Uber but for strikes

Sean Rameswaram: Welcome to Today Explained, I'm Sean Rameswaram.

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Jaylon Healey: I'm Reuters Jaylon Healey here in San Francisco in front of the Uber headquarters where about a hundred drivers and activists have gathered to protest the company. No drivers, no Uber! No drivers, no Uber! No drivers! Drivers United will never be defeated.

Sean Rameswaram: Dozens of the ride-hailing cars made a slow protest drive across the Brooklyn Bridge this morning. It was one of at least a dozen demonstrations that Uber and Lyft drivers held across the country and also in some other countries. The protest comes just a few days before Uber's public stock offering on Friday. The company could be valued at more than $90 billion. This is one of the biggest recent tech IPOs. It's by far the largest of the so-called gig economy.

Shireen Ghaffari: So, you know, as early investors and Uber and corporate employees stand to make millions off of this and become overnight millionaires, drivers were feeling like they're getting the short end of the stick. And what exactly did drivers do or not do yesterday?

Sean Rameswaram: Uber drivers shut down their apps, meaning they didn't take rides. In L.A. and San Diego, we saw drivers shut down their apps for a full 24 hours, whereas in other places, they just did it during the morning commute, like from 7 a.m. to 9 a.m. local time.

Shireen Ghaffari: To be clear, was this a strike against Uber and Lyft or just Uber? How did it all work?

Sean Rameswaram: This strike is definitely in anticipation of Uber's IPO. And so, you know, the first company that they are complaining about is Uber. However, I will say that in talking to drivers, most of them did not differentiate between Uber and Lyft. One of them called Lyft Uber in a pink sweater. So most were not only not taking rides for Uber, but a lot of them also didn't work for Lyft or any other ride hailing apps as well in that time to flex their force.

Shireen Ghaffari: Do we have any idea how many Uber drivers were striking? Yeah, so at least in the thousands. We don't have an exact number just because they've been kind of organically popping up around various cities around the world. But it's at least in the thousands. And how many Uber drivers are there? Do we know that number?

Sean Rameswaram: There's three million Uber drivers. So when you look at the big picture, it's still a pretty small percentage of the total workforce. But it is one of the biggest protests involving Uber drivers and Lyft drivers that we've seen yet.

Shireen Ghaffari: So as we heard at the top of the show, this wasn't just a strike yesterday, right? These were like demonstrations, too?

Sean Rameswaram: That's right. There were rallies at offices in the cities that are participating and particularly in San Francisco, which is the main Uber headquarters. There was a big rally at noon. And, you know, we are seeing some corporate employees show sympathy toward Uber drivers. Like there was a Medium post by an anonymous Uber Corp employee who said that he feels like Uber should be doing much more for its community. Beyond not getting cut in on this massive IPO that's going to happen tomorrow, what exactly were their grievances?

Shireen Ghaffari: Main thing is better pay. A lot of Uber drivers I spoke with say that they're working more hours for the same or lower pay over time. They also want better benefits. Right now, there's very limited benefits. There's no health care. And they also just want greater transparency. You know, how much an Uber driver makes per ride can be really complicated. And so drivers feel like there's this black box algorithm that's dictating their pay and they want more of a say as to what cut of each ride they get versus what the company gets.

Sean Rameswaram: And so some have been asking for 80 to 85 percent per ride.

Shireen Ghaffari: Yeah, I've always been worried about that with ride sharing. So I often ask drivers, what's your cut? Is this sustainable for you? And depending on the city, some say, yeah, it's OK. But some gripe that Uber and Lyft take as much as 50 percent of the payout.

Sean Rameswaram: It sounds like payouts vary all the time. Basically, with this tech-enabled gig economy, Uber is constantly tweaking its exact pay rates. And they've admitted, actually, in their S1 filing leading up to their IPO to have lowered the pay for drivers in certain cities in those areas where they said they wanted to remain competitive. And they said they are probably going to continue having to do so. So the company's actually been upfront about that in their public filing.

Shireen Ghaffari: Shereen, did you speak with any of these drivers who went on strike yesterday?

Steve Gregg: Yeah, so I spoke with Steve Gregg, who's been driving for Uber and Lyft for two years. I'm Steve Gregg. You can call me Steve. I'm a Lyft driver, I'm a rider, and I'm also a leader in the Geek Workers Rising organization here in San Francisco. I expected to drive maybe two or three weeks. I expected it to be transitional as I came off of a long-term disability. What I didn't expect was to just completely fall in love with it. I thought that the people were going to make me crazy and just completely annoy me. And what I found out was that I was thoroughly enjoying the people and that became a paradigm shift. And so because I was making decent money at the time, I thought, well, you know, I can just kind of go on this journey and explore the human race a little bit. In those days I could work 35 to 45 hours a week and expect to bring in or more before taxes and expenses Now, I'm working 60 plus hours a week, sometimes 70 plus, and I'm generally hoping to bring in $900 before expenses. And gas costs have gone up, so it's pretty slim. It's embarrassing to admit. I've had to make huge adjustments to my cost of living just to make ends meet. The longer I do this, the more into debt I'm going at this point. I would continue to drive if I could make enough money. I'd probably do it for the rest of my life. I am looking for other work, and at this point I'd take just about anything that would pay the bills while I kind of rebuild into a different life. And I expect that to happen. It's just proven to be very hard being 51 years old and disabled. You know, it's brought challenges that I really didn't expect. There are a wide variety of changes that I'd like to see, but if I boil it down to just the basics, you know, we need a living wage. We need to be able to support our families in a reasonable amount of time. We need some transparency in how the pay structure works because it's really obscure the way they have structured it. I'd like to see us have the basic benefits that are required by law for most employees. We have made our grievances public, but I have not heard from Uber or Lyft in response to our requests.

Shireen Ghaffari: How exactly and when did all this get started, Shereen? I mean, to my recollection, Uber and Lyft drivers have been mad for a number of reasons for years, right?

Sean Rameswaram: Yeah, practically forever. There's been a lot of tensions brewing. There was another protest ahead of Lyft's IPO. How this one in particular started was actually in the LA ride sharing group. And that's how these drivers largely organize in general. They sort of air their grievances and talk about things like we're seeing where they anecdotally share, hey, I think the pay is going down in this area or this has changed. They do all of that in a series of kind of city by city or region by region Facebook and online groups.

Shireen Ghaffari: A lot of office workers communicate on Slack these Days or Gchat or whatever, there is no one central office communication tool for Uber and Lyft drivers. So it's kind of up to them to coordinate on these social networks. And unlike, say, cabbies in a lot of major cities, they're not part of any union or anything like that, right?

Sean Rameswaram: That's right. And that's largely because they are considered contract employees who do not have the same backing and legal protections to organize.

Shireen Ghaffari: It's not a union, but Steve mentioned that he's part of a workers organization called Gig Workers Rising in San Francisco. Did drivers in the rest of the country find other types of labor groups to help them organize?

Sean Rameswaram: Yes. There's a New York taxi and limousine union that did help organize some of the protests in New York. There's also various union-supported organizing groups that did help educate drivers.

Shireen Ghaffari: Supporters of ride-hailing apps have said that there's a competitive interest there, too, that those tax unions essentially have a competing interest in trying to make sure Uber doesn't do well and make sure Uber drivers are unhappy and striking.

Sean Rameswaram: And these strikes were all planned around tomorrow's big IPO. And when a company's doing an IPO, it has to kind of open up and share. What have we learned from Uber's filing?

Shireen Ghaffari: So one thing that comes out of an IPO is a breakdown of exactly how much some of the, you know, winners in the company are going to get. And that upsets drivers. I mean, Uber has done some things to try to make drivers feel included. Like, for example, they're giving some cash bonuses to longtime drivers based on various, you know, levels of how many rides you've given. But ultimately, that's like pennies on the dollar compared to what, let's say, you know, an early VC would get out of this IPO.

Sean Rameswaram: Right. So I think that frustration between the disparity and the gains that the corporate employees and investors are getting versus the everyday drivers is huge.

Shireen Ghaffari: Wasn't it also revealed that like this company isn't actually making money? That's right. I mean, in Uber's defense, it's not like they have piles and piles of money sitting around in profit to be dishing out. They are losing $1 billion as of the first quarter of this year. So they're an unprofitable business. They were already pressured by investors to become profitable and cut costs, and they're only going to feel more now that they're going public.

Sean Rameswaram: That being said, there's a lot of legitimate questions about how they are spending their money and if they should be cutting costs in a different way than by cutting driver pay. But I guess this whole strike puts them in a pretty tough position.

Shireen Ghaffari: You wrote about the strike for Ricoh. Did you hear from Uber or Lyft?

Sean Rameswaram: Yeah, I did. So Uber actually sent over a statement and they said drivers are the heart of this service, that they can't succeed without them. But at the end of the day, the statement only pointed to programs that sort of already exist, like free online college tuition for top drivers and some partial insurance protections. But, you know, there's nothing new there and it's nothing like the kinds of benefits that drivers want to see.

Shireen Ghaffari: What would it look like for Uber to cave and give drivers what they're asking for, considering the company isn't exactly turning a huge profit right now? I mean, honestly, it would look like a radical shift of their fundamental business model, which is why we probably won't see these demands being met overnight.

Sean Rameswaram: If Uber and even eventually Lyft decide to, I don't know, hold out and forego meeting these demands, what will that look like? I mean, they're not going to go away, right?

Shireen Ghaffari: Yeah absolutely As I written I think we just going to see a growing frustration with this sort of two workforce between you know tech engineers employees corporate level workers who are enjoying the successes of the markets and then these drivers and these gig economy workers who are not

Sean Rameswaram: Shireen Ghaffari is a reporter for Recode, which is now actually part of Vox. Welcome, Shireen.

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Carolyn Saeed: Carolyn Saeed, you're a business reporter at the San Francisco Chronicle. A lot of these Uber and Lyft drivers work full time, get paid every week, but they are not employees, right?

Sean Rameswaram: That is so true. That is the huge bone of contention. They are independent contractors and they have none of the protections and social safety net that employees have. And when all the executives and investors become millionaires in the IPOs, they will get very little, if anything. And they also don't have any of the benefits, right?

Carolyn Saeed: What exactly does it mean to be an independent contractor?

Sean Rameswaram: You get to set your own hours, but in this case, they do not get to set their own wages. They don't have such benefits as disability protection, workers' compensation, health care, paid time off, vacation, sick leave, 401ks, a whole raft of benefits they do not have.

Carolyn Saeed: Okay, so the list of disadvantages is slightly longer than the list of advantages for the drivers themselves. That's true, although there are many people who like being independent contractors. And many drivers would say that they like being independent contractors because they like the flexibility.

Sean Rameswaram: And what about for Uber and Lyft themselves? What are the advantages for having the system set up this way where they basically have these armies of independent contractors?

Carolyn Saeed: Their entire business models are predicated on having the drivers be independent contractors because they get a tremendous amount of flexibility and they save a lot of money. If they were to give them the benefits of employees, it would add at least 30% to their labor costs. And as we know, they're losing money hand over fist as it is with this current setup. If the drivers became employees, they'd lose even more money.

Sean Rameswaram: So is there a huge push to have Uber or Lyft drivers classified as actual employees?

Carolyn Saeed: There is a push there. It's been going on for several years, and it's kind of reaching a boiling point. A year ago, the California Supreme Court unanimously ruled in a case called Dynamex that some delivery drivers should be employees. And the California Supreme Court used something called the ABC test. In order for somebody to truly be an independent contractor, they need to A, be free from the company's control. B, not be doing work that is central to the company's mission. and C, have an independent business doing that kind of work.

Sean Rameswaram: Okay, so with this ABC test, if you fail it, it means you're an employee, not a contractor. Yes, that's accurate. So to pass on A, Uber would have to prove it's not directly controlling how people drive. Seems debatable. To pass on B, Uber would have to prove that driving people around isn't core to its central business. Good luck with that. And on C, to be independent contractors, Uber's drivers would have to have their own totally independent business driving people around, which I'm guessing most don't.

Carolyn Saeed: Does that mean drivers in California, at least, have become employees of Uber and Lyft?

Sean Rameswaram: No. So this was a California Supreme Court case. It's technically law, but it has not been legislated. Instead, what's happening in California is we have a bill pending in the state legislature, AB5, which would codify and clarify this Dynamex decision. And that would implement ABC as sort of the law of the land.

Carolyn Saeed: The state then still might need to take action, such as the Department of Labor might need to take action against specific individual companies to say, hey, your people should be employees if that becomes law. And then might they unionize too? If they became employees, they would, of course, have the right to unionize, yes.

Sean Rameswaram: And organized labor is very much in support of AB5 and I'm sure would be delighted to work with Uber and Lyft drivers and other gig workers.

Carolyn Saeed: As it is with the protests on Wednesday many of those were created by informal groups of drivers but they are getting support and assistance from organized labor I mean it seems obvious that Uber and Lyft would be totally against like spending way more money on these drivers.

Sean Rameswaram: Do they have any arguments that don't sound just completely from self-interest?

Carolyn Saeed: Well, their argument, which is one that many drivers agree with, is that the drivers now enjoy a tremendous amount of flexibility. They can, you know, log in and log out whenever they want. They can work 50 hours a week or they can work two hours a week. They can take off for three months a year or 10 months a year. And then they say that those drivers would not enjoy that same flexibility if they were employees.

Sean Rameswaram: That point is in dispute. Many experts look at this and say there's nothing in the law that says that you can't have employees be sort of self-scheduling and sort of on-the-fly flexibility. But that model does not exist. I mean, think of people who work at McDonald's or Starbucks. They get their schedules a week in advance. They don't get to just punch in and punch out on the fly.

Carolyn Saeed: So that part remains to be seen.

Sean Rameswaram: And are there other states that you know of that are doing stuff like this?

Carolyn Saeed: Massachusetts and New Jersey led the nation on this. They both have already implemented the ABC test. However, it has not resulted in widespread reclassification in either state of Uber, Lyft drivers or other people, even though it was legislatively enacted in both states.

Sean Rameswaram: If AB5 does pass and Uber and Lyft drivers are reclassified as employees, What would the implications be outside of ride sharing? There is a whole lot of businesses outside the gig economy that would be affected. You know, people who do nails, people who cut hair, architects, lawyers, engineers. There's lots and lots of businesses where people traditionally have been independent contractors for years. And you could look at it and say there are a number of professions, the architects, the lawyers, doctors, where they totally legitimately are independent contractors. They're running their own business. In fact, AB5 excludes emergency room doctors, for instance.

Carolyn Saeed: But then with a lot of lower wage situations, the people who historically have been independent contractors, that's who AB5 is looking to protect, saying that they are being exploited.

Sean Rameswaram: Yeah, that just kind of makes it seem like there's no real easy answer here. I mean, you can try and carve out a bunch of exceptions into legislation, But it seems like without a doubt you're going to miss somebody.

Carolyn Saeed: Well, that is always true. There are no easy answers. And that's the thing about legislation. They can come back and amend it. That's why we prefer legislation to ballot box legislation where you can't come back and amend it if it's something that happens at the election level.

Sean Rameswaram: If there are no easy answers, are there at least inevitable answers? These companies have revolutionized how people get around across the planet. but they're nothing without their drivers. There's real tangible power in that, right?

Carolyn Saeed: I think it's overstating it to say it's inevitable. I mean, on the one hand, the drivers are the backbone of these companies. They cannot operate without them. On the other hand, the drivers are a highly dispersed workforce, geographically dispersed and dispersed in other ways and don't have an easy way to organize. So that makes their situation more difficult.

Sean Rameswaram: I'm Sean Ramos for him. This is Today Explained. Irene Noguchi, Efim Shapiro, Bridget McCarthy, Noam Hassenfeld, and Amina Alsadi make the show. So does Halima Shah. She's new. Welcome, Halima. Extra help this week from Miles Bryant and Britt Hansen. Siona Petros brought her intern A-game. And the mysterious Breakmaster Cylinder sent me some G-chats. Today Explained is produced in association with Stitcher, and we are part of the Vox Media Podcast Network.

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Todd Vandewerf: Hello. We've had you on the show before to talk about television. Television is your jam. Yeah, I love TV. And you are making a new TV podcast for the Vox Media Podcast Network. Yes, I am. It's called Primetime. It's about the power of television. What are you focusing on specifically?

Sean Rameswaram: Well, this first season, we're going to be talking about the presidency in TV. Times when the presidency has affected TV or when TV has affected the presidency. And we're seeing how the two things influence each other. Seems like a good time to do that. Yeah, you know, it's not like the president has anything to do with television or, you know, the Ukraine just elected like a TV star their president. We covered that. We call that episode Martin Sheen 2020. And so which begs the question, are you going to cover like the West Wing? The West Wing is our very first episode. We're talking about the West Wing. We're talking about 24. We're talking about the long legacy of fictional female politicians who follow in the steps of Hillary Clinton. We got a lot of fun stuff. And so when can people expect this show?

Todd Vandewerf: Well, the trailer is out now, but you can listen to the first episode on May 9th. Great. Primetime. Subscribe now.