With the ring of a bell, controversial former Uber CEO Travis Kalanick became a billionaire on Friday when the ridesharing company made its debut on the New York Stock Exchange. But while Uber execs former and current cashed in on the IPO, the drivers that actually build the company’s wealth won’t see nearly that kind of payout.
“On a bad day — and there’s too many of those bad days — you make less than minimum wage after expenses,” says Vincent Suen, a rideshare driver based in Los Angeles. That’s why Suen — along with drivers around the world — went on strike ahead of the public offering to show who actually generates Uber’s wealth.
Suen is a member of Los Angeles Rideshare Drivers United, one of the labor groups behind the strike. Members of the organization, along with other California-based drivers, previously went on strike in March in protest of a change in Uber’s pay structure that effectively meant wage cuts for workers.
Pay cuts are all the loathsome given how the company has recruited its drivers — a model Lenny Sanchez, a rideshare driver and co-founder of Chicago Rideshare Advocates, calls predatory. Among the company’s misdeeds was a controversial subprime car loan program, which garnered comparisons to indentured servitude. Sanchez says he’s seen Uber “targeting low-income minority neighborhoods — people who specifically do not have credit, do not have co-signers, do not have a job, do not have a car, but people that are about as desperate as can be,” Sanchez says. “They’re just in a deep hole. So Uber and Lyft present the solution to these people.”
Uber’s entire business model is based on undercutting drivers at every turn. Perhaps most notably, the Uber characterizes drivers as independent contractors, which means they don’t receive the same workplace regulations or benefits, including healthcare.
The independent contractor classification is at the heart of “Uber’s hyper aggressive nature of disrupting workforces,” as Sanchez calls it. “Their main objective is to skate around regulations so that they don’t have to comply with everything that exists — the protections that an employee, or union-protected employees have. If they can redefine any workforce as independent contractors, they will.”
The lack of benefits is particularly troubling given the low pay — which studies have found to be poverty wages — and high expenses for Uber drivers. “You give passengers a discount, but for drivers? We don’t get a discount on maintenance,” Suen says.
Poor working conditions for drivers made the payout for people like Kalanick all the more galling. “I would emphasize the billion to the groups of drivers I was talking to,” Sanchez says, when telling other Uber workers how much the disgraced CEO stood to make, “and then say ‘not million, billion.’”
“I just wish I could somehow express to [Kalanick] all the reactions that I’ve gotten from the drivers when I tell them that,” Sanchez says. “They’re like, ‘I have to work. I’m away from my home for 14 hours, six to seven days a week…and this guy is going to make $9 billion overnight.”
Sanchez has been organizing with other Chicago drivers for months, and connected with drivers in California after he saw their strike earlier this year. Drivers used WhatsApp and Signal to coordinate with each other across the world, all culminating in what became an international day of action. Originally, Sanchez said, not all the cities involved intended to strike. But early media reports ahead of the day of action were fuel to an already quickly burning fire, and interest in striking from drivers around the world grew organically.
While drivers have the most at stake, the public at large has good reason to hold Uber accountable. Both Sanchez and Suen pointed to the safety concerns posed by poor working conditions. Drivers often work long, potentially dangerous hours in order to make ends meet. And, given their poor wages, Sanchez says, some might have to make a choice between providing necessary car maintenance and meeting other obligations, from healthcare to housing.
Others are concerned about the growing inequality posed by big-dollar IPOs like Uber’s. That’s why San Francisco Supervisor Gordon Mar unveiled an “IPO tax” last month. IPOs are particularly likely to widen already massive wealth gaps in the city, which is home to not only Uber but a slew of other tech companies likely to go public this year.
Mar’s proposal would restore the employer payroll tax on stock-based compensation from its current .38 percent to 1.5 percent, the same level as it was in 2011. Mar says he’s got the seven required votes from the city’s Board of Supervisors to get the proposal on the ballot in November, where it would need the backing of two-thirds of the city’s voters to pass.
And ahead of the strike, drivers and allies from People’s Action — including Sanchez — delivered a letter to Uber offices, demanding the company meet with drivers and couriers around the world to discuss how to “equalize the disparities in wealth and income.”
“We demand that a company valued at over $100 billion treat those who are the backbone of its business model fairly,” the letter states. “We demand living wages that can pay our bills and support our families. We demand transparency on policies, wages, tips and fare breakdowns. We demand benefits so that we can have a guarantee of safety and security on the job. We demand the right to join an independent, driver-led organization of our choosing.”
Does the rocky start to Uber’s IPO, debuting on the heels of the strike, mean that investors might see through a business model that basically depends on shortchanging drivers as much as possible? That’s yet to be determined, but drivers certainly won’t let Uber forget that they’re the backbone of the company. The strike is only one step in a growing movement.
“We’re a lot more organized now than we were even a month ago at the national and even international levels,” Sanchez says. “We have people from all over the world now.”