Who came out on top when the Minneapolis City Council announced a deal with Uber and Lyft to raise driver pay and improve working conditions last month?
On May 20, the city council announced a commitment to ride-sharing companies. Uber and Lyft would accept an inflation-linked minimum wage that matches Minnesota’s minimum wage of $15 an hour after expenses. Some lawmakers have hailed this as a 20% increase for drivers; However, the wage rates in the agreement are lower That’s almost all proposals made in the last two years amid a bitter fight between Uber, Lyft, their drivers and lawmakers.
Drivers, often arbitrarily fired (“deactivated”) by opaque algorithms, they can now appeal the dismissals. There is also funding for a “nonprofit driver center” for education on drivers’ rights. The real gem may be the expansion of insurance coverage requirements for ride-hailing drivers up to $1 million, which now includes the time immediately after ending a ride, which will help drivers with medical costs and loss of wages after assaults or accidents.
This deal, however, preserves integral parts of the digital transportation model, allowing Uber and Lyft to continue operating and undermine the commitment later.
In the two-year conflict over the agreement, groups of transport drivers demonstrated, pressured legislators and even negotiated with Uber. Uber and Lyft have repeatedly threatened capital strikes and vowed to leave the state on three separate occasions over the proposed legislation. Each time the companies have spilled political blood: the first threat convinced Tim Walz, the governor, to delete a bill in May 2023 with his first veto; the second prompted Jacob Frey, the mayor of Minneapolis, to veto an ordinance approved by the city council in August of that year; the third came again after Frey vetoed an ordinance in March but it was canceled by the town hall.
The threat of capital strikes allows these companies to narrow our political horizons while strengthening their own position. We debate drivers’ pay rates that inevitably undermine them while distracting them from their inordinate structural power. Cities preemptively dilute their ambitions, customers rationalize higher prices, and drivers limit themselves to marginal improvements.
So who really came out on top?
A sympathetic account holds that the drivers won an immediate victory. Driver wages would be reduced to zero if Uber and Lyft left the state. An agreement that allows drivers to continue working and earn better wages positions them to continue fighting for better deals.
There are two key pillars of the digital ride-hailing model that perpetually degrade drivers’ working conditions: 1. the misclassification of drivers as contractors to reduce labor costs, and 2. the information asymmetry between workers, regulators and companies. The Minneapolis agreement leaves both alone, but the decision to abandon data transparency specifically guarantees that working conditions will deteriorate due to what Veena Dubal, a professor of labor and law ethnography at UC Irvine, calls “algorithmic wage discrimination”. Using constant monitoring of workers, companies like Uber and Lyft calculate the minimum pay rates needed to extract maximum value from each driver. Dubal observes that even if the work is the same, “totally unpredictable and opaque means” calculate the value of a driver’s work. With the elimination of predictability any notion of fairness disappears, as algorithms trick workers into betting on whether the assigned work will be worth the expenses incurred, normalizing longer hours and worse conditions. A salary floor alone is not enough to combat this dynamic.
Moving away from data transparency creates a huge hole in the bill. Uber and Lyft supposedly pressed lock in any minimum income guarantee on each trip. Instead, trucking companies will compensate drivers whose average earnings fall below the minimum over a two-week pay period. And while the bill codifies driver pay transparency, it eliminated the ordinance’s requirement that transportation companies make regular, unrestricted data disclosures to Minneapolis.
After New York City introduced its minimum wage, an hourly net income of $17.22, Uber and Lyft responded by introducing a tiered quota system and forcing a lockout, a coercive strategy in which an employer denies employees work until they agree to new conditions. Drivers were forced to work substantially longer hours to have priority in shift scheduling: the more trips they made each day, the more likely a driver was to schedule shifts during peak work hours. Drivers who did not meet quota requirements were simply not allowed to use the apps. The program was a great success for the companies. Its first phase, from June 2019 to March 2020, forced 8,000 drivers to abandon each platform thanks to the intentional deterioration of working conditions.
Misclassified, lacking basic protections, and managed by algorithms driven by widespread surveillance, drivers lived in cars and pushed their bodies to the limit to make a living on even minimum wage.
The heart of the on-demand work model is about Preserve imbalanced power dynamics. between these companies, passengers, drivers and cities. Any agreement that avoids issues of driver misclassification, data mining and algorithmic management is temporary at best.
Uber and Lyft are adept at reducing debates and proposals to superficial treatments. The temptation to go with the flow is understandable; a recent study from the UC Berkeley Labor Center found Drivers in America’s major metropolitan areas consistently earn poverty wages—they need help now. And yet, the success that Uber and Lyft have enjoyed in dodging billions in business taxesin reforming labor legislationand in capture institutions intended to regulate them, suggest that companies will always find a solution. We have been led to believe that there is no alternative, that policy proposals (municipal or state transportation services, expansion of public transportation) will fall short.
In reality, it is the digital private transportation model that is fundamentally broken. Is inefficient and costly, exploitative and discriminatory. It does not work without a liberalized market, exorbitant subsidies to investors and an expansive political machine to protect it. In almost every city where it has been allowed to fester, ridesharing has The quality of urban transportation decreased.contributed to massive increases in congestion and pollution and degraded working conditions in additional industries. To what end? Empowering saboteurs pocketing billions while offloading all possible costs to the public.
Elsewhere there will surely be another capital strike. Ridesharing steals the dignity of drivers by misclassifying them and exploiting them until they fight back. Next time, will it end with another “compromise” that leaves the core of this strategy intact? Or will we finally reject the Faustian pact and risk something new at the expense of the parasitic corporations that hold countless cities, passengers and drivers hostage?