P O S I T I O N PA P E R
Uber and the Degradation of Working
Class Jobs
Jon Liss Virginia New Majority and Tenants and Workers United Driving Cab – A Working Class Job with a Living Wage?
Thirty one years ago, I drove a cab for Falls Church Yellow Cab Company in Virginia. I had a history degree and radical politics, and barista jobs hadn’t yet reached these shores. This was the set up. I drove a cab on a weekly basis. I paid for the gas I used and paid the company stand dues or rent for using their cab, for driving under their colors. Anything I earned after that was mine. I would sit on a cab stand and listen to a scratchy radio dispatcher barking out numbers and addresses. When there was a trip nearby I’d shout on the radio, “five – three at Gallows and 50” or “five – three, stand 10.” Then I’d listen intently and hope that the dispatcher would assign me the trip. The dispatcher had a huge wall map but knew by memory all of the major intersections. The dispatcher would mentally triangulate all the drivers who “bid” on a trip and assign it to whoever was closest. Once I was dispatched to an address, I would take off like a rocket to get to the passenger’s location. In the pre‐GPS days that often meant glancing at a map while racing along the highway. On a good day, I grossed $160 and – minus stand dues and gas costs – I would clear $100 in cash after 12‐14 hours. In 1983, that was a living wage. “Hacking” is slang for driving a cab, and it involves plenty of skill – reading maps, knowing backroads and shortcuts, anticipating where future calls will pop and, of course, driving. In my case, that meant maneuvering a hulking Plymouth Fury with slinkies for suspension and a bottomless pit for a gas tank. I learned from industry veterans that one of most important bidding skills was “long hooding,” essentially stretching your car hood’s location to shorten the distance—
by a few blocks or even a few miles—to make the dispatcher think you were closer to the potential passenger. In order to make a living wage, I had to be on the road for both daily rush hours when trips to DC or the airport were abundant. I was in my car by 5:15 AM so I could bid on the 5:30 AM calls. My day typically finished around 7 PM, when I made it home from my last drop. So that I could stay in line on the stands or listen to the dispatch radio, I stayed within a few feet of my cab at all times. I ate my lunches at 7‐11s or fast food restaurants with drive‐through windows. I enjoyed the chess‐like strategy of bidding on trips, anticipating when and where there would be business. POSITION PAPER
There was a sense of accomplishment when I hacked a series of short trips (referred to as “jerks”) during slow periods. My goal: Keep the meter running. My office was my car so waiting for trips at busy stands was where I built real friendship and camaraderie with other drivers. Today’s Taxi Industry – Work, Income, Profits, and
Power
The State of Virginia divided taxis—a public utility—into jurisdictions, leading to wildly different experiences and opportunities for drivers. For years—decades, even—drivers have been fighting for rights such as due process protection from arbitrary firing, the ability to change companies, and limitations on stand dues. The cab company that has best achieved a fair and democratic administration is Alexandria Union Cab , a driver‐owner cooperative. In the meantime, companies like Uber and Lyft have taken advantage of these outdated systems to the detriment of all taxi drivers.. However, while these companies have used cutting edge applications to give consumers convenient access to rides, its barely regulated operation has downsides for consumers and drivers alike. For drivers, unlimited numbers of drivers is turning taxi and transportation service jobs into marginally paid part‐time work. For consumers, market‐based features like surge pricing have led to exorbitant prices for short trips during periods of high demand. This article will tie together these intricate and real‐world consequences, culminating with recommendations to build a just car service system that serves both consumers and drivers. Barring some modest variations and technological improvements, the system I drove under is still in effect today. In Virginia, local jurisdictions have the ability to create their own taxi code within parameters set by the state legislature. This has resulted in some important differences between jurisdictions. In Alexandria, over 90% of the cabs are individually owned. In nearby Arlington, 1
55% of the drivers own their cab and about 45% rent cabs. In Fairfax County, most cabs are rented by drivers. In any case, the rented or owned cab is affiliated with a company that has been granted the legal right to operate. The work day is pretty much the same for drivers who are renters or owner‐operators. Today, taxi drivers continue to work 10‐14 hours each day and drive six days 2each week. They drive between 100‐200 miles each day. Drivers clear between $150‐$250 each day. Drivers increase their income by increasing the length of their work day or adding a day to their work week. This is why most drivers work 50‐80 hours each week. In one extreme example, a driver is nicknamed 3
“Seven ‐Eleven” because he, like the convenience store, is always open for business. Through long work days, drivers have the ability to grind out a living wage. That is, they can earn enough to live. With a partner or spouse who generally needs to work too, they can raise a family in the high‐priced D.C. suburbs. As Arlington cab driver Fassil Berhe said, “with my wife 4working and me driving a cab we are able to pay the rent and take care of our two children.” It is a cruel reflection of our times that driving over 60 hours and working six days to squeeze out a living is considered a good job. In the dense, urbanized suburbs of Northern Virginia, the taxi system was set up to ensure that seniors and business passengers would be served by cabs. Both constituencies are dependent on taxis for necessities, and both are consistent voters who could and would rally to defend the taxi system and the local elected officials who oversee the taxi code. A regulatory regime evolved that generally gave good service to core constituencies by requiring a majority of taxis in a given jurisdiction to be affiliated with the principal dispatch company. For example, in Arlington, 455 5
out 787 authorized cabs are affiliated with one company owner. A system with proprietary, over‐
the‐phone dispatch service ensured a critical mass of drivers to pick up dispatch trips. It also promised a living wage to drivers by limiting the total number of cabs in each jurisdiction. 2 POSITION PAPER
Working in a captured market, drivers—if they worked a long day—could earn a living wage. The big winners were a handful of cab company owners. Local jurisdictions awarded owners “Certificates of Public Necessity and Convenience.” This allows them to run a cab company. They are given carte blanche to charge drivers what the market will bear for stand dues. Stand dues are what drivers pay to companies for affiliating with the company or for leasing a company owned car. Most of these companies provide a nominal level of marketing, and most larger companies operate a dispatch system connecting drivers with people who call for rides. Drivers may affiliate with only one company, and they have virtually no ability to shift affiliation from one company to another. All jurisdictions have set up rules that prohibit drivers to switch to another company. The slots or number of cabs that are authorized are linked to the company where drivers are affiliated. Until the entry of app‐based companies, all companies operated at near 100% capacity. If a driver turned his number in with one company s/he couldn’t count on there being an opening at another company. Based on this allocation of numbers, companies controlled all of the taxi jobs. This regime vested almost all economic and political power in the hands of the company owners. Drivers had no legal recourse or right to due process. Even after investing up to $60,000 to outfit a taxi the driver had no legal protection from arbitrary contract termination. Their affiliation and, hence, their ability to operate a taxi could be revoked by a given company owner for any or no reason. The market was the only check on the price of stand dues. Based on the difference in stand dues between the similarly‐sized driver‐owned Union Cab and the privately owned Alexandria Yellow Cab, there is at least a $6,000 per year company profit rate for each 6
affiliated driver. That is, a company with 200 affiliated cabs nets about $1.2 million per year. Its sole source of income is drivers’ stand dues and fees. This regulatory regime evolved over time and created a strong, politically reinforcing relationship between local elected officials, a base of cab passengers, and company owners. Drivers have organized for the last 30 years to limit stand dues, win due process rights (protection from arbitrary firing, and secure the ability to move from company to company. In 1983, I was fired from Falls Church Yellow Cab for my participation in a drivers association that was trying to unionize. At least, I think that was why I was fired. One day, I came in to check out a cab and was told that I was no longer in the computer system. No reason was given. Five years later, I became the first staff person for Tenants and Workers United. After the 9/11 related shut down of National Airport TWU, I began to organize Alexandria and Arlington taxi drivers. In 2005 in Alexandria, four years of intensive driver organizing with Tenants and Workers United (where I was now the executive director) resulted in an amended taxi code that enabled 234 drivers to leave a taxi monopoly—protected by local government—and create their own company, Union Cab. Also in Alexandria, drivers won the right to dispute resolution or due process. Drivers who were fired had the right to mediation, binding arbitration and if need be, civil courts. No other Virginia jurisdiction has established this right. This was a closed system. There was no internal drive for modernization. The number of cabs and companies were limited. One company had a locked‐in majority of all allocated cabs and hence, the best ability to operate a viable dispatch system. If a customer didn’t like it, there was no alternative. Seniors going to the doctor or business people going to the airport could generally count on being picked up. Municipal governments were happy as long as key consumers (i.e., voters), were content. Drivers today—for the most part immigrants from East Africa and South Asian—are ignored stakeholders. This is the quiet working of structural racism. This system ossified over the last 30 years. If an individual needed a cab ride, her experience was largely the same in 2012 as it was in 1983. That is, a customer needed to call, slowly spells out their pick up information, be told that a cab would be there in 20 minutes and wait. The twenty minutes was a standardized guess and had little relationship to how long it would take a taxi to actually arrive. When the ride was over, the customer either paid cash or waited for several minutes for credit 3 POSITION PAPER
card approval and a receipt. 7
Enter Uber
In early 2103 Uber began offering rides in Virginia. Instantly they provided a service that allowed consumers to order a ride via their smartphone, track and read about their assigned driver, and pay with a tap of the phone on their prearranged credit card. There was also a crowdsourced survey system to evaluate the driver. In less than two years in Virginia, this app‐based company has built a huge market for itself, In particular, it has a devoted following of millenials. In fact, UberX market penetration lines up pretty closely with areas that have a high concentration of 8
millenials. In Virginia, that is Alexandria and Arlington. Based on blog posts and public comments, there is an almost cult‐like devotion to Uber. UberX, a subset of the company Uber, offers privately owned and driven late‐model cars to pick up passengers. This service, priced similarly to a taxi service, is particularly competitive with cabs. There are downsides to the UberX model: surge pricing to charge many times above regular fares during periods of peak demand, a lack of commercial insurance for UberX drivers, and limited vetting of UberX drivers. What does this mean for the future of work? Are UberX drivers earning full‐time, living wages? Can they support their family with its income? Is it a better “job” than driving a taxi? Justin Singer’s detailed analysis of UberX drivers income in New York City shows drivers generally 9
netting between $35,000‐$45,000 per year if they work 70 hours a week. This is very much like taxi driving. Anecdotally, in the greater Washington area, UberX has grown its part‐time drivers pool while crippling its full‐time drivers because, without regulatory limits on the number of passenger serving cars, Uber has no incentive to build well‐paying and stable opportunities, 10
thereby generating jobs that are the equivalent of Walmart Greeters on Wheels. Millionaires and Taxi Drivers versus Billionaires - the
battle over a new Regulatory Regime
In June 2014, Uber and Lyft were told to “cease and desist” by Virginia’s Division of Motor 11
12
Vehicles. Uber and Lyft continued to operate. Uber launched Operation Rolling Thunder. Thousands of pro‐Uber emails, texts, and tweets were sent to the Governor and regulators. On August 6, 2014 Virginia Governor Terry McAuliffe permitted Uber and Lyft to operate (https://governor.virginia.gov/newsroom/newsarticle?articleId=5726) with the understanding that the 2015 General Assembly still needs to approve new regulations going forward to govern ridesharing and the taxi industry. It’s on! The millionaire owners of regulated taxi companies in Virginia have created the Virginia Taxicab Association primarily to lobby at the state level. They are in a full‐scale battle with Uber over the future of the industry. To quote the VTA’s June, 2014 packet for Virginia Legislators, “the founder [of Uber] recently bragged: ‘we’re in a political campaign, and the candidate is Uber and the opponent is an asshole named Taxi…nobody likes him, he’s not a nice character, but he’s so 13
woven into the political machinery and fabric that a lot of people owe him favors.’” Besides hiring President Obama’s lead strategist David Plouffe, Uber and Lyft have hired four of Richmond’s five largest lobbying firms for the 2015 legislative battle. Until the entry of Uber into the local market, taxi company owners had little incentive to modernize in an industry with a virtually guaranteed high return on investment. They had even less incentive to work cooperatively with drivers affiliated with their company. The old regulatory regime guaranteed owners high returns on investment and completely subordinated drivers’ 4 POSITION PAPER
interests. Now, however, there is reduced business and even unused cabs parked on taxi company lots. Since 2012, drivers in Arlington have seen the value of cabs they bought on the gray market 14
for $30,000‐$50,000 dwindle to “zero.” The numbers that are linked to the cabs are actually owned by the local jurisdiction with the local cab company authorized to use them. The gray market means that companies let the drivers sell the number to another driver with the company’s approval. Only in Alexandria is this formalized into law. In all other jurisdictions it is an informal practice. This is reflective of decreased taxi trips and the large number of potential taxicab purchasers who are now driving a private car for an app‐based company. Uber has hit the fan, and taxi companies and drivers are looking for strategies to preserve the industry and living wage work respectively. For the first time, there have been conversations bordering on negotiations between drivers and taxi companies. The power balance between companies and drivers is shifting. As Arlington driver Teguwaze G. said, “Uber is my friend. They are weakening taxi companies. Many of us bought a cab for $50,000 or $60,000 dollars. Now they are worth nothing. We can join with the companies to fight against Uber but only if the companies push for laws that respect our rights too!” (emphasis 15
mine). We are in a rare conjunctural moment where the regulatory regime that shapes class and intra‐class relationships is in flux. As the forward‐looking owner of Alexandria Yellow Cab, Spencer Kimball, said, “the world has changed. We have marriage equality, we have marijuana legalized, and the taxi industry can’t keep treating workers the way it has. Frankly, if firing without due process is part of any company’s business plan, they shouldn’t be in the business. Dispute resolution is fair and good for business. Uber’s model leaves all power with the company. I don’t see them agreeing to drivers’ rights.” However, most cab company owners are desperately fighting to keep the old system with its embedded power relations. Regulatory Regimes (for capital accumulation)
Myths of laissez‐faire capitalism aside, the accumulation of capital is intimately linked to state regulatory regimes. Who is allowed to operate under what conditions, and with what level of public subsidies or public protections, are all governmental decisions. Public policy decisions are ultimately about power. Uber has the power of money, an organized social base and a dominant set of ideas about the positive value they provide society. They have come to represent a modernizing force. Their “brand” has a positive buzz. They are now valued at over $19 billion dollars and have an identified base of young and publicly active supporters. This puts them in a strong position. This new technology may have eased the ability of drivers and customers to connect, but its future is being decided by brass‐knuckled power politics. While the old and new industries battle over the future of passenger transportation services, drivers affiliated with Tenants and Workers United met in early October and formed Virginia Taxi Drivers United to represent drivers’ interests statewide. Drivers are seeking to win dispute resolution (protection from arbitrary dismissal) for all independent contractors who provide rides or passenger service. This is a step toward creating a future of work that recognizes the rights of contractors who are, in most regards, workers without legal protections. Passenger Services are a Public Utility
To the extent that taxis or ride services are required to pick up passengers, they are providing an invaluable and unsubsidized public service. To the extent that drivers do not earn a living wage for trips that are necessary for the public, the drivers are, in effect, carrying out a public service. This is the public utility component of taxi or passenger services. For example, short trips for 5 POSITION PAPER
senior citizens with limited mobility are necessary. Nonetheless, for a taxi driver to earn five dollars from a short trip, it may take over 30 minutes of driving and work to load and unload a passenger. Deducting car operating expenses, the driver providing this service earns well below the minimum wage. Until now, the tradeoff for providing this public service was strict limits on who could pick up passengers as well as limits on the total number of cabs in a particular jurisdiction. Uber has shattered this old “deal.” Uber has no requirement to serve the public. Passengers can be blocked or blacklisted from pick up. Furthermore since use of ride services are app‐based, they require a passenger with a credit card and a smartphone. There is a strong race, class, and age bias as to who can utilize Uber. Uber’s “surge” pricing, in which rates jump based on the relative scarcity of drivers, is an attempt to mirror the actual “market value” of a ride at any given time. Again, this does not serve the vehicleless public that is dependent on rides as part of their daily survival (drivers can and do “rig” the system by collectively turning off their app and then jumping back when the price has surged). There are significant public utility‐like components to the work of the taxi industry. As we move toward a world where more people choose to live without owning a car, the public utility component of car or taxi services is even more important. Who wins and who loses – the existing old taxi services or new ride sharing services? How are public needs protected? Deregulating a public utility without developing a plan to serve the full population will create significant coverage gaps. 16
The Degradation of Working Class Jobs
Uber is predicated on part‐time workers driving for relatively brief periods during the weeks in which they work. As Bloomberg reports, this model is predicated on high levels of job insecurity 17
and large numbers of part‐time workers. The way this app functions and how it has been implemented is not geared toward protecting or creating full‐time jobs. In Virginia over 3,000 cab drivers eked out a full‐time, living wage by working long hours. The work is not particularly fulfilling or self‐actualizing – whether done as an Uber driver or a taxi driver. One of the byproducts of Uber is the degradation of working class jobs that generate a living wage. Taxi drivers, for now, have no choice, other than working additional hours and living with less. Over time, unchecked numbers of part‐time drivers degrade working class jobs. Effectively, a full‐time job is being sliced and diced until there are many lower‐paying, part‐time jobs. This is a general concern for entire industries, which, like the taxi service, were once below the radar of big business. New technologies allow large global conglomerates to reap profit from what had been locally owned and operated businesses. Fifty years ago could anyone have imagined GM or IBM operating ride services? Better Ways Forward
It is not what is made but how [it is made], and by what instruments of labor, that distinguishes different economic epochs. Instruments of labor not only supply a standard of the degree of development which human labor has attained, but they also indicate the social relations within which [women and] men work. – Karl Marx18 Indeed we are entering a new epoch quite rapidly. The high tech billionaires who dominate the economy and increasingly dominate United States politics developed an app that, under their proscribed regulatory regime, will allow them to peel away the most lucrative part of the market for existing car and taxi services. It is, however, possible to imagine a different system that preserves living wage jobs, reduces the amount of hours needed to earn a living wage, and provides good service to consumers. It is not hard to imagine a group of radical hackers developing an open source version of Uber’s app. Such 19an app could actually be managed by a public entity or even contracted out to a private entity. If this new app‐based taxi service were 6 POSITION PAPER
run like a public utility, it would be possible to serve the public efficiently while also eliminating Uber’s 20% commission or most of existing companies’ stand dues. Such a system should monitor and reduce the amount of hours drivers are allowed to work while striking a balance between income earned and affordable and necessary travel. Such a system should maintain insurance, safety, and service requirements that are in the public interest. Drivers who invest in cars or cabs and insurance and licensing should be protected by due process. Public safety and fair dispute resolution for all the participating independent contractors may require the installation of cameras in all passenger‐serving vehicles. It is indeed possible to imagine that such a system would operate as a public serving cooperatively owned business. As the 234 driver‐owners of Alexandria Union Cab demonstrate, the benefits of cooperative ownership for workers are significant, even though the number of cooperatively‐
owned business in the United States remains relatively small. Key benefits include: Higher incomes and benefits. A worker cooperative gives worker‐members the opportunity to generate higher incomes through profit‐sharing, reductions in management costs, and other savings. It also provides employment benefits that workers themselves determine. Control over the labor process. Cooperatives give workers maximum say over how work is performed, managed, and organized, including the ability and incentive to modernize the work through labor‐enhancing technologies. Workplace democracy. Related to control over the work process, worker‐members participate directly in decisions that affect them and the success of the business. Financial management and ownership. Worker–members contribute directly to owning the business, generating wealth, and sharing in financial success. The U.S. Federation of Worker Cooperatives (www.usworker.coop.org) estimates that there are over 300 worker cooperatives in the United States today. Alexandria Union Cab ranks among the larger worker cooperatives in the United States today. According to a recent column in The New 20
York Times, “[worker] co‐ops are back in style...they are an effective way to battle inequality.” The technology can work to support new models of ownership fostering greater equality and economic democracy. Such a new organization requires a new political majority, a new regulatory regime, and a shared vision for the future of work in society.
7 POSITION PAPER
Acknowledgments
Special thanks to Andy Rivera, Cameron Barron, Stephen Boykewich and especially Denise Cheng for editing support. This position paper was produced as a part of the Future of Work Project, an inquiry supported by the Open Society Foundations that is bringing together a cross‐disciplinary and diverse group of thinkers to address some of the biggest questions about how work is transforming, and what working will look like 20–30 years from now. The project is exploring how the transformation of work, jobs, and income will affect the most vulnerable communities, and what can be done to alter the course of events for the better. The views and opinions expressed in this position paper are solely those of the author(s). These views and opinions do not necessarily represent those of the Open Society Foundations. 8 POSITION PAPER
Notes
1
http://arlingtonva.s3.amazonaws.com/wp‐content/uploads/sites/19/2013/12/Taxicabs‐Service‐Assessment‐Report.pdf, pg .19 2
Interview with Alexandira driver Daniel Berhane. 3
Ibid. 4
Interview with Fassil Berhe, Arlington taxi driver 5
http://arlingtonva.s3.amazonaws.com/wp‐content/uploads/sites/19/2014/07/2014‐Taxicab‐Certificate‐Determination‐Report‐
Final.pdf, pg.13 6
As of this writing Union Cab stand dues are $ /week and Alexandria Yellow Cab Stand Dues average $208/week. 7
Uber, Lyft and Sidecar are for profit companies that use smartphone apps to link private cars with customers seeking rides. In the Virginia market Uber is the dominant ridesharing service but here Uber is used as a standin for all ridesharing services. 8
http://www.bizjournals.com/washington/news/2014/09/18/arlington‐alexandria‐lead‐nation‐for‐
millennial.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+industry_17+(Industry+Human+Resour
ces) 9
http://justin‐singer.org/blog/2014/06/beautiful‐illusions/ 10
Numerous interviews with D.C. area taxi drivers. Uber’s passenger and driver information are not publicly realeased. 11
http://www.washingtonpost.com/blogs/dr‐gridlock/wp/2014/06/05/virginia‐officials‐order‐uber‐lyft‐to‐stop‐operating‐in‐the‐
state/ 12
http://online.wsj.com/news/articles/SB10001424127887324235104578244231122376480 13
“Rogue Apps and Ride Sharing,” a legislative background prepared by the Virginia Taxicab Assoiciation, June, 20‐14 14
Interview with Tebibu Tesfaye, Arlington cab driver 15
Teguwaze G. interview 16
Braverman, Harry, Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century. (1974) New York: Monthly Review Press. 17
http://www.bloombergview.com/articles/2014‐10‐02/a‐secret‐of‐uber‐s‐success‐struggling‐workers 18
Karl Marx, Capital: A Critique of Political Economy, translated Ben Fowkes (1990). London, Penguin Classics. 19
“New app among ideas to push D.C. cabs ahead,” Washington Post, October 8, 2014, Lori Aratani B1. . . . . . . . . . . . http://www.washingtonpost.com/local/trafficandcommuting/dc‐taxi‐commission‐chief‐offers‐a‐final‐plan‐to‐push‐fleet‐into‐
the‐modern‐age/2014/10/07/46847c00‐4e39‐11e4‐babe‐e91da079cb8a_story.html 20
See Shaila Dewan, “Who Needs a Boss?” NYT Magazine, March 25, 2014, http://www.nytimes.com/2014/03/30/magazine/whoneeds-a-boss.html?emc=eta1 9