Thousands of Uber drivers around the world went on strike on Wednesday, May 8, ahead of the company’s hotly anticipated IPO on Friday, which is slated to be one of the largest in recent history at an estimated $90 billion valuation.
In at least eight cities in the US, including San Francisco, Chicago, and New York, drivers stopped business as usual by participating in a “shutdown,” turning off the Uber and Lyft apps — some for the entire day, others from 7 to 9 am local time — and rallying at Uber hubs and corporate offices. While Uber drivers have protested working conditions before (Lyft drivers took similar action recently), this was the biggest protest yet in the tech-enabled gig economy workforce.
The drivers, organized by several local driver networks working together, are calling for better pay, more transparency about how the app calculates drivers’ fares, benefits such as health and disability insurance, and a greater say in shaping company policy around drivers’ working conditions. Drivers have been asking for these improvements for years. And while ride-hailing app companies have made some nominal changes, many drivers say conditions have become significantly worse over time.
Uber knows as much. In its recent S-1 filing, the company admitted to having lowered the fares and bonuses for drivers in order to remain competitive in certain markets, and said it may continue to do so in the future. Considering the pressure Uber is under from its investors to turn a profit (it lost an estimated $1 billion in the first quarter of last year), this seems like the new normal.
“[A]s we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase,” Uber’s S-1 stated, marking a rare public acknowledgment of the company’s fundamental labor dilemma: As it continues to squeeze costs to its bottom line by cutting wages, it risks upsetting its 3 million drivers in 65 countries to the point of departure.
In response to a request for comment about the strike, an Uber spokesperson sent the following statement: “Drivers are at the heart of our service ─ we can’t succeed without them ─ and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road.” The statement then pointed to programs like partial insurance protections and free online college tuition for top drivers as examples of how the company has worked to improve drivers’ lives.
The company is also awarding some top drivers a one-time cash “appreciation” reward, on a per-trip basis. For example, drivers who’ve completed 2,500 trips get about 4 cents a trip, or a $100 payout in total. Drivers who’ve completed 20,000 trips will get about 50 cents a trip, or a $10,000 payout. The company is also reserving 3 percent of its IPO stock for qualifying drivers who would like to purchase it.
But these one-off driver IPO rewards are small compared to what Uber’s early corporate employees and investors are set to make — and not enough to stop many drivers from asking for more. The company expects to raise $10 billion from its IPO.
As Uber struggles to turn a profit, it remains to be seen if the threat of worker action and regulation will compel Uber to pay its workers a greater share. In New York City, the company, along with other ride-hailing apps, is now legally required to pay its drivers an hourly wage of $17, after expenses. Shortly after this first-of-its-kind wage floor was introduced, Uber said it was raising its prices in the city.
No matter how successful Uber’s IPO is on Friday, as Uber executives and board members (although notably, reportedly not co-founder and ex-CEO Travis Kalanick) ring the bell at the New York Stock Exchange, the strike will serve as a blemish on the company’s record. It’s a sign of the persistent, gargantuan issue that not just Uber but all gig economy companies have on their hands. One Uber driver participating in the strike said the company’s main rival, Lyft, is no better in how it treats drivers, calling it “Uber in a pink sweater.”
The flexible, on-demand workforce that was touted as the gig economy’s greatest asset is now its biggest liability.
Continue reading for personal driver experiences: https://www.theverge.com/2019/5/6/18531089/uber-lyft-driver-strike-ipo-protest-ride-hail
- The Uber strike shows how drivers remain one of the company’s biggest liabilities.