On The Question Of Uber


The advent of Uber, the U.S.$18 billion driver-hiring company based in San Francisco, has caught many policy thinkers on the hop. Responses to this company and its rapid proliferation are widely varied and largely disappointing.

This is not surprising. Policy can only be judged against its effectiveness at achieving a desired outcome, and the desired outcome is of necessity framed within the ideals of the policymaker.

Perhaps we do not think enough about what outcomes we would like to achieve in this field and how these outcomes can be achieved by progressive policy. The company’s success is due to its ability to slip through these gaps in our thinking.

Uber excels at the 21st century approach of appearing to be all things to all people. The company’s website describes Uber as, alternately: ‘Treating Yourself’; ‘Sharing Experiences’; ‘Owning The Moment – Welcome to Anything is Possible’; ‘Creating Escapes’; ‘Getting More’; and the more literal (but surely intended to be suggestive) ‘Moving People’.

These are all big claims for what is essentially an unregulated taxi service. My concern is for those of us in the Labor Party who tout its glory using the company’s own claims that drivers are ‘partners’, ‘CEOs’, ‘sole traders’, or ‘entrepreneurs’.

Uber provides a service that is popular because it is essentially a (usually) cheaper and quicker taxi. I have used Uber many times, but have returned to taxis.

It is a mode of providing service that is clearly welcomed and fills a gap in the market. I am no particular friend of the taxi service – I’ve been hit by one, insulted by drivers and offered a free ride in return for sexual services.

My challenge to Labor members is to prepare our response to Uber in the same way we should prepare all policy: first decide on the desired outcome, and then decide how we achieve this outcome without creating negative effects that are in contradiction to our values.

I contend that if the outcome you are seeking is a quick taxi service with consequences be damned, Uber may be the answer. But if you claim to care about labour rights, do not be so quick to praise the newcomer.

I would also contend that we could get quicker, cheaper taxi services by governments tackling the monopoly of Cabcharge and reducing the prices of taxi licences. Then again I catch public transport home from a night out whenever possible – perhaps we’re coming up with answers to the wrong question.

Some would have you believe that the question Uber poses is a recent dilemma for the Labor Party – how best do we apply to contemporary issues our knowledge that high quality labour rights provide our ideal outcomes for the community?

But this is not a new question: it is the only question we have had with us since the beginning.

Uber is not innovative, nor is this a complicated new economic phenomenon. It is typical unregulated free market economics that shifts profit upward and risk downwards.

No matter what you tell yourself, the ‘owner/driver’ proposal of Uber (that is that the driver provides the vehicle) does not make the driver his own CEO. Some may argue that they are ‘sole traders.’ Sole traders take risk, but they also take profit.

Uber drivers take the risk, but they do not take the profit nor make the decisions.

Uber takes 20 percent of all fares – a reasonable amount, one could argue, for doing marketing and the app maintenance and so forth. However Uber also sets the fares, and regularly cuts them to promote or maintain market share.

Uber decides how much money drivers will take home. Uber has the power to provide vouchers for free rides in order to promote Uber – not to promote the individual driver.

In the company’s home state of California, Uber began with a fare rate that was bringing in $US15-20 an hour for drivers; an attractive prospect for Americans living in a state with a $9 minimum wage.

Once drivers had signed on, however, the fare was cut in half to increase market share. Drivers still had to maintain petrol, maintenance, and insurance, with no guarantee of earning a fare – so very often once the company took its 20 percent there was no profit to the driver.

Unfortunately it would seem we also need reminding that those who are willing to drive strangers around for money with no guaranteed fare and shouldering all risk are not typically those who have a breadth of economic choices.

The marketed portrayal of Uber drivers as fun-loving guys who just have a nice car and want to meet new people while making some money after their other, (presumably higher earning) job is ludicrous.

When I have taken Ubers, many of the drivers have bought their cars to do that specific job, and are paying off the car loan.

So the drivers bring the capital, the infrastructure, the labour, and shoulder the risk – but the company decides their income.

Not only is their income vulnerable, but their position in the company is also at risk. Uber drivers are not ‘partners’ in Uber, as Uber can ‘deactivate’ a driver at whim.

The customer service rating that passengers provide affects if a driver will be ‘deactivated’; so if you use Uber, remember – you may live in Australia so you don’t have to tip, but you are operating under an American model so you do have the responsibility of constantly reinforcing an employee’s role in the company or they might lose their job.

This system doesn’t just keep out the terrible drivers - drivers with a rating of below 4.7 out of 5 can be deactivated at any given point.

Uber has another slogan on its website - ‘Choice is a Beautiful Thing.’ Presumably they mean choose your ride; choose your driver; choose if your driver loses his job.

If they mean choice for the driver, they are referring to the fact that the drivers are essentially operating on zero-hour contracts. There is no guaranteed wage, work or employment security.

As a Labor Party we should fight against this most vicious form of casualization. Across the global economy zero-hour contracts are being used to undermine workers’ rights and securities.

Aside from the personal affect it has on workers, it also means that they find it difficult to get home loans and other securities; and those who are underemployed or not making a living wage are hidden in employment statistics which in turn makes it difficult for government policy development to provide for an inclusive society.

Typically, a person on a zero-hour contract is statistically far more likely to be young, or female, or over 65 years old. These are the most vulnerable members of our economy. These contracts are not invented for the man in the stable job looking to earn a bit of extra money on the weekend – they are a deeply insecure form of contract written by companies who treat employees like an endless resource.

The sad truth is that these contracts will continue to be written and taken up because exploitable, vulnerable workers are an endless resource – unless the labour movement continues to fight. Uber is another frontier in this continuous war.

Zero-hour contracts do provide ‘choice’ for the drivers to not drive but remember- they have to keep their rating above 4.7 or they are ‘deactivated’ (that Orwellian term for ‘fired’).

If you are a person with limited economic opportunities who has to pay the bills – or your car loan that you took out for the job – the idea of ‘choice’ is not an authentic one. The concept of every individual being an ‘entrepreneur’ is a regular one touted by the same people who say ‘if you don’t like your job, quit’ and ‘if you can’t get a job, move.’

If Uber did ask a question of the Labor Party, the answer would be the same as always: we must prioritise labour rights and reject the free-market carpet-baggers who claim to have the latest solution. Labor Party members need to expose these daily myths, not endorse them.

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  • commented 2015-01-17 13:33:31 +1100
    They say a frog doesn’t know it’s being boiled until it’s too late. The taxi industry has been exploiting customers and workers for yonks now. So I welcome Uber. Not because they’re a good corporation (corporations will always exploit—they need regulation) but because they’ve finally drawn attention to a mess. Taxi drivers are not earning much more than UberX drivers…how is that even possible?! Oh, exploitation that has the endorsement of govt.