Bargaining with Silicon Valley

Uber chief advisor David Plouffe speaking at TechCrunch’s “Disrupt” conference, May 2016 (TechCrunch / Flickr)

The dwellers of Silicon Valley, we’re led to believe, are preternaturally gifted with powers of prediction. The fifty-square-mile area teems with people manically anticipating the next big thing, whether it’s self-driving buses or an app that lets you text “Yo” (and nothing else) to your friends. Startup staff don’t just work in offices—they do their innovating in “futures labs.” “Foresight practitioners” receive large paychecks to tell clients what tomorrow will look like.

Of course, predicting the future is easier when you have the money and power to determine it. Now, from deep in the heart of that mysterious dell, the seers of the tech world have issued the biggest prophecy yet: work as we know it is about to change forever.

“I want to talk to you today about the future of work,” Uber chief advisor David Plouffe told a crowd who had assembled to see him speak at the Washington, D.C. start-up incubator 1776 in 2015. Plouffe went on to tout the ride-sharing platform’s importance in creating jobs and “boosting the incomes of millions of American families.” On-demand platforms like Uber will continue to grow, Plouffe declared, because they’ve found a new means to offer workers something they desperately need: an easy way to make a quick buck in a tough economy.

While Plouffe and his cohort may think they’ve hacked unemployment, the “gig economy” that he describes is still far too small to make much of an impact on overall U.S. jobs numbers. Varying definitions and a lack of available data make it difficult to determine exactly how widespread gig employment has become, but a December 2015 discussion paper by economists Seth Harris and Alan Krueger estimated that about 600,000 people nationwide work in the online gig economy, amounting to 0.4 percent of the total labor force.

At this rate, it’s unlikely that all of us will be working on online platforms anytime soon. But the defining feature of the gig economy isn’t really that workers accept jobs through an app on their phone: it’s that they work with no benefits, no job security, and no unions. And it’s this model of the future, in which workers are fully fungible, that is being embraced not only by tech acolytes, but also by traditional employers and the broader right. Under the guise of inevitability, a host of tech, business, and anti-union groups appear eager to use the gig economy as a Trojan horse for changes that affect far more workers: privatizing what remains of the social safety net, “modernizing” (read: gutting) key labor laws, and further hobbling unions.

If these groups get their way, Silicon Valley’s prophecy about “the future of work” could well become self-fulfilling. Claims of a future where we’re loosed from the shackles of our nine-to-five jobs hide a different, less glamorous vision: one where we return to the Wild West of labor law and collective action is replaced by a patchwork of self-help groups that, at best, aid members with piecemeal services and, at worst, enlist them in their own immiseration.

 

In November 2015, an unlikely alliance of tech gurus, labor leaders, and policy wonks of varying political stripes published a short manifesto titled “Common Ground for Independent Workers.” Signatories included the co-founders of Uber’s rival ride-sharing app Lyft, leaders of a number of unions and worker groups such as SEIU and the National Domestic Workers Alliance, and presidents of think tanks across the political spectrum, from the left-liberal Roosevelt Institute to the conservative R Street Institute. The letter posited a shared problem: “new technologies and business models” are “raising questions about the changing nature of work in America for businesses, workers, labor organizations, governments, and consumers alike.” For liberals and workers’ advocates, the prospect of tech magnates and conservatives throwing their weight behind a shared solution must have been an enticing one.

But given the nature of the coalition, such a solution is outlined only in broad strokes: “We believe these issues are best pursued through policy development, not litigation,” the letter writers concluded. At the time both Lyft and Uber were caught up in class-action lawsuits brought by drivers alleging that they’d been misclassified as independent contractors when in fact they should have been entitled to the benefits and protections granted to employees. The letter’s reference to “independent workers” is a nod to an oft-repeated proposal to sidestep the W-2 vs. 1099 debate for gig workers by creating an entirely new category for “independent workers” under federal labor law. Such workers would be entitled to some, but not all, of the benefits and protections of traditional employees. Economists Seth Harris and Alan Krueger laid out an argument for a third category in a December 2015 paper for the Hamilton Project, but the idea had been circulating as the lawsuits, filed in 2013, began to look like they might pose a real threat to the independent contractor model. At a June 2015 industry event, venture capitalist and Lyft advisor Simon Rothman suggested, “I think it’s not 1099 versus W-2. I think the right answer is a third class of worker.”

Some labor advocates, however, worry that this cure might be worse than the disease. The initial creation of a category for “independent contractors” was a coup for big business and the right, which pushed successfully to exclude such workers from basic labor protections through the 1947 anti-union Taft-Hartley Act, paving the way for rampant worker misclassification. There’s no reason to think that additional carve-outs to workers’ rights won’t be just as easily exploited by employers, who will push to apply them as broadly as possible. “We think developing a whole new category of workers, especially to respond to what is a tiny part of the labor market, would engender a race by other businesses to reclassify their workers in order to avoid accountability,” Rebecca Smith, deputy director of the National Employment Law Project (NELP), told the Washington Post in December 2015.

One of the policy ideas the open letter calls for is the creation of “portable” benefits that workers can carry from job to job. The idea has received support from Democratic politicians including Senators Elizabeth Warren and Mark Warner, and in July, the labor department announced the availability of grants to develop portable retirement savings plans. The safety net for both gig and non-gig workers has all but disappeared, and providing additional avenues to access pension plans or unemployment insurance could be a positive step, providing that it expands the guarantee of these benefits rather than merely allowing employers to dodge their existing obligations. But much of the discussion so far has set aside some fundamental questions—including who will pay.

Not long after the letter was published, one of the signatories, the R Street Institute, offered its answer to this question in a brief outlining a voluntary, private benefits exchange that would supplant employers’ obligation to contribute to payroll taxes—a model that simply repackages a long-standing conservative scheme to privatize Social Security and other social insurance programs. Their proposal is part of a series of moves by right-wing groups to use the gig economy to push through free-market reforms that would further decimate the safety net and undercut workers’ rights.

The Chamber of Commerce has said it would support voluntary portable benefits coupled with a safe harbor from other obligations created by existing employment classifications. In an April 2016 paper titled “Three Paths to Update Labor Law for the Gig Economy,” the Washington, D.C.-based Information Technology and Innovation Foundation suggested an even simpler approach: simply suspend all labor law for internet-based platforms for the time being, in the hopes that they might then “experiment” with offering benefits to their workers, free from the threat of misclassification suits. In other words, workers would be at the mercy of their employers, who might, somehow, become kinder and gentler when given free rein.

The most far-reaching, and frightening, idea in this vein comes from former policy chief adviser to Dick Cheney, Cesar Conda, and conservative commentator Derek Khanna, who suggest in a paper in the Aspen Institute’s “Future of Work” series that the gig economy provides a convenient opportunity to “rethink the entire safety net.” Specifically, they suggest reinstating the “workfare” requirements partially rolled back by President Obama in 2012 and reforming welfare and disability statutes so that the unemployed and the disabled would have to be willing to work in the gig economy—where, they say, jobs are plentiful and less physically demanding—before receiving benefits. Eventually, Conda and Khanna add, these requirements should be expanded to all entitlement programs. While there’s no reason at present to think that this proposal will move forward, it’s a good example of how conversations about benefits in the gig economy can be hijacked for an entirely different political purpose—in this case, making low-income people become TaskRabbits in order to get food stamps.

Rather than creating a new benefits system in response to challenges posed by the gig economy, NELP’s Rebecca Smith suggests “taking a step back” and thinking about how to build on public benefits that are already portable—social security, workers’ compensation, and unemployment insurance—and expand them to include new ones like paid leave.

She notes that privately administered workers’ compensation programs, in particular, have been a disaster, and the conversation about gig workers shouldn’t be siloed from efforts to ensure access to benefits for all workers. “It’s critical that workers’ organizations have a role in administering and overseeing those benefits, and in negotiating with business for more, based on the needs of the workers in a particular sector,” she says.

Silicon Valley, however, is only keen to negotiate if it’s on its own terms. Gig-economy companies have consistently fought unionization of their workers. In the early days of the sharing economy, an anonymous disgruntled TaskRabbit described to Business Insider how the company took steps to prevent the rabbits from meeting because “they don’t want us unionizing.” Since then, Uber has been caught delivering anti-union messages to its drivers through customer service reps usually tasked with administering driver satisfaction surveys. Uber and Lyft, joined by the Chamber of Commerce, are suing the city of Seattle over an ordinance that allows on-demand workers to unionize.

Instead, the gig economy has produced an alternative to collective bargaining that has anti-union groups drooling. In May, Uber announced that it would recognize and fund a “driver’s guild” affiliated with the International Association of Machinists and Aerospace Workers union. It’s the first of its kind in the gig economy, but falls far short of an actual union. As Chris Brooks noted in an August 2016 Labor Notes article, the association has no collective bargaining rights, and the Machinists have yet to release the text of their agreement with Uber, even to drivers. In exchange for Uber’s blessing, the union agreed to drop any claim of employee misclassification and promised not to instigate strikes among drivers.

While employer-sponsored “company unions” are currently prohibited under the National Labor Relations Act (NLRA), the Information Technology and Innovation Foundation, in its paper outlining updates to labor law, suggests that the NLRA could be revised to permit this model, and that unions embrace it without delay. Tellingly, the Koch-backed anti-union Mackinac Center also calls the Uber driver’s guild a “model that could pull the antiquated union model into the 21st century.”

Bhairavi Desai, executive director of the New York Taxi Workers Alliance, instead calls the model “capitulation.” Her group represents some 18,000 drivers, both in the traditional taxi and on-demand industries, and has filed a class-action lawsuit alleging misclassification of Uber drivers in the state. “For labor to consent on the question of [employee] status is nothing short of surrender—and it’s the worst kind of surrender,” Desai told LaborPress after the Uber driver’s guild was announced in May.

Indeed, perhaps the most destructive effect of gig companies’ narrative about the “future of work” is that it radically restricts what seems possible for labor and the left to accomplish or even demand. Faced with a frightening narrative about the demise of unions and the collapse of the social compact amidst sweeping technological changes, progressive and liberal groups have readily embraced Silicon Valley’s hair-of-the-dog cure. In its November 2015 letter, for example, the portable benefits coalition asserts, “We expect that the solutions to these challenges will develop from some of the same technological advances and entrepreneurial creativity that are driving new models.” While labor and the left undoubtedly need to think creatively about how to respond to changing circumstances, new strategies should be informed by a set of core values, not an empty belief that tech and innovation will save the day.

In that vein, it’s crucial for unions and progressives to remember what’s not new about gig economy models. Designating employees as independent contractors is an old trick that tech companies have merely taken to new extremes. Long before Uber and company, this kind of misclassification was pervasive in the transportation industry, as well as construction, agricultural work, and many other sectors. Many workers have for decades been living the independent future heralded by gig-economy boosters.

Take port truckers, whose working conditions resemble those of on-demand drivers in many ways and who have faced particularly harsh exploitation. The truckers typically receive no healthcare, benefits, or overtime pay, as employees would, and must cover all of their operating costs. At the same time, they have little or no control over their routes or schedules. When truckers working for three Los Angeles–area companies struck in 2013, they described working twelve-hour shifts and still ending up with meager paychecks—or even in debt to their employer—after expenses like gas, repairs, and insurance were deducted. A 2014 report by labor advocates estimated that nearly two-thirds of the country’s 75,000 port truckers were misclassified by their employers, resulting in about $850 million of stolen wages each year in the state of California alone.

Gig-economy companies didn’t invent this model, but they could halt a growing momentum to end it. In recent years, workers, labor officials, and advocates have stepped up their efforts to halt worker misclassification, winning a number of important victories. In December 2015, port truck drivers for Pacific 9 Transportation were awarded nearly $7 million in back pay after the California Labor Commissioner’s office ruled that they were employees of the company. “We will continue suing and striking these companies until . . . the industry abandons the misclassification scheme that allows these trucking companies to steal our wages and defraud the government,” said Daniel Linares, a Pac 9 driver, in a statement following the ruling.

If there’s a cue that labor could take from Silicon Valley, it’s that it pays to envision a bolder future. Rather than genuflecting in hopes of being dealt a kinder fate, labor could focus on making its own destiny—one where all workers have collective bargaining rights and access to universal public benefits. That’s no more outlandish, after all, than the idea that a handful of tech magnates ought to decide what society will look like in years to come.


Rebecca Burns is an associate editor at In These Times magazine. Her writing has also appeared in Al Jazeera America, the Chicago Reader, Jacobin, and other outlets.



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