Keeping Workers in the Driving Seat
Mandating traditional employment for Uber drivers would benefit a few at the expense of the many.
By Robert Winterton & Nolan Dickson
Recently, the Financial Times released a game where you play as an Uber driver working towards a goal of earning $1,000 at the end of one week. The game prompts you to make limited choices throughout, including which car to rent, whether to miss your friend’s birthday party or not, and if you should work through your day off. While it may be possible to pass the $1,000 mark, it’s very difficult. A small mistake, such as parking your car illegally at the request of your passenger or getting caught in traffic chasing a price surge, are all it takes to end up missing your goal, leaving you unable to pay your monthly bills.
Anyone who does it will tell you, contract work is not considered a reliable source of income. The pay-for-service structure amplifies flexibility and independence, but does not guarantee future work or stable wages. In comparison to being employed full-time, a slow month for a contractor means fewer hours, less money, and far more unpaid time off than you were likely bargaining for.
Contractor status empowers workers to choose. Uber, Lyft and other ridesharing platforms have benefited both consumer and producer by allowing drivers to work as contractors. Without the contractor status, these companies would look more like a chauffeur or taxi service making the transportation space no different for customers and taking away income from hundreds of thousands of part-time drivers. Uber was founded in 2009 and now has more than 160,000 drivers in 84 countries.
Some, however,are skeptical the service is fair for its drivers. The argument the Financial Times game makes characterizes this: they argue Uber does not pay their drivers enough, especially for how hard they work. The game, which claims to be built on research the Financial Times has accrued interviewing dozens of drivers, asserts that even after working far more than 40 hours with no days off, Uber drivers find it difficult to make ends meet.
The veracity of the game’s almost inevitable outcome is highly questionable. Not only are there plenty of accounts of Uber drivers making far more than the game would suggest, the framing of the game implies that one should be able to earn at least $1,000 per week just to get by, a number that exceeds the average salary for every age group. Not only can Uber drivers be very well paid, the company has also never advised its drivers to rely on Uber for their entire income. As their recent ad campaign shows, Uber sees its drivers as people with other forms of income who use contracting as a “side hustle”.
The data reflects the “side hustle” reality. A 2015 study at Princeton found that while a decent number of drivers do so for Uber as their full time occupation (38%), the majority don’t. Other recent research, notably a study conducted by Will Rinehart of American Action Forum, shows that Uber drivers are not as hard done by is often argued. The study found a median hourly rate of approximately $37 for surveyed drivers, with a small number even making hundreds of dollars per hour. Replacing the contract nature with employee-status, meaning hours and schedules would have to be set at least 24 hours in advance, would remove lucrative incentives for strategic driving that benefit both drivers and passengers.
The ridesharing model has so drastically reduced the costs of entry for those wanting to drive others around for money that now almost anyone can enter the market. More than just exposure to customers, Uber allows drivers to have full control over what hours they work and that’s exactly what they want. Research from UCLA and Yale surveyed nearly 200,000 Uber drivers, a considerably wider sample than the Financial Times cohort, to try to quantify the value of flexibility. The results — published in April — make it clear that flexibility was an essential part of the driver’s work week, with over half of observed drivers working 12 hours or less each week. Benenson Survey Group conducted a study that found 74% of drivers believed Uber driving made their lives better compared to the 5% that felt worse off.
The sharing economy allows for a decentralized platform that brings customers cheaper service and individuals more options to earn money in a variety of different ways. Specifically, Uber has greatly increased competition and innovation in public transportation, benefiting customers. Meanwhile, it has empowered millions of Americans with an opportunity for added income and flexible work.
Forcing Uber to fully employ rather than contract their drivers would undermine the entire sharing economy model that has been so innovative and popular. Urging for policy that would harm Uber and Lyft’s ability to operate should not be taken lightly when ridesharing has been found responsible for reductions in sexual assault and drunk driving incidents, and both companies have given many with criminal records the ability to earn while other employers wouldn’t. Attacking the contract model may be sold as a way to force Uber to be more generous to its drivers, but doing so could mean they wouldn’t be driving at all.
