FoundSF

Historical Essay

by Veena Dubal

Originally published in the May 4, 2020 issue of Logic Magazine

Taxi demonstration against Uber at the corporate headquarters, 1455 Market Street near 11th in San Francisco, October 8, 2014.

Photo: Chris Carlsson

In early 2012, San Francisco taxi drivers began to raise the alarm at organizing meetings and city hearings about “bandit tech cabs” pilfering their fares. “I’ll sit at a hotel line, and I see one of these guys in their own car come up, hailed by some guy’s app, and they’ll turn down my fare,” Dave, who had been driving a taxi for fourteen years, said at a meeting that April. “They steal it. It’s insulting.” Other cabbies said they were seeing the same thing, and that their income was suffering as a result. “I think I made 20 percent less last week than normal,” one driver lamented. He wanted city officials to know; surely, they would put an end to it.

These taxi workers were experiencing the very earliest stage of a global re-organization of private and public transportation, fueled by billions of dollars of financing from venture capitalists. Under the shadow of the Great Recession, in a period of high unemployment and slow job growth, Uber, Lyft, and their erstwhile competitor Sidecar used this technocapital to begin offering almost anyone with access to a car a way to make money by driving people around San Francisco. The companies aggressively marketed themselves as disruptors of the transportation industry; consumers and commentators, seduced by on-demand, technology-fueled mobility and the prosocial promise of what the companies called “collaborative consumption,” enthusiastically adopted their narrative.

Cabbies, however, saw Uber and Lyft as well-financed corporate continuations of the taxi companies that had long subjugated them. “This isn’t about technology,” Mark, a long-time taxi worker and advocate told me in 2013. He explained that, for the previous few years, San Francisco taxi drivers had already been using an app called Cabulous, which essentially did what Uber and Lyft were doing. “They claim they’re innovative and new, but we already have this technology,” he went on. What was different, Mark described, was that Uber and Lyft had “a new exploitative business model,” though it was just “one step removed from the leasing model that the taxi companies have been using for years.”

Since 2012, much of the positive discourse around Uber and Lyft has continued to regurgitate the notion that these are companies built on technological innovations that brought new forms of transportation to people and places who needed them. Meanwhile, critiques of these companies, and of the gig economy as a whole, have typically seen Uber and Lyft as breaking sharply from earlier modes of employment to create new forms of precarity for workers. In both cases, the public discussion tends to see these companies as creating major discontinuities, whether of technology or of labor models. What Mark pointed out, however, is that Uber and Lyft are in many ways not as different as we tend to think from the taxi companies that prevailed until 2012.

Taxi demo October 8, 2014.

Photo: Chris Carlsson

In 2020, almost a decade after the advent of Uber and Lyft, we seem to be at another turning point. The ride-hailing industry is facing a wave of militant self-organizing and claims to employment status by drivers. So far, the most significant mobilization has been the fight over AB5, a California assembly bill that was signed into law in September 2019, and which makes it much clearer that drivers should be treated as employees of Uber and Lyft. The companies have fought this reclassification in myriad ways, and some drivers fear that it may cause them to lose their flexibility. But those who have welcomed the passage of AB5 hope it will deliver them many of the benefits—from healthcare to a guaranteed minimum wage—that Uber and Lyft have so far denied them. On all sides of the issue, no one doubts that we are at a critical juncture in the history of labor and urban transportation.

But in order to sort through the arguments surrounding AB5 and grasp the significance of this moment, we must do something that the discourse around ride-hailing has failed to do: situate ourselves historically, tracing both the continuities and the discontinuities that the cabbie Mark pointed to. Our present moment is largely the product of two neoliberal shifts in the taxicab industry—and, in a certain sense, in US society as a whole—that occurred in the late 1970s and the 2010s. Understanding the reasons for these shifts can help us get beyond the easy assumptions made on different sides of the debate: that employee status is an unalloyed good or ill, that innovation made the rise of Uber and Lyft inevitable, or that the issues raised by the sector are matters of technology rather than politics.

Few people understand those reasons better than the drivers themselves—though, like other workers, they rarely have their voices centered in public discourse. By listening to drivers’ accounts of how their industry operates and has changed, we can come to understand how and why, despite some fears and ambivalence, they are using employee status to create a much-needed friction in the wheels of technocapital.

Leasing as Liberation

Typically, mainstream observers see two defining features of the business model of Uber and Lyft. The first is that the people who drive “on” their platforms are treated not as employees of the companies, but rather as independent contractors using those platforms to run their own personal taxicab businesses. In the US, direct employment increases corporate costs by roughly one-third, so classifying workers as independent contractors significantly increases profitability. (This is essentially the labor arrangement underlying the entire gig economy, from people delivering food and groceries to those performing rote tasks for Amazon’s Mechanical Turk.) The second defining feature is the technology—the apps and the various pricing and dispatching algorithms behind them—that the corporations use to exert enough control over drivers in order to provide a more or less on-demand service. In both cases—the non-employment model and the technologies—Uber and Lyft share more in common with the previous generation of taxicab companies than many people understand.

The independent contractor model that underlies today’s gig economy first developed in the taxicab industry in the late 1970s, as the United States shifted towards a neoliberal conception of society in which almost everything was to be subjected to the forces of competition. Workers and households were reimagined as entrepreneurial concerns, sole proprietorships that should fend for themselves in the tumult of the great American marketplace. Embodying this logic, the taxicab industry was one of the first among US businesses to slough off the costs and liabilities—minimum wages, healthcare benefits, disability insurance, among other things—associated with direct employment.

Graffiti on a San Francisco sidewalk, November 2014.

Photo: Chris Carlsson

Taking advantage of rank-and-file discontent with traditional unions, as well as an existing carve-out for independent contractors in labor laws, cab companies all over the US reorganized their business models in this period, claiming to “free” their drivers from the imagined restraints of employment. In San Francisco, taxi companies approached drivers in 1976 and asked if they would like to “lease” their taxis on a shift-by-shift basis, so that the companies could rid themselves of the expenses and risks associated with employing workers, including unemployment insurance, workers’ compensation, and a guaranteed commission that taxi drivers had previously been paid.

Although the Chauffeurs’ Union, which had represented drivers since before the New Deal, discouraged workers from accepting these contract terms, many drivers were interested in the leasing model, which emerged within a tightly-controlled regulatory regime won by the union. In the early twentieth century, the union had successfully fought for municipal regulation of fares and restrictions on the number of taxis operating in the city. This helped to more or less ensure that drivers earned a living wage, even absent formal income guarantees.

Cabbies who chose to lease rather than work as employees continued to benefit from these laws. Many believed they could use their knowledge of the city and business acumen to earn more than they had as employees. Many hoped to be liberated from the companies’ direction and control. Some had also grown distrustful of the Chauffers’ Union, which took a politically conservative and dues-driven approach to the workforce. “The union was even worse” than the taxi companies, recalled Markos, a driver who had emigrated from Africa and signed a lease contract in the late 1970s, when I spoke to him in 2010. “They take your money and they say, ‘Thank you and what can we do for you?’—and they didn’t do nothing.”

Markos and other drivers had also been frustrated by the union’s positions on any number of political issues. Those who had embraced the civil rights movement or protested the Vietnam War had been ignored. Drivers who protested US interventions abroad by refusing to say the Pledge of Allegiance, which was recited at the beginning of union meetings, were ejected from the meetings. Dissident workers with long hair, whose left politics were in opposition to the union’s, were even punished: ostensibly for their appearance, but more likely, for their political positions and agitation for a more radical union.

Though not all drivers initially embraced this shift, the decision was eventually made for them. When Yellow Cab, the biggest taxi company in San Francisco, went bankrupt and re-opened in the late 1970s, the company utilized a leasing model to contract with a workforce who, as independent contractors, did not have the right to union representation. Drivers who hoped to stay employees, particularly those with families, were alarmed. For the first time since the early twentieth century, taxi drivers in San Francisco were operating without a union contract and the safety nets associated with employment. Employment was “the only course for the working man if you want to have any kind of security, in the taxi industry particularly,” Bill Williams, a thirty-nine-year-old driver with two young children told a local reporter at the time. “You can’t afford the benefits individually … Your income varies, so you have to have a group plan, which is the union.”

In response to this heightened insecurity, many cabbies organized and became increasingly engaged in city politics. For the next three decades, working without a union contract, taxi workers and activists formed informal worker organizations to lobby local politicians to maintain a regulatory environment that enabled a stable income. Drivers began regularly attending municipal meetings, and won a number of important victories for the taxi workforce, including getting a cap on how much the taxi companies could charge them to lease a cab. When workers’ advocacy attempts were rebuffed—as in 2008, when drivers lobbied the city to institute a centralized dispatch system to improve service—they persisted. Many independently adopted the Cabulous ride-hailing app, which was strikingly similar to Uber and Lyft, so that riders could have access to the entire fleet (and not just the taxis at one company) when calling a cab.

Although drivers lacked any legal mechanism to collectively force companies to the bargaining table, workers continued to exert control over their income by opposing the issuance of new taxi medallions (thereby restricting competition) and lobbying for occasional fare increases. While some drivers, particularly the most vocal activists, wanted to fight for renewed employee status, the issue was contentious among driver groups. So, from the 1990s to 2010s, they avoided it.

As Ruach, a taxi worker and activist, complained to me about drivers’ mobilization in this period: “We have to negotiate every fucking thing in our universe in public with the politicians and in the ballot box because we can’t have a union because we can’t have a contract because we are so-called ‘independent contractors.’ ”

Remote Control

When Uber and Lyft began to eat into their income in the spring of 2012, San Francisco taxi drivers were relatively certain that they could rein in the “bandit tech cabs.” Uber and Lyft were unequivocally violating both state and city laws. So, through organizing and advocacy, cabbies thought they could force the city government to enforce the laws and protect their interests, as they had done in previous eras.

And without even a fraction of the resources of technocapital, collectives of cab drivers put up an impressive fight. Between 2012 and 2014, in addition to organizing a number of demonstrations to protest the bandit tech cab companies, and writing and submitting sophisticated legal memos to regulators, taxi drivers also created a crowdsourced database of license-plate images of personal cars engaged in illegal ride-hailing. “We have tracked thousands of these cars,” Barry, a key organizer in this endeavor, explained to me at the time. “We’ll share this with the SFMTA”—the local taxi regulator— “and insurance companies, because you know these guys are operating in violation of their personal insurance contracts.”

Uber driver demo at corporate HQ, October 22, 2014.

Photo: Chris Carlsson

But these worker efforts were no match for the neoliberal political evolutions emerging in the US at the time. In the throes of the Great Recession, the individualizing, entrepreneurial logic that had emerged in the late 1970s intensified. For example, while the federal minimum wage remained unchanged, the Obama administration poured money into small business loans, with the hope that individuals taking on personal risk would reignite the economy. Rather than finding well-paying jobs, US workers were implicitly told to create them. Following this reasoning, in the taxi industry, state officials and politicians embraced the narrative that Uber and Lyft, in the name of micro-entrepreneurship, “freed” workers—not just from employment, but also from the taxi industry regulations (namely, vehicle caps and fare regulations) that had long kept their incomes stable.

But Uber and Lyft were taxi companies, just on venture capital steroids. The startups quickly created a loyal rider base by offering investor-subsidized prices and deceptively marketing themselves as a safer and more community-oriented service than regulated taxis. Though the companies were operating their ride-hailing services illegally, city regulators refused to intervene, citing the promise of technological innovation and a much-needed supply of jobs during the Great Recession’s slow recovery.

Although less widely acknowledged, the regulatory pressure that Uber and Lyft exert—and the laws they flagrantly flaunt—is also a defining feature of their business model. In the early 2010s, by pouring money into California political campaigns (particularly that of Ed Lee, then the mayor of San Francisco) and hiring nearly every lobbyist in the state—including at least one who was later charged with illegal lobbying—the companies weaseled their way out of century-old regulations on fares, vehicle caps, and licenses in just a few months. They convinced state regulators to allow them to operate and then to carve them out of existing regulations by creating a new regulatory category, Transportation Network Companies (TNC).

Scandalously, the first TNC rules, adopted in September 2013, closely resembled those written by the companies themselves. “They got exactly what they wanted,” Brad, a taxi driver said to me about the companies on the day the TNC regulations were released. “They wrote the laws themselves.” Indeed, the state regulations, which preempted local municipal regulations, seemed to inscribe the companies’ preferred business model into law. For example, even consumer safety regulations tied to professional licenses and state-monitored vehicles were conspicuously absent; instead, these safety oversights were outsourced to the companies themselves. Most critically for drivers, the new regulations lacked both any restraints on driver competition—in the form of vehicle caps—and state control over fares. The regulations were also explicitly silent on all labor issues, including work flexibility, a wage floor, the amount of time drivers could spend working per day, and most centrally, employment status.

Wanting to avoid treating drivers as direct employees, Uber and Lyft nonetheless had to find ways to subtly exert control over them. Rather than just tell drivers what to do and how to do it, which would trigger employment status, Uber and Lyft use “psychological inducements” derived from social science and deployed remotely through algorithms to influence when, where, and how long their drivers work. Instead of directly employing the millions of drivers whose work produces the company’s primary value, Uber hired hundreds of social and data scientists to shape driver behavior. (For example, using findings from social psychology and video game technologies, Uber notoriously tricks drivers into working at undesirable hours and locations.)

The success of Uber and Lyft in restructuring the taxi market and securing a legal environment that suited their interests emboldened venture capital to pour more money into the tech cab companies and to other on-demand labor platform start-ups, such as DoorDash and UberEats. As the technocapitalists celebrated these victories, a seemingly unlimited supply of drivers and declining commissions quickly devastated driver incomes across the entire taxi and ride-hailing economy. Almost overnight, full-time drivers made roughly 65 to 80 percent of what taxi drivers had made in 2012.

Uber driver demonstration at corporate HQ, October 22, 2014.

Photo: Chris Carlsson

And that was only part of the wreckage. Over the next few years, hundreds of taxi drivers who had taken out large “balloon loans”—which typically have low interest rates but involve one large payment due upon maturity—to purchase medallions went bankrupt or teetered on the edge. A few died of the intense stress caused by loss of income and long hours. Others continued driving, but lost their housing, spending the night in their taxi or on the couches of friends. Some, desperate for work, began driving for Uber and Lyft, even as the companies were quickly slashing wages. These drivers, especially those for whom driving had been a lifetime profession or who owed money on a vehicle they had purchased for work, felt trapped. In one of the most expensive places in the world, drivers in San Francisco worked long hours with no control over their earnings. And within months, this legalized system of low pay, debt, and devastation was replicated the world over.

Beginning in 2016, without access to municipal regulators, fare controls, or vehicle caps, Uber and Lyft drivers turned to the only places left: the courts and each other. Like cabbies before them, ride-hailing drivers began to self-organize and form drivers groups. Some even worked with plaintiff-side employment attorneys to sue Uber and Lyft for millions in back wages and vehicle reimbursements. Uber alone faced dozens, and eventually hundreds, of lawsuits and complaints alleging that they were misclassifying their drivers as independent contractors.

But Uber and Lyft, even though they were unprofitable, had unprecedented sums of venture capital funding with which they could aggressively litigate such cases and confidentially settle them, sometimes for more than what the plaintiff would have received had they won at trial. The companies used these ungodly streams of capital along with legal acrobatics—both settlements and arbitration clauses—to avert a conclusive finding on the central issue: were drivers employees or independent contractors? By avoiding a legal decision at either the district or appellate level, the companies continued to get away with treating their workers as independent contractors.

Samy, an Iranian refugee who emigrated to California in the 2000s, described the terrible conditions that he and many of these “independent contractors” face. Unable to afford the Bay Area, he lives a hundred miles away from San Francisco, and rather than commute to the city daily, he sleeps in his car between shifts, sometimes not returning home for several days in a row. “We have no freedom,” he told me. “I sleep in my car. I eat in my car. I work in my car. That is not freedom. That is not flexibility.” Because he has to make a certain amount each day to make ends meet, Samy hypothesizes that Uber has used the data they have on him to systematically lower his wages, forcing him to work harder and longer to earn that same amount.

Back in Iran, Samy, who is a highly skilled carpenter, ran a small construction business. “In Iran, I had some guys, they were working for me… I took care of them,” he said. “I was giving them breakfast, lunch, and I even paid for their dinner. In America, it’s something different than all over the world.” He said he hadn’t heard of another country where workers were required to have their own tools to work for a company, and then not considered employees on that basis. “It makes no sense.”

Finding Friction

In the post-union, post-employment decades leading up to the appearance of Uber and Lyft in 2012, taxi driver advocates in San Francisco had largely avoided organizing around employment status. Because the issue was contentious among drivers, San Francisco taxi worker activists had relied mostly on policy advocacy to improve their working conditions, lobbying regulators to ensure the economic security of taxi drivers and their families. With the legalization of the Uber and Lyft business models in the mid-2010s, an industry of workers who had long understood themselves to be “independent” began to build and leverage collective labor power, not just policy advocacy, to demand changes to both the industry business model and the regulatory environment. Drivers of all kinds—full-time and part-time, Uber and Lyft and taxi—took to collective activity, including direct actions, which came to a head in 2019.

As Uber and Lyft approached their IPOs early that year, the companies noted in their public SEC filings that the classification of their drivers as independent contractors remained key to their future profitability. Uber and Lyft drivers quickly ascertained that their status was the companies’ most painful pressure point. Moreover, the fact that the companies—whose executives made millions—were relying on avoiding paying minimum wage and overtime to the drivers for the companies’ profitability enraged drivers. As one driver explained to me in the summer of 2019:

"Four years ago, there is no way anyone would have [supported] employment. People were getting what they needed, and they felt loyalty to the company. But now we can’t survive. And did you see that [Uber co-founder] Garrett Camp bought a seventy-one-million-dollar home in Beverly Hills? That is our money. That is some bullshit. I know people living in their cars. And he bought a seventy-one-million-dollar home. We made him every dollar he has."

Until this moment, driver organizers had avoided the potentially divisive issue of employment status. But in response to the IPO, a changing legal landscape, and fury rooted in their extreme economic vulnerabilities, drivers adjusted their tactics to direct their energies at technocapital’s Achilles’ heel.

On May 8, 2019, a coalition of Uber, Lyft, and taxi drivers, led by the New York Taxi Workers Alliance and the California-based Rideshare Drivers United (RDU)—whose members had been self-organizing and protesting for better regulatory oversight of the industry for over two years—called the first ever global strike against Uber. In the weeks leading up to the strike, the demands focused on fair pay and an appeals process to deal with terminations, yet they conspicuously lacked the word “employment.” But during the strike action in front of Uber’s headquarters on Market Street in San Francisco, drivers were beginning to talk about AB5.

The bill, which had been introduced in the California State Assembly just a few months earlier, drew upon a recent state Supreme Court decision to change the test for employment status. Rather than examining how much control a putative employer exerted over workers, the decision called for the presumption of employment status. If a company wanted to use independent contractor labor, they had to pass an exacting “ABC test” which asked, among other things, if the workers were occupied in a line of work that differed from the company’s core business. AB5 constituted a striking revision in California employment law and strongly favored extending basic protections like minimum wage, overtime compensation, workers’ compensation, and unemployment insurance to gig economy workers.

Two days after the strike, Uber went public, and driver organizers with Rideshare Drivers United began to talk more publicly about AB5 and the possibility of employment status. If it passed, it would be the first time since Uber and Lyft’s founding that drivers had a law on the books that could support their struggle against the companies. They decided, in spite of some fears, to throw their support behind the bill’s passage.

Still, in private, drivers were ambivalent about formally becoming employees. “We get behind this law because we have to show the companies we have power,” Soleiman, a full-time Lyft driver, told me privately, after an organizing meeting. “But what does it mean for me and other drivers?” Though worried about the consequences, he and other Uber and Lyft drivers had advocated loudly for AB5, putting their fears to one side and leveraging collective action to fight for the one thing that companies most wanted to avoid.

In a truly unexpected turn of political events, AB5 passed. The California legislature, which had previously shown great deference and affection for technology companies, sided with the workers on the issue of employment status. The Assembly’s speaker, Anthony Rendon, went so far as to call the so-called gig economy “fucking feudalism” in announcing his own support of the law. Upon its passage, AB5 was celebrated by driver advocates the world over and signed into law by Governor Newsom in September 2019. It was the first sign in over eight years that, perhaps, worker power could fracture technocapital’s tight grip over lawmakers.

But like Soleiman, many drivers did not fully understand the implications of the new law—not because they were ignorant of the statute, but because so much was left in the company’s hands. What would it mean to be an “employee”? Most centrally, would the companies take away whatever degree of flexibility the drivers had? Could Uber and Lyft cap their potential earnings or push them off the app? Or would the law facilitate exactly what precarious workers in the economy needed: a wage floor, access to the safety net, and a pathway to unionization?

While debates about the impact and efficacy of AB5 and the ABC test roiled over social media and in courtrooms—Uber and the food delivery service Postmates sought and lost a preliminary injunction against the law, while simultaneously arguing that the law did not apply to them—workers privately debated what to do. The law was supposed to go into effect on January 1, 2020. The day came and went and, conspicuously, nothing changed. When it became clear to workers that neither the city attorneys nor the state attorney general was going to force Uber to end its practice of misclassification, drivers decided to take matters into their own hands.

“We cannot wait for the city or state to enforce this law,” Nicole, a Lyft driver and organizer in California, said to me over the phone, weeks after the law had gone into effect. “We have to do it ourselves.” On February 5, 2020, members and supporters of RDU marched together to the Labor Commission’s offices all over California, collectively submitting individual claims for back wages and vehicle reimbursements against the companies. The roughly 150 drivers who filed claims against Uber and Lyft that day calculated that together they were owed up to $4 million dollars for the last three years of underpayment. AB5 was not an end in itself, RDU organizers explained to the press and to their fellow workers, but a route to collectively achieve much-needed security, a law they could use to stabilize income and aid driver organizing efforts.

“Look, the companies can threaten us all they want,” Chris, a Bay Area Lyft driver and RDU organizer told his fellow workers at an organizing meeting. “They can keep sending us emails and these in-app messages. But what employment status means is we can organize together. We can build power. We can build a union. And then we can force them to bargain over our working conditions. And then they can’t take away our flexibility if we won’t let them take it away.” For Chris and others, employment status created a path through which workers could organize and maybe even get a federally-recognized union. Talk of a union, which had been stymied for three decades in the taxi industry by the reality that taxi workers without a union contract could still use the municipal regulatory regime to eke out a living under the leasing apparatus, has become a live issue once again.

While taxi companies had pioneered independent contracting in an earlier moment, technocapital’s flamboyant forms of neoliberal risk-shifting have catalyzed a powerful resistance to both the corporate practice of eschewing direct employment and worker reliance on state structures for security. The second neoliberal turn brought on by Uber and Lyft eradicated both municipal regulations and the limited sense of agency that workers had over their livelihoods. Ironically, this purge of state structures in the 2010s that drivers could leverage stirred new—but old—forms of collective activity. For the first time since the early 1980s, employment status—and more importantly, shared worker power built through the threat of employment status—has become a way for ride-hailing drivers to resist extreme economic insecurity and to collectively imagine better futures.

Workers are turning to one another to build power and effect change. Through protests, strikes, and other direct actions that have emerged through the fight for employment in California, drivers have found a much-needed source of friction that can stop, or at least slow, technocapital’s assault on their lives: solidarity.