U.S. News & World Report: Uber’s Race to the Bottom

Don’t Buy That the Company Is Fixing Its Problems

The transportation network company Uber says it’s reforming its ways. Travis Kalanick, the brand-tarnishing founder and CEO, announced his resignation Wednesday. A day earlier, the company announced new measures to address persistent and widely-reported disquiet among its drivers. That followed an announcement last week that Uber would adopt every recommendation in a report by former Attorney General Eric Holder to reform a “hostile workplace.”

That’s fine – but Uber is missing the point, as well as a larger opportunity for reform. It’s not just about Kalanick. It’s not even just about Uber. The problem is a business model pioneered by Uber that values greed and its bottom line above all else.

It’s good news that Kalanick has left the company. His personal antics and the hostile culture he created finally caught up to him. As the Financial Times wrote when it called for the CEO’s firing: “One day we will look back at what will hopefully be the smoldering wreckage of Kalanick’s career and ask how a person so lacking in basic human and corporate ethics was allowed to run a company for so long.”

The company’s report that preceded Kalanick’s departure advised Uber to “reformulate its cultural values.” Uber is claiming to do that: It announced on Tuesday that it will allow drivers in three cities (Seattle, Minneapolis and Houston) to accept tips, allow all drivers to purchase insurance, pay them more for wait times and institute a special fare for teen passengers (in Seattle, Phoenix and Columbus).

But let’s examine what Uber’s so-called “180 days of change” really means.

First, Uber isn’t negotiating with its drivers: It’s just taking some small steps that might slow down the flood of drivers who are leaving it. A cynic might even suggest that the choice of Seattle as a roll-out city is a traditional union-busting measure, meant to quell a robust organizing drive. There, Uber has shown that it is as hostile to workers having a real voice and real power as the worst corporate behemoth.

Second, Uber isn’t giving up on a business model that passes the costs and responsibilities of doing business onto its workers, some of whom are earning less than minimum wage, living in their cars and suffering assaults by passengers. Sure, it’s allowing drivers to accept tips, but that’s a cost borne by its customers, not the company. In lieu of paying its workers’ compensation premiums, it’s allowing drivers to buy private insurance.

And while it is taking some responsibility for discrimination within corporate offices, it continues to claim none for discrimination and harassment suffered by its drivers. Instead, it perpetuates the blatant untruth that its low-wage drivers, whose every move is dictated by the company, are somehow in business for themselves. When it doesn’t get its way, it sues. When it loses, it appeals. When all else fails, it moves to change the law, as it has in over half the states.

To top it off, even the popular tip provision isn’t exactly real: The fine print informs drivers that the company will grab the tips as car payments for those who have bought or leased cars in order to work. As the LA Times’ Michael Hiltzik noted, the company just doesn’t get it: While its announcement included feel good driver platitudes, (“simply put, Uber wouldn’t exist without you,“) it still treats drivers like profit centers.

Uber is not alone in creating a business structure that builds wealth for those at the top, but leaves the workers at the bottom. Like the McDonald’s franchise structure, its business model eschews any responsibility to workers by creating a legal fiction over who’s the boss. Like the port trucking companies profiled in a recent USA Today article, it forces workers into debt as a means of binding them to itself, all the while claiming workers are independent businesspeople.

Its practices have led some to compare it to Walmart, perhaps the poster child for corporate culture that simply doesn’t give a damn. Frankly, that seems unfair to Walmart, which at least doesn’t try to pretend its employees are something else.

Uber could, of course, become a good corporate citizen, one that cares about drivers and consumers, not just its bottom line. It could comply with the baseline laws it’s been ignoring: anti-discrimination laws, antitrust laws, wage and hour laws. It could pay its taxes, so that workers get unemployment insurance, workers compensation and social security. It could tell us what data it is collecting on consumers and drivers, and what it’s using that data for. It could cooperate with city transportation agencies to ensure that it is effectively integrated into a community transit system. It could engage in real negotiations with its drivers’ chosen representatives, with a written, enforceable agreement. Instead of leading a race to the bottom in the on-demand economy, it could begin a race to the top.

Rebecca Smith is deputy director at the National Employment Law Project and author of a new white paper on Flexibility in the On-Demand Economy.

This op-ed was originally published in U.S. News & World Report.

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Rebecca Smith

Director of Work Structures, National Employment Law Project

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