A sign marks a rendezvous location for Lyft and Uber users at San Diego State University in San Diego, California, U.S., May 13, 2020.Mike Blake/Reuters
California blinked. Last week, corporate colossuses Uber and Lyft threatened to cease operating their ride-hailing services in response to the state’s demand that they treat their drivers as full-time employees rather than independent contractors. California’s Assembly Bill 5, which stipulates that so-called “gig-workers” must be protected and given benefits such as a minimum wage and unemployment insurance, went into effect in January 2020. Uber and Lyft oppose the bill, maintaining that it is impossible to change their business model “overnight.”
Uber and Lyft said that if a stay were not issued by the California appeals court, they would take their apps and go home at the stroke of midnight on August 21, leaving approximately, 350,000 Lyft drivers and 100,000 Uber drivers out of work. The companies hope to reverse the ruling on November 3 when Californians get to vote for Proposition 22, an initiative that would cancel most of the mandated changes to their work force. They’re spending big money – so far a reported US$110 million – to make sure it does.
Uber and Lyft got their last-minute stay. It’s far from a victory, however, and the war over the future of ride-sharing mobility is bound to rage on into the U.S. federal election. The day after the stay was issued, the Washington Post reported Trump campaign spokesman Tim Murtaugh blaming Democratic presidential candidate Joe Biden for threatening, “Lyft and Uber drivers’ livelihoods” in order to “take away workers’ opportunity to make their own schedules and participate in a free and open gig economy.”
That Trump’s twisted trolls see advantage in this fight illustrates what a bewildering fable the ride-hailing saga has become. It is the story of what happens when Silicon Valley enterprises hell-bent on profits meet a tired, technologically backward industry hell-bent on coasting. That was the scenario when the technology was introduced.
It’s important to remember that when Uber and Lyft arrived in 2013, they were not assailing a modern, efficient industry. Taxi service was archaic. In most Canadian cities, for example, taxis were a virtual monopoly. This bred poor treatment. While there were good drivers who knew their cities, kept their cars clean and treated customers with courtesy, there were others who arbitrarily refused a fare because they didn’t consider the route worth their time. It was normal for drivers to refuse to accept credit cards or administer a mysterious “service charge” for using credit. The technology in place in traditional taxis was non-existent.
Uber arrived and offered users the chance for a seamless ride. Uber uses GPS to find the nearest vehicles and gives customers the price prior to the trip. It is a cashless transaction. Tip, any tolls and government sales taxes are all included. The customer receives an electronic receipt. Customers around the world embraced the new model – it was cheap, fast and convenient. In car-struck cities such as Los Angeles, people started getting rid of their cars and relying on ride-hailing apps.
It was good for the customers and bad for traditional cabbies and nobody but the cabbies cared.
But they cared a lot. Taxi drivers and companies rose up in defiance. In Paris, for instance, cabbies protested and smashed up Uber vehicles.
Over the years, the disorganized independent contractors driving for Uber and Lyft started pushing back, too. They formed collectives, such as Rideshare Drivers United, demanding that they be treated as employees. It’s a reasonable assertion. If you work eight hours a day for a single employer, you sure sound like an employee.
When challenged, ride-hailing companies argued that their drivers have a unique amount of freedom and autonomy. Then they would leave – as Uber did in Austin, Texas in 2016. Uber returned a year later when the city had curbed to their demands.
That was before the age of face masks and hand sanitizer. Since the COVID-19 pandemic began, Uber and Lyft have seen their ride-hailing numbers plummet. They’re down by around 75 per cent. The companies seldom if ever made a profit and kept their prices low by subsidizing their rides. It was a smart gambit. Investors envisioned Uber eventually running driverless autonomous vehicles. They’d be to ride-hailing what Netflix (which started out as mail-order DVD rental) was to streaming.
Now, in the middle of a global pandemic, the threat of removing a service few people are using isn’t much of a threat. Besides, taxi companies have modernized. They now use ride-hailing apps.
Essential workers and those living in underserved communities will be most hurt by a service suspension. Usage data from Uber shows that 46 per cent of riders in April were from low-income neighbourhoods. The affluent can desert ride-hailing. The hardest hit communities cannot.
It raises the question of whether enormous companies should have the right to pull up stakes whenever the government issues policy with which they disagree. Uber and Lyft use roads and transit infrastructure, all of which are paid for by taxpayers. They benefit from government spending. Why should they be able to grab the money and run any time they like? Conversely, without Uber and Lyft, a lot of people who presently are making moderate to very little money will be making a grand total of nothing.
And why is the Ontario government considering replacing seldom-used bus routes with companies such as Uber? Dubbed “microtransit” by some possessed wizard living in a cave, the practice involves replacing buses with on-demand ride-hailing. Sounds like a great idea! Why not involve a business model that is under assault, and likely to be a swing issue in the American election, into our provincial public transit system! As we used to say back at Nepean High in 1985, get me fifty bucks of whatever they’re smoking.
We’ll find out soon enough if Uber and Lyft are going to become four-letter words.
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