Beneath the reports of a second wave of mandated closings of bars and restaurants and the mile-long lines for food banks, slipped a largely unreported event that will have massive implications for the some 57 million+ Americans who are classified as “gig workers.” Uber has recently come to an agreement to acquire the digital courier service Postmates for $2.65 billion. At a time when an increasingly high number of people are going to be thrust into the gig economy in the future, this would seem like an acquisition worth covering. Yet, most people discovered the acquisition occurred only after opening the Postmates app to find a message on their screen notifying them.
What little coverage there was of the matter seemed to have largely been derived from the surrounding speculation over whether or not the acquisition would finally take the ridesharing unicorn into the black. One of the many shams of Silicon Valley is the unicorn-style fundraising that has pyramid scheme written all over it, bringing in more and more capital to inflate their valuation, keeping the early VC investors rich while the company continues to bleed cash in exchange for “market share.” Little coverage has been dedicated to the reaction of the workers who will be impacted by the acquisition.
What does Uber’s increase in market share mean for workers? Nothing good. Uber has been notorious for its poor treatment of its drivers. The company is currently embroiled in a legal battle against both the states of California and Massachusetts for taking measures to prohibit the exploitation of its workers. In California, the state sued both Uber and its competitor Lyft, for their blatant violation of California Assembly Bill 5, a state statute demanding that workers essential to business operations be classified as employees. AB 5 provides workers who would’ve been previously categorized as “gig” with the protections of all other employees, including expanded labor protections, paid sick leave, etc.
Uber responded, like the other gig-based companies operating in California, by continuing business as usual while tying the matter up in court. Funny how when a group of mega corporations decide to defy the rule of law to deprive people of their democratically determined protections, there’s so little outrage. Instead of going to jail like normal people do, they release public statements that they and all their friends will be pooling their money to have the law changed, and until then they’re just gonna keep on breaking it anyway. Oh if only we could restore law and order to this once great nation.
With this acquisition Uber makes its intentions to take over clear. The Uber everything concept will aim to compete with Amazon for same-day deliveries. Instead of just delivering things from fast food joints and pharmacies, Uber intends to merge and expand the Postmates and Uber Eats platform to provide people with instant service and vacuum up any remaining share of the delivery market not completely cornered by Amazon.
If there’s one lesson to be gleaned from American history, it’s that massive market consolidation and monopoly always spells disaster for the working class. On July 14, the Attorney General of Massachusetts announced that, like California, the state was suing the ridesharing companies Uber and Lyft for the misclassification of workers.
“Uber and Lyft have built their billion-dollar businesses while denying their drivers basic employee protections and benefits for years,” said Attorney General Maura Healey in a press release. “This business model is unfair and exploitative. We are seeking this determination from the court because these drivers have a right to be treated fairly.”
University of California Hastings law professor and gig economy expert Veena Dubal “definitely thinks more states will follow suit” with legal action. “The states themselves are now frustrated with the companies,” she says. Many of the individuals who were displaced during the pandemic could have been covered by state unemployment, but despite the law in states like California requiring it, ride sharing companies like Uber have refused to pay unemployment taxes for their drivers.
California has adopted a simple legislative test to determine the classification of workers known as the ABC Test. Under the current guidelines, a worker can only be classified as a contracted employee if they meet the following requirements. One, that they are “free from the control and direction of the hiring entity,” two, that they are “customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed,” and most devastatingly for a company like Uber, “perform work that is outside the usual course of the hiring entity’s business.”
Essentially, the ridesharing giants are arguing in court that the workers who drive their passengers are performing work that is not “usual for the business,” which any sane person would quickly conclude is total horse shit. It’s why this is a battle they have consistently lost in the attempts to expand into European markets.
“Insulting,” is the first word that comes to mind for Willy Solis to describe how he feels — an organizer from Gig Work Collective, a worker-led gig economy advocacy group — who himself has been a courier for Uber Eats. “The drivers are the ones hustling, [Uber is] using our efforts on a daily basis to profit and make money, without us they do not exist,” he continued. In a time of mass layoffs and economic instability, they are “taking advantage of the fact that there are people are out there who need work… It’s despicable.”
Because the case the ridesharing companies present is so pitifully flimsy, they have committed themselves to forcing a change to the law itself. Along with other ridesharing companies, Uber has precipitately pushed for a change in the legislation by committing a combined $110 million to the passing of Proposition 22, which according to Dubal would create a “third class” of workers, one specifically designed to benefit the companies driving the gig economy.
That being said, Dubal still believes it’s perfectly possible to create a gig economy that doesn’t rely on worker exploitation, without changing much.
“It is very very possible to create a model where things are not that different than they are now. You just have people earning a wage floor, or at least a wage floor, and also being covered by a social safety net,” she says.
According to Solis, “a lot of drivers are seeing below minimum wage pay,” especially when things like gas, car payments, and routine maintenance are deducted from the profits they receive. As more of the labor force is driven toward gig work to sustain themselves in our acutely depressed economy, workers like Solis suspect it will lead to more profiteering at the expense of workers. As such it is imperative that state governments pass legislation that will protect workers and demand they are classified correctly by their employers and guaranteed all of the legal rights that accompany it. It is crucial that the federal government back up the states and provide them with the teeth to enforce these changes, abating the issue seen in California where the state is unable to impose their worker classification guidelines despite its laws requiring it.