Uber Workers Sink Company IPO
The developments show that new organizing tactics can work
Uber Technologies Inc. went public this week, and their IPO (Initial Public Offering) came in way under expectations in the wake of the largest strike yet by ride-share drivers. This week wasn’t any better for their main rival, Lyft Inc., which ended their first quarter on a terrible note since going public in March.
The strike, which took place during morning and afternoon commutes on Wednesday in cities from San Francisco to London, was the largest of its kind. Riders were also strongly encouraged to boycott and not cross the virtual picket line. It worked, judging by Uber and Lyft’s most recent stumbles on the market and in the media.
Despite having the third highest IPO ever (behind Alibaba and Facebook), Uber was valued way below expectations, as rising consumer prices, dissatisfied drivers, and more competitors lie ahead. The stock price fell almost 7 percent in the morning hours on their first day as a public company and the fall continued on Monday with the stock down another 7% by mid-day. Uber is now under close scrutiny by Wall Street investors and SEC regulators.
Uber and Lyft comprise almost 100 percent of the ride-share market in the U.S., and their business model up to this point was predicated on avoiding regulations like minimum wage laws and surviving on subsidies from venture capitalists to keep fares as low as possible. Both companies still operate in the red and aren’t expected to turn a profit until the middle of the next decade.
Their business models and profitability are also dependent on under-paying their drivers. In fact, they don’t consider drivers to be “their” employees, instead classifying them as independent contractors without legal protections, collective bargaining rights, or minimum pay and benefits. Taking these factors into account, a study by the Economic Policy Institute puts the average hourly wage closer to $9 an hour — lower than 90 percent of all workers and much less than what the companies claim the drivers get. Another study from the JPMorgan Chase Institute found that drivers are currently making less than half of what they were five years ago, mostly because of fewer hours, higher fees, and lower reimbursement rates.
The companies now find themselves pressured by investors and competitors on one end and a young but growing labor movement on the other. They tried enticing drivers with promotions, bonuses, and a company union called the Independent Drivers Guild.
For many drivers, the latest strike was their first action on the job. It grew out of organizing efforts by Rideshare Drivers United in Los Angeles and Gig Workers Rising in Silicon Valley. Then it quickly spread to dozens of cities, including New York where a campaign led by the Taxi Workers Alliance won a minimum wage bill through the City Council last year. The AFL-CIO and Democratic presidential candidates shared their support, adding to the strike’s public relations triumph even if only a small fraction of drivers participated.
The top demands include a 10 percent cap on commissions, an elected driver-representative on the boards of directors, and a “just cause” standard for all discipline. These could set the working conditions for millions of people in what is potentially a trillion-dollar industry.