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Senator Josh Hawley, a rising star of the Republican Party, recently announced that he had introduced a bill that would penalise firms for using slavery in their supply chains. Hawley made the obvious case that “If you consider yourself an American company … you should not be profiting on slave labour, particularly not to the detriment of American workers.”
We can all agree that slavery is morally abhorrent. But Hawley’s legislative focus, however admirable, is somewhat myopic: he and other policymakers also need to focus attention on other forms of labour exploitation occurring right under their collective noses in America’s “gig economy”, in which benefits and protections that were key components of our employment laws for many decades are now being rapidly unwound.
No company better exemplifies this trend than Uber. The company’s exploitation of workers is symptomatic of the rise of what author Albena Azmanova has called “precarity capitalism” in her new book, Capitalism on Edge, a condition that Professor James Galbraith has described as “a minority ensconced in a diminishing set of safe career paths or sufficient wealth not to bother worrying about [economic insecurity], and a majority living in persistent anxiety over the costs of health, housing, education, the quality of public services and other formerly ordinary attributes of middle-class life.”
What makes this trend particularly galling is that the main economic drivers of this transition to 21st-century serfdom fancy themselves as enlightened, socially “woke” corporations, but in fact embrace employment practices worthy of the 19th century Gilded Age.
The company uses retrograde tactics to circumvent existing labour law via the “independent contractor” loophole, which allows them to deny their work force traditional employee benefits, such as healthcare, sick leave and holiday pay, themselves the products of many decades of hard-earned reform. And even with these 19th century work practices, Uber still can’t generate positive cash flow, let alone sustain profitability. There’s no reason why a company with this kind of business model should exist.
In a genuinely independent contractor relationship, the quid pro quo is higher pay as an offset towards the lack of paid benefits. But companies such as Uber don’t operate this way: drivers earn around $9-$10 per an hour, and they can’t expand revenues because they haven’t got the ability to set their own prices or unilaterally expand their customer base. That’s left in the hands of Uber’s management. So, the only option drivers have is to drive more hours.
But when a driver is making less than the minimum wage, driving more hours considerably impinges on one’s alleged work-time flexibility. It also adversely impacts the ability to generate sufficient earnings to afford decent benefits, such as adequate health insurance (which is not a public good in the US), let alone enjoy any kind of leisure that the alleged “flexible” working hours purportedly facilitate. Out of economic necessity, all “free time” is effectively commercialised.
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SubscribeI detest all those who are ‘peacefully’ rioting, looting and burning in various US cities, not least because most of them are just ‘larping’ middle- or even upper-class white kids. However, as has been obvious for some years, there is something very, very wrong with the form of capitalism to which we are currently subjected. Uber embodies this system perfectly and will make a few people very rich on the back of many people who are very poor, even as it loses tens of billions. The whole thing is disgusting.
Should business exist to provide value to customers or to provide jobs you approve of?
There is a trenchant analysis of Uber’s position on the London Reconnections blog. A point made there is that if Uber were classified as a transport company, it would be directly liable for the 20% on fares: individual minicab drivers are typically below the VAT threshold.
Interesting. Isn’t Ponzi finance just an over valued company though? In a ponzi scheme the investors are unaware of the how works. With Uber, Investors have access to the company information and chose to invest.
Another complication of Uber model is that there are both part-time and full-time drivers. What is viable (on marginal cost grounds) for a part-time driver, is not viable for a full-time driver (who has to fund his car and insurance etc. from his fares). In other words, the part-timers can undercut the full-timers.