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by Seth Sandronsky
IT'S ANOTHER TALE of rich companies and poor workers. Uber is a mobile app-based ride-hailing firm, valued at $51 billion. Lyft is its business competitor, valued at $2.5 billion. Investors from America to China have skin in this game. Meanwhile, Takele Gobena, 26, is an Ethiopian immigrant in Seattle, Washington who transports riders as an independent contractor for Uber, full-time, and Lyft, part-time. “I earned $2.64 an hour after all expenses in 2014,” he said, “after leaving my $9.47 an hour dispatcher job at Seattle-Tacoma International Airport in 2013.” (Gobena's job switch preceded the Seattle City Council's April 2015 approval of a minimum-wage hike, in stages, to $15 an hour.) The precarious nature of Gobena’s earnings illustrates the pitfalls and potentials of what a new report from the National Employment Law Project (NELP) calls the "on-demand economy."
Begin with workers such as Gobena laboring as independent contractors, not company employees. “Calling workers 'independent contractors' [means] breaking jobs into small tasks that create erratic schedules and fluctuating income, and making it difficult for workers to take collective action,” write Rebecca Smith, NELP’s deputy director, and Sarah Leberstein, senior staff attorney.
Unorganized and exploitable, workers such as Gobena propel the on-demand economy. Globally, in transportation, home services, and crowdwork (work that is pieced out via the internet), workers’ services are profiting “businesses that use internet-based platforms to assign individuals seeking work to businesses and individuals seeking services," write Smith and Leberstein, with the businesses "controlling relevant aspects of the work and working conditions." Hard data on the number of U.S. workers in the on-demand economy is unclear, they say, but a September 2014 report by the Freelancers Union and Elance-oDesk that found 53 million American workers, 34 percent of the U.S. labor force, have employment as freelance workers.
TO DRIVE FOR UBER and Lyft, Takele Gobena borrowed money to buy a car, while bearing the costs to clean, fuel, insure, and maintain it. “I worked 15 hours a day while driving customers 37,000 miles in 2014,” he said. He surrendered his access as an airport employee to health insurance, and as an independent contractor, he has the legal status of an entrepreneur, not an employee, required him to pay the IRS a self-employment tax of 15.3 percent.
It’s no secret that employee benefits cost employers. The less employers spend on workers’ benefits, the more revenue goes to executives and investors. This is a recipe for income inequality. The NELP report is a bid to reset such workplace arrangements. “Businesses in the on-demand economy should not get a free pass on making contributions to existing social insurance programs such as Social Security, Medicare, workers’ compensation, and unemployment insurance, on their workers’ behalf,” write Smith and Leberstein, asserting that the U.S. social safety net created during the 1930s under FDR’s New Deal labor coalition, should be available to all workers.
There is, for example, the Fair Labor Standards Act of 1938, which sets minimum wage, overtime pay, record-keeping, and youth employment standards for industries subject to its provisions. There are also “social insurance programs now being developed, such as earned leave and supplemental retirement savings, [which] should extend to on-demand workers,” write Smith and Leberstein.
Retirement security is meanwhile weakening among the American working class. Accordingly, the NELP report calls for all workers in the on-demand economy to be able to pool their money into portable, state-managed retirement plans. California, Connecticut, Illinois, and Maryland are experimenting with this policy. Paid sick-leave for on-demand workers is another policy that would help them. Having to choose between earning income and healthy living puts on-demand workers and their families into a horrible situation.
“Uber and Lyft drivers need better treatment and livable wages,” Gobena agreed. “This is an issue that affects riders and drivers.”
NO SMALL PART of the NELP’s “policy roadmap” for workplace reform is to make it easier for on-demand workers to organize into labor unions and bargain collectively with company owners. Seattle Council-members Mike O'Brien and Nick Licata have introduced city legislation that would allow on-demand transportation drivers to bargain collectively with their employers.
Policies that have weakened bargaining power among typical workers, the bottom 80 percent of the U.S. labor force, account for worsening income inequality, according to a report by Josh Bivens and Lawrence Mishel of the Economic Policy Institute in Washington, DC. Echoing the NELP report, the EPI’s new initiative, “Raising America’s Pay,” calls for increasing the bargaining power of typical workers by in part updating overtime rules and strengthening collective bargaining rights.
Such efforts to advance policy options for workers in the growing on-demand economy are moving from the margins to the center.
Seth Sandronsky is a journalist and member of the Pacific Media Workers Guild. He can be reached via email.