Ride-sharing app drivers on strike ahead of Uber IPO

Uber, Lyft and other ride-hailing app drivers went on strike in New York City during rush hour Wednesday morning — a day before shares of Uber are expected to be priced for the tech startup’s big initial public offering Friday. Throngs of drivers — the company’s key asset — organized by their union, the New York Taxi Workers Alliance, went offline between 7 a.m. and 9 a.m. to demand, among other things, a more equitable pay structure. Drivers in other major cities also threatened strikes.

Drivers are now paid based on a per-minute and per-mile formula that doesn’t rise in tandem with increased fares for riders, NYTWA Executive Director Bhairavi Desai told CBS MoneyWatch. “Drivers no longer make their earnings from a cut of the fare — they’re paid by distance and time, and since Uber made this change in 2017, it has started to take the lion’s share of the fare. Passenger fares have gone up,  but drivers haven’t seen any additional revenue,” Desai said.

Workers are also protesting what they say are unfair and out-of-the-blue driver “deactivations” that don’t let them seek work via the mobile platform. “These are unjust firings that show that fundamentally these businesses see drivers as expendable,” Desai said. “When drivers are fired overnight, without an appeals process or notice, you not only lose income, you also have to pay for your vehicle expenses out-of-pocket — a vehicle you likely had to purchase in order to have that job.” That’s because drivers are classified as independent contractors rather than not employees, so they’re responsible for providing their own cars and maintaining them.

“Adversely affected”

Uber says drivers’ status as independent contractors affords them flexibility they otherwise wouldn’t have — a perk whose value isn’t lost on drivers. The company also acknowledges in its IPO filing that its “business would be adversely affected if drivers were classified as employees instead of independent contractors.”

Desai also sounded off on Uber’s model for growth — including its investment in autonomous vehicles, which, if successful, would eliminate drivers’ work. “They broke the empire by oversaturation, and now they’re moving toward driverless cars in an effort to show their investors that they can turn a profit,” Desai said. “They are beginning to shed the drivers.”

Company executives and early investors, including Amazon founder Jeff Bezos, stand to make a hefty profit when the company goes public this week. Ousted founder and former CEO Travis Kalanick — the company’s single largest shareholder — could make $9 billion. Some eligible Uber drivers will also be able to buy shares in the IPO, but the value of that perk is questionable, according to some experts.

While the already-rich investors get richer, Uber drivers, on whom the company depends, are effectively reduced to “pauper status,” according to Susan Schurman, professor at the Rutgers School of Management and Labor Relations.

“Both Uber and Lyft drivers are clearly realizing that they’ll never be able to make a living under the current terms of their contracts,” she said. “Their status as ‘independent contractors’ denies them coverage under most federal labor and employment laws. This leaves them with little recourse except to follow the path that workers have taken for centuries and engage in a public strike.”