Uber, Airbnb and the Clash Between Workers and the On-Demand Economy
The Uber Battle Has Only Just Begun
It’s one of those universally acknowledged truths that the rise of the on-demand economy creates challenges for the labor movement. Last week, a major court settlement and a backroom fracas between two unions emphasized the immediacy of those challenges.
Ride-hailing giant Uber agreed to pay $84 million to settle two class-action lawsuits from its drivers, essentially buying time before the company has to answer to whether its business model—classifying drivers as independent contractors—is legal. Meanwhile, the Service Employees Union International and hospitality union Unite Here’s competing interests in the sharing economy came to blows when SEIU tried to broker a controversial deal with Airbnb.
Both the court settlement and the SEIU-Unite Here brouhaha have created more questions than answers to how unions—and the labor movement more broadly—can effectively combat the harmful consequences of Silicon Valley’s disruption of the employer-employee relationship.
Uber’s $84 million settlement with drivers made for nice headlines, but as Michael Hiltzik notes for The Los Angeles Times, when looked at closely it’s a far better deal for the company than the workers. The most active drivers in the suit will receive up to $8,000, but compensation for the vast majority of the drivers involved will likely be just a couple hundred bucks. Additionally, Uber must now show cause for “deactivating” (its Orwellian phrasing for “canning”) drivers, and not accepting enough rides cannot be one of those causes. Whether this will actually lead to fewer unpredictable firings remains to be seen.
A final concession in the deal requires Uber to “facilitate and recognize” drivers’ associations that can bring up drivers’ concerns and discuss them with the company on a quarterly basis. Again, the degree to which such an association would have any real benefit for workers—or whether it’d be a pseudo-company union—remains unclear.
Meanwhile, Uber’s $84 million payout is a bargain. By agreeing to the settlement, Uber completely avoided any legal ruling on whether the company must classify its drivers as employees. Uber has an estimated valuation of $64 billion (how much of that is attributable to its refusal to acknowledge its drivers are employees is anybody’s guess), and the company likely sees the settlement as a way to buy some legal breathing room on the issue of misclassification as it faces attacks on several other fronts.
For instance, the National Labor Relations Board is currently investigating whether Uber’s drivers are in fact traditional employees, and thus eligible for minimum wages, overtime, workers’ compensation, and importantly, the right to unionize. Unions like the Teamsters are already attempting to organize drivers in anticipation of a favorable ruling and lobbying for legislation that allows for gig workers to unionize. Seattle, which is on the vanguard of passing labor-friendly ordinances, recently passed a law granting independent contractors the right to unionize. Democrats in the California legislature were also pushing a similar law, though they recently announced that they are holding off for now (the California bill apparently gave workers less power than the Seattle ordinance, prompting some unions to temper or withhold their support). The Teamsters have announced that they are forming an association for Uber drivers in California similar to the association they are helping support in Seattle.
The union strategy for gaining ground among app-based drivers so far appears to be a rather chaotic approach of throwing everything—organizing, lawsuits, legislation—at the wall and seeing what sticks. Central to a cohesive strategy is the question of whether labor can force companies like Uber to classify its drivers as employees, which may result in the happiest outcome for workers but which also may require a long, expensive battle in the courts.
An alternative route, pioneered by Seattle, is to push for collective bargaining rights for independent contractors, which would ensure workers’ right to organize but gives employers flexibility and enables them to duck many of traditional employers’ legal responsibilities. Some centrists in the Democratic Party favor establishing a new, third classification, often called a “dependent contractor,” that would extend some legal guarantees to workers like Uber drivers; many in labor see this as an unnecessary concession to employers who just want to craft new, less comprehensive regulations to better fit their business models. The Uber settlement settles none of these issues; indeed, it merely ensures that the debate, both within and without the labor movement, will continue.
When Solidarity Softens
Early last week, news broke that SEIU was trying to reach a deal with home-rental company Airbnb. In exchange for the union’s tacit seal of approval, the company would endorse a $15 minimum wage and promote the use of unionized housekeepers to its hosts. When Unite Here, which represents hotel workers, heard that this deal was in the works, it furiously mobilized a coalition of labor and housing activists calling on SEIU to pull out.
“We are appalled by reports that SEIU is partnering with Airbnb, a company that has destroyed communities by driving up housing costs and killing good hotel jobs in urban markets across North America,” said Unite Here spokesperson Annemarie Strassel in a statement. “Airbnb has shown a blatant disregard for city and state laws, has refused to cooperate with government agencies, and turns a blind eye to the fact that its business model exacerbates the affordable housing crisis.”
“They are essentially selling cheap cover to an American corporation for union dues from a few members,” said Peter Ward, head of the Unite Here local in New York. “It goes against all the principles of the labor movement.”
It was also discovered that former SEIU President Andy Stern was acting as a representative for Airbnb in the negotiations, reigniting criticism from many within labor that the union (and Stern in particular) was too inclined to cut deals with corporations that might add to its membership rolls. But SEIU quickly released a statement saying that they were merely having an early-stage conversation and denying that they had reached a deal. “We actively and regularly engage in conversations with companies who are committed to doing right by their workforce by paying better wages and giving them a voice at work through their union,” an SEIU spokesperson said in a statement. Airbnb is one such company, however, there is no formal relationship or agreement between SEIU and Airbnb.”
Later in the week, reports surfaced that the SEIU-Airbnb deal had crumbled, and after privately meeting, Unite Here and SEIU agreed “to find a common approach to protect and expand the stock of affordable housing in all communities across the country and to protect and preserve standards for workers in residential and hotel cleaning while also growing opportunities for these cleaners to improve their lives,” according to an SEIU statement.
The not-so-small irony here is that SEIU has for years been funding and directing probably the largest union campaign in history to have directly benefited millions of workers—the Fight for 15—despite the fact, as the union must know, that it has faint prospects of turning the vast majority of those workers into dues-paying members. And yet, when the union was presented with perhaps the first such campaign that could have generated more members—the Airbnb initiative—it came at the expense of another union, Unite Here, which has a vested interest in the industry where most of its members are employed, as SEIU does not. Understandably, Unite Here took SEIU’s pursuit of the Airbnb deal as a direct affront to its own mission, and it had no trouble rallying affordable housing advocates and other unions to its cause.
This is far from the first time that unions have had contentious turf battles. However, with membership rolls diminished, the more active unions (such as SEIU and Unite Here) are constantly searching for new organizing opportunities. Silicon Valley and its startup economy bring with them both organizing opportunities and organizing conundrums. But unless and until labor can agree on a common strategy and appropriate jurisdictions, the SEIU-Unite Here fracas will just be the first chapter in what could be a chaotic period within the movement.