I am not a Luddite, but change and technology trouble me. Through my adventures with automation and leveraging of technology, I have driven to detach myself and others from the world of paper and postage. Inadvertently, perhaps that drove us all away from people, from each other? We have seen technology accomplish radical changes in our society and community over the last 30 years.
In 1990, the Internet, as we know, it was unknown. Electronic mail was a rumor. Computer–based legal research was a luxury, an expensive one; books were cool. The age of the cell phone was upon us, but the expense associated with cellular still deterred many from its use. The first law firm for which I litigated declined to reimburse attorneys for cell phone bills. They did not see a positive cost/benefit analysis.
In the 21st century, we have seen algorithms, apps, and innovation drive the so-called "gig" economy. The world of work has been impacted by so many changes, and technology permeates so much of that innovation, evolution, or devolution.
Certainly, these applications have revolutionized much, including shopping, food delivery, and more. The result has been, at times, confusing and frustrating. And the change seems persistent. I had fallen into the habit of making purchases from one retailer and enjoying home delivery. However, on recent purchases, upon reaching the checkout page, I would learn that a variety of products were available only by driving to the local store for “pick up." Thirty years ago my reaction would’ve been driving to the store. This time I just switched to a different shopping experience. Brand loyalty? Convenience? How will people make their decisions? If that original retailer mends its ways, will I go back?
We have been told that the "gig" economy would be the end of conventional taxi and car services. Uber, Lyft, and others crashed upon our consciousness and made immediate impressions. It has only been about a decade ago. Though I am enamored with technology, I was reluctant to engage these services. Certainly, the news coverage of aberrant behavior was anecdotal, but it was a deterrent. In fairness, I’ve never been a big fan of commercial taxi cabs either. The price is simply difficult to justify in a world of inexpensive rental vehicles.
For a trip last fall, I found myself with a 5 a.m. airport report time and was hesitant to request a 4:30 home departure imposition from my family. I, therefore, strove to obtain a rideshare commitment for that 8-mile ride. One application offered me a $50 fare, And another a $43 fare. Both of these included long delays, which would potentially frustrate my airline departure. I eventually elected another path. In fairness, my attempt to hire a taxi cab that morning was no more successful. The promise of a ride app was elusive.
Recently, upon return from a trip, I found myself unable to get a ride home from the airport. In a fit of inspiration, I decided to try rideshare. One of the apps provided me an $82.91 fare, advising a weight of approximately 10 minutes. I switched and tried the other application, and received a more reasonable quote of $28. However, I spent the next 15 minutes repeatedly trying unsuccessfully to get that app to verify and accept my credit card.
I returned in frustration to the $80 app and put in a new query. Inexplicably, it then quoted a $35 price, which I accepted. There are frustrations with using these applications. People in my age group want predictability. We like order, repetition, and consistency. Don’t get me wrong, if you wanna give me a discount price I won’t complain. Want me to pay $10 a mile for a ride home, you may see me just log out. If the next app fails me, I might come back.
These thoughts came to me this week as those who drive for the two major ride shares, Lyft and Uber, are garnering press coverage. They are lamenting their oppression at the hands of these applications. An ABC News story focus solely on pricing and noted a demonstration occurring at a big city airport in support of unionization. I discussed that January article with my recent Uber driver and he expressed no knowledge of either the demonstration or any complaints.
More recently, news coverage has focused on the manner in which Uber and Lyft drivers may be permanently deactivated, which some see as a euphemism for "fired." This article turns to an analysis of the earnings of the application owners (Uber and Lyft), and the earnings of drivers, and the inevitable discussion of fairness in the grand scope of economic exchange, our equitable and socially accepted economic wonderland.
The complaints of the drivers are intriguing. Having entered into an “independent contractor“ paradigm for work, they are seemingly angry at what that means. One complained that all of the expenses associated with operating and maintaining the vehicle are upon the driver. Newsflash: the very definition of independent contractor means you are responsible for all of the expenses associated with your tools and equipment. This should not be shocking.
Others lament the optics of the economic split. They note that consumer cost for rides recently increased by 50%, but driver compensation concurrently increased by only 30%. Thus, the somehow surprising news is that workers do not enjoy commensurate earning advantages with the businesses for which they labor. How many people received a recent 30% increase in pay?
Some would say that this difference, 50%/30%, is due to the inherent risk of the business, and the disproportionate freedom of association enjoyed by the worker. Others would say it is inherent inequity. There are various perspectives from the socialists, the capitalists, and those that fall in between.
Many don’t realize that a worker may leave employment or an independent contract or relationship more readily and freely than perhaps a company may. Businesses face financial costs for unemployment compensation, notification expenses, and severance packages, for which there is no corresponding benefit or right when an employee elects to leave work. Employers take on risk and are responsible for a myriad of details. Workers should understand that. Similarly, workers have a myriad of concerns and responsibilities of which employers should remain conscious.
The employer/employee relationship is currently inherently symbiotic. Employers may be able to use technology, artificial intelligence, and robots to replace labor. That is happening today and the pace is seemingly increasing. How will labor replace employment? Government? Anyone that has not noticed should read up on the state of the U.S. budget. We are broke. Existing programs are in financial trouble. Check Social Security or Medicare. The day of reckoning I have long lamented is coming. With a soaring debt and troubled budgets, only the deluded will see a potential for more government support.
But the focus of this recent article is on the permanent deactivation of gig drivers. One of them felt strongly enough to file a lawsuit regarding the termination. That ended in judicial enforcement of a contract to which the driver had agreed. The company and the driver entered into a contract, and the contract defined the circumstances and relationship between the two. That said deactivation was a potential. The driver's lawsuit was dismissed.
Though viewed as unfair by the press, that worker found themselves bound to that contract, to which they had agreed. One might argue that outcome is not unexpected. Although, in our modern world, we do see a great deal of expectation that consequences should not flow from what we agreed to. A great example is the hue and cry regarding student loan debt.
In a recent article regarding the Supreme Court’s consideration of the debt relief plan legislated by the executive branch, one of the critical elements discussed is whether a state may have standing to challenge this based on its own decisions regarding taxation. This is referred to as the “self-inflicted harm“ doctrine. Essentially, the states may not have standing if the harm suffered was their own doing. And yet, somewhat ironically, those who asked to have their debt erased at taxpayer expense, did precisely that. They signed contracts, made commitments, and undertook to obtain benefits they now wish others would pay for.
Thus, perhaps we are in an age in which contractual commitments are less than absolute?
But, as to the labor disputes in rideshare, we see the potential for the demise of the rideshare platforms as we know them. The algorithmic revolution of ground transportation may evolve into a mirror image of taxi cab alternatives. Legislation, regulation, and constriction may render these services no different than taxi cabs, and we will return to the government regulated monopolies, the "gypsy" cabs, and more. One can have the convenience of an app and yet a conventional cab. Or, perhaps, the driverless car will upend it all? Will the government mandate a "driver" in each driverless car to preserve and protect employment?
A spokesman for one of the app companies issued a statement, quoted in the article, and essentially said things aren’t so bad. The statement points out with the American economy is amazingly ripe with unfilled job opportunities. Without the expenses associated with vehicle, maintenance, a driver could accept employment in a multitude of jobs, earning minimum wages in excess of their claimed Uber or Lyft hourly rate. And yet, they continue to drive.
That recent trip I took from the airport was 8 miles. The charge was $35.00. The trip concluded with the suggestion that I provide a tip for my driver. As it’s customary in such settings, I did. See Tipping (February 2023). However, I did not elect the ridiculous high-end range the app suggested. I tipped eight dollars (about 22%).
In the course of 20 minutes, my driver earned about 8 dollars ($1 dollar per mile) and an eight dollar tip, or $16. Admittedly, not every minute of every hour will produce revenue. But, if the driver does that only twice per hour, that is effectively $32 per hour. Certainly, from that, there are expenses. However, I am reasonably confident, that Uber driver earns more than the minimum wage, substantially.
And, notably, the driver is seated most of the time. The driver works in air-conditioned comfort most of the time. The job involves little to no lifting, no set work schedule, no dress code, and it is apparently somewhat enjoyable (my driver chatted gregariously throughout the trip, sharing his views on professional sports, local, and national news, and more. Perhaps there are more difficult working environments.
In the universe of my rideshare experience (one), I can honestly say I’ve never had a bad experience. I say that recognizing that others very well may have. In the universe of my experience, one ride, I’m confident drivers can make money in this endeavor. It will be interesting, to see the extent to which government (city, state, or national), intervenes in the driver/app, contractual relationship, the potential unionization, and the re-definition proposed.
But, my advice, old people like me may abandon an app over challenges (won't take the credit card, charging $80 for an 8-mile trip). Once we leave, we may not come back until we get frustrated enough with the next app. Old folks can be loyal, but we can be cranky, proprietary, and resistant to change also. The app might find that a consumer permanently deactivates it.
The only constant is change. I’m confident the rideshare business is not immune. The source and direction of change remain to be seen. In the changes, we will all face challenges. We will all be making economic decisions, leveraging technology, and facing change. It will be interesting to watch. Maybe I will try a food delivery company next. Or perhaps not.
