Uber and Lyft drivers for the union

October 13, 2016

Julian Guerrero reports on a union campaign by drivers for ride-sharing companies that is taking on both the bosses and a legal system that denies they are employees.

THE TAXI industry is being dramatically "disrupted" across the country by taxi app companies that have little regard for drivers' livelihoods and long-term prospects.

Led by Uber, with its shiny ads and ostentatious promises of high pay for drivers, taxi app companies--known in the industry as Transportation Network Companies (TNCs)--are lowering the value of taxi medallions and causing a rapid entry of thousands of new drivers into a congested market which has brought destabilizing changes for all involved.

But there is one silver lining that can be found in all the turmoil: a renewed burst of organizing efforts among taxi drivers to fight for the legal right to form a union.

The latest chapter in this nationwide trend came on September 27 in New York City, where Amalgamated Transit Union (ATU) organizers, along with Uber and Lyft drivers, presented 14,000 signed union cards for ATU Local 1181 outside the Taxi Limousine Commission (TLC) office in Long Island City, Queens.

Drivers demanded that the TLC schedule a union election and declared that they would deliver the cards to the National Labor Relations Board (NLRB) to gain union recognition.

Union and Lyft drivers rally for a union in New York City
Union and Lyft drivers rally for a union in New York City

The action was, unfortunately, largely symbolic. In an effort to consolidate and better manage yellow cab, green, black and livery drivers, the TLC now grants a universal license despite the different fleets within the taxi industry, but the agency claims that setting up union elections is not their responsibility.

The major legal obstacle for drivers trying to organize a union is that they are not considered employees, but "independent contractors"--and so they are ineligible in the eyes of the NLRB for protected union status.

This has been a barrier for unionizing taxi drivers long before taxi apps, but the influx of thousands of new drivers into the taxi industry fueled by TNCs is giving the demand for "employee status" renewed vigor.

For that reason, the union card rally in New York City may have been symbolic, but--like other organizing campaigns among Uber drivers across the country--it's an important step that is putting front and center the demand for "employee status" of drivers and the right to unionize.

UBER HAS used its tried-and-true strategy of slick marketing and rapidly adding drivers to firmly establish the e-hail app in New York City and remain free of Mayor Bill de Blasio's efforts to regulate its growth in any way.

Uber promises high salaries and flexible hours to attract thousands of drivers, and in the process develop a significant consumer base, a strategy it has used to great success in many other cities.

Deploying billboard signs in working-class neighborhoods promising "No shifts, no boss, no limits" and a $5,000 subsidy in the first month for new drivers, the company added roughly 40,000 "black cars" to New York City streets since the app launched in 2014, while the overall number of licensed drivers in New York City grew by 14,356 between 2014 and 2015.

However, as often happens in the "gig economy," the popularity of Uber inevitably invited other apps into the rapidly shrinking taxi market. The subsequent competition between the TNCs, where "surge pricing" is used to poach customers from each other and establish their own brand, is playing out like the most dedicated free-marketeer's dream.

The TNCs argue that surge pricing--corporate-speak for raising and lowering fare rates--attracts more customers to using their service and thus more business for their drivers.

But the surge-pricing logic doesn't take into consideration that there are now more drivers competing for the same fares and a limit to the number of hours a driver can work in any given day. This means that by dropping the fare rate per trip, all surge pricing does is make the driver work harder by having to complete more trips for the same earnings. Adding thousands of new drivers to the mix means that all drivers, Uber or otherwise, will likely see a drop in their total earnings per day.

"Business picked up but the amount of time we're spending on the road is longer," Ang Sherpa, an Uber driver from Woodside, Queens told the New York Daily News. "But we're working longer for the same amount of money."

In effect, by pushing the cost of competition onto the drivers while maintaining the same rate of commission per trip, Uber and Lyft are able to attract more customers to their service at the expense of the drivers' earnings.

FOR FULL-time Uber drivers, lower fares force them to work harder, which means more driving, along with higher gas costs--so weekly earnings are usually significantly less under surge pricing than otherwise.

The manipulation of driver's fare rates, along with the incredibly high commission rate that TNCs take with each trip, is what is fueling driver's discontent and urge to get organized.

While surge pricing directly impacts Uber drivers, it also causes a ripple effect for all taxi drivers on the road.

The TNCs' use of surge pricing gives them an edge against the fleets of yellow, green and livery cabs, whose price rates are set and regulated by the TLC. That's why Uber's growth has been gone hand-in-hand with the contraction of the regulated taxi industry.

The Verge reports that the value of a taxi medallion in New York City has dropped 40 percent in the past five years. The migration of yellow cab drivers to Uber and other e-hail apps has created hundreds of idle yellow cabs parked throughout the outer boroughs.

In an effort to prevent New York's regulated cab companies from going bankrupt, as they have in cities like San Francisco, the TLC is allowing more gadgets and apps for yellow cabs, in an effort to shed the reputation of being an outmoded service, a reputation it received in no small part by Uber.

Meanwhile, other app developers are creating "driver-owned" dispatch services to challenge the private taxi app companies. But TNCs like Arro, Way2Ride and, most recently, FlyWheel--which don't use surge pricing and are meant to support yellow cab drivers--do little to regulate the big players that are lowering the earnings of all drivers through surge pricing and over-competition.

WHILE THE TNCs' entry into the market and their competition against each other are wreaking havoc on the industry, there is growing pressure to regulate the taxi apps and, even more importantly, organize taxi drivers.

There have been more than 70 federal lawsuits filed against Uber since its launch in 2009, and lawmakers have rejected attempts to legalize ride-sharing in Texas, Florida, upstate New York, New Jersey and Pennsylvania.

Drivers trying to unionize paid particular attention to lawsuits in California and Massachusetts that almost reached a settlement to pay over $100 million dollars to more than 300,000 Uber drivers but not make any changes to the lawsuit's main target: drivers' "independent contractor" status.

The New York Taxi Workers Alliance, a union that represents 19,000 taxi drivers--5,000 of whom drive for Uber--lobbied against the company's settlement offer because it dodged this critical question.

The settlement has since been rejected by a federal judge for being too low, which will hopefully allow drivers to continue pushing on the question of their legal status as employees.

Complicating matters in New York City is the Independent Drivers Guild (IDG), an organization cofounded in May by Uber and the International Association of Machinists (IAM)--which some denounced as a company union because it doesn't fight for employee status, collective bargaining or many of the other protections and rights normally associated with union membership.

However one wants to characterize the IDG, it's not going build driver power by avoiding the "independent contractor" question. Anything less than a real union will leave drivers disarmed in a rapidly changing industry.

Seattle is the only city so far that has granted the right to unionize to Uber drivers, but the variety of organizing efforts in New York City is a sign of drivers' discontent and desire for power on the job. While the legal obstacles are far from being overcome, the TNCs have provided a clear target for drivers in their organizing efforts in an otherwise scattered workforce.

UBER HAS successfully forced itself into the New York City taxi market, but its aggression has also come at the cost of creating a surplus of TNC drivers that has driven down pay--and pushed drivers away.

"The yellow-cab industry, which had long operated with little competition, is now offering drivers better terms," reported Crain's New York in June. "While Uber has gained a reputation as a cutthroat player with little regard for its driver 'partners.' For the first time since the service started shaking up the ride business, a driver migration appears to be flowing the other way--back to yellow."

Uber lost $1.2 billion in the first half of 2016, raising questions about its viability. The company spends a fortune on breaking into established taxi markets through advertising and driver subsidies, and some business analysts speculate that its long term strategy is to accept losses until it has a monopoly that allows it to cut driver pay and raise rider fares.

If Uber is able to maintain its growth in New York City, it might give drivers a better shot at organizing for better rates and conditions, but the rapidly changing industry doesn't guarantee that Uber will hold on to first place, let alone secure a taxi monopoly. Regardless of what happens, the struggle unfolding now has the potential to lay the basis for the organization of all of New York City's nearly 150,000 drivers into one union.

Many drivers are learning how to organize themselves in their struggle against Uber and other TNCs. At the union rally in Queens, ATU organizer Chris Townsend told the Indypendent, "This is the product of thousands of hours of on the part of a few staff people, many, many volunteers and drivers working the parking lots and the various places where the drivers are, having discussions about joining the union."

The hope is that many of the drivers gaining this experience will provide the leadership for efforts to organize all drivers further down the line.

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