber is the perfect example: By classifying drivers as independent contractors instead of employees, Uber doesn’t need to pay certain taxes, benefits, overtime, or minimum wages to tens of thousands of drivers. As self-employed contractors, drivers don’t have a legal right to form labour unions and negotiate contracts, either.
Uber drivers have spent more than six years fighting the company in court, saying they’ve been intentionally misclassified.
They argue that drivers should be considered employees because the company has so much control over their work-day, including strict rules on their vehicle conditions, what rides they can take, and which routes to take.
Uber has fought back, maintaining that drivers are not employees because they set their own schedules and provide their own cars.
In March, Uber settled the main court case with 13,600 Uber drivers, agreeing to pay them $20 million, but without changing their status as independent contractors. The other 350,000 drivers who were part of the initial class-action lawsuit had signed mandatory arbitration agreements, so a federal judge is requiring them to pursue their cases in a private forum, where they are less likely to win their case.
In the meantime, Uber has been cutting driver pay rates in major cities to boost its bottom line to attract stockbrokers. That infuriated drivers, who were already struggling to make ends meet (which the Fed survey confirms). They were particularly incensed by the fact that Uber investors reaped millions (even billions) of dollars from the IPO because of their labour.
So on May 8th, a loose network of ride-hail drivers went on strike, from San Diego all the way to São Paulo and Sydney. They urged drivers to boycott ride-hailing applications for 24 hours and to instead spend the day picketing to demand more money.
They also called on cities to regulate ride-hailing platforms the way New York City does.
New York City has set the standard for regulating ride-hailing services.
The unrestricted growth of app-based ride-hailing companies put serious financial strain on New York City’s taxi drivers, making it harder for all drivers to compete and earn a decent living.
Researchers say ride-hail drivers in the US earn about $12 an hour, after deducting car expenses and gasoline. But pay rates vary wildly each day, with Uber sometimes taking more than 50 per cent of drivers’ earnings.
Economists at the New School and the University of California Berkeley published a report in July with some limited pay data, and discovered something alarming: Driving for ride-hailing apps in New York City is not really a part-time gig for people who want to earn extra cash.
More than half of their drivers are ferrying around passengers on a full-time basis, and about half of them are supporting families with children on that income. Their earnings were so low that 40 per cent of drivers qualified for Medicaid, and about 18 per cent qualified for food stamps.
The New School report showed that the average hourly wage for app-based drivers in New York was about $12. ‘The app companies could easily absorb an increase in driver pay with a minimal fare adjustment and little inconvenience to passengers,’ they wrote.
The report helped drivers persuade city officials in December to pass the nation’s first minimum pay rate for drivers working with the four largest app-based firms: Uber, Lyft, Juno, and Via.
Starting in January, ride-hailing companies were required to start paying drivers around $17.22 per hour (after expenses) – about $5 more per hour than the previous average of $11.90 per hour, according to the Independent Drivers Guild, which represents about 70,000 Uber, Lyft, Juno, and Via drivers in the city.
The new pay rate is calculated per ride, but the guild expects it to give full-time drivers an extra $9,600 a year. (Lyft and Juno are now suing the city, arguing that the calculated rate favours Uber, but said they are using a different formula to meet the minimum hourly pay rate.)
Because Uber and Lyft drivers are considered independent contractors and not employees, they are not subject to the city’s minimum hourly wage, which is now $15 per hour. But the new rules essentially get around that loophole and ensure that drivers are earning at least the minimum wage, with a few dollars extra to cover payroll taxes and some paid time off.
Uber and Lyft have pushed back against the pay increase, saying it would hurt competition and discourage drivers from taking riders out of Manhattan. The current lawsuits suggest that Lyft and Juno are not done fighting it (Uber is not part of the lawsuits).
It’s still too early to study the impact of the new laws, but it gives other cities and states a blueprint for doing the same. In California, lawmakers have tried to pass laws giving independent contractor union rights. They’ve all failed.
In April, the California Supreme Court delivered a win for gig workers, making it harder for companies to classify them as independent contractors instead of employees.
As employees, Uber drivers would have the right to form a union and earn the minimum wage. And maybe, just maybe, they could save up $400 to put aside in case of an emergency.
