Outside a 24 Hour Fitness in San Mateo, side-saddling a commercial office space and a tiered parking structure, a swath of strategically tinted cars sit parked, veiled by thin layers of condensation coating their windshields. It’s obvious that people have spent the night inside them, presumably cocooned somewhere either in the back seat or the spacious hatch. Many attempt privacy measures — some using towels or sheets or other fabrics stuffed under the windows to block out wandering eyes.
Most display a shared vocational decal: Lyft or Uber.
While most don’t associate hailing a rideshare with the notion of stepping foot inside someone’s home, that’s exactly what some passengers are doing.
The number of people living in their cars overall in the Bay Area has dramatically increased in recent years. The most recent survey of the homeless, released in 2019, found that 600 (roughly 8%) of all the near as much 8,000 homeless people estimated to be in the city live in their vehicles, up from 13% in 2015.
In response, city officials have recently announced plans to open the first “safe” parking lot near the Balboa Park BART station, where people can sleep in their cars without fear of repercussions and get access to showers, bathrooms, and social services.
The reality is that a substantial segment of those residing in their cars are drivers for Lyft or Uber, and the reasons, I’ve learned — through deep dives in subreddits, interviews, and everything in between on the internet — span the gamut. Some commute hours from their apartments as far as Sacramento or Fresno to take advantage of lucrative Bay Area surge pricing, choosing to spend days dotting around city parking lots rather than returning to their own beds, which sit in less profitable markets.
But without question, a large chunk of those filling their cars with manmade morning dew live in them full-time because they’ve simply been pushed out by the rising cost of living in the Bay Area or because of some other unfortunate circumstance.
“All my clothes, sleeping bag, pillow, toiletries, and other personal items can fit in the under-storage cargo area of my trunk. That way, if someone needs to use my trunk for something, I can do it and hide the fact that I’m living out of a Corolla.” — Uber driver
And the number in the recent survey count is likely lower than the reality — car dwellers who work in the gig economy during the day in dense, overcrowded cities, like San Francisco, often choose to find respite elsewhere in safer, more low-key (and less police patrolled) areas to park in overnight, oftentimes miles away from those the US Department of Housing and Urban Development are performing headcounts on for such surveys. Such is the case with the lot in San Mateo, which is outside the head-count zone.
To find people to interview for this article, I ventured to parking lots known to be frequented by car dwellers. I was formerly one myself, after all, so I was all too familiar with those addresses. I hand wrote notes and wedged them between windshield wipers, hoping someone would get back to me. In the end, two drivers were willing to talk, both of whom wanted to remain anonymous.
The first, a 37-year-old man originally from Brazil who drives for Uber, said he had been parking at various lots overnight to sleep for about five months now, without a permanent home in his new country.
“I’m still struggling to find work here and a place to live,” he said. “English isn’t easy for me, and I have it on my Uber driver’s account that it’s my second language, so people understand I may not understand them completely.”
His work schedule isn’t unlike that of others who are in a similar predicament. He typically drives from 2:00 p.m. to 3:00 a.m. six or seven days a week, depending on “how much the nice people tip.”
“It’s the best time frame to make money,” he said. “Between surcharges and how busy it is, I always manage to find someone to pick up, sometimes as many as 32 rides a day.”
And to make sure that no one catches on to his psuedo van life, the baritone-voiced man makes sure to—quite literally—live small. “All my clothes, sleeping bag, pillow, toiletries, and other personal items can fit in the under-storage cargo area of my trunk. That way, if someone needs to use my trunk for something, I can do it and hide the fact that I’m living out of a Corolla.”
The other person who contacted me, a 20-something woman who drives for both Uber and Lyft, said she hasn’t had a “regular steady job with health insurance” since September 2018, when a now-defunct startup in San Francisco deemed her front-desk job an unnecessary financial burden.
“I’m a single, healthy female with no kids, so living out of my car was at least feasible,” she told me from her 2011 Camry’s driver’s seat, adding that she does the bulk of her drives in San Francisco.
It’s little wonder why the mid-Peninsula 24 Hour Fitness where I met her is a favorite among car-dwelling rideshare drivers. It’s a spacious parking lot, umbrellaed by towering trees, and often given a blind eye by passing law enforcement.
Over 40% of drivers admit that they have trouble paying for essentials for the job, such as gas, insurance, and basic vehicle maintenance.
“When I lost my job, my lease was almost up, and I knew I couldn’t afford the rent,” she explained. “My savings was nearly gone too. I don’t have a family to fall back on, so I thought I could do this and figure things out from there.”
And this millennial, boasting a black, somewhat faded peace sign on her inner elbow, isn’t alone. YouTube is alive with 20- and 30-somethings who’ve embraced car (or van) life as a means to see themselves through these cash-strapped times. Yes, a handful of these young ’uns are glorified “digital nomads,” but it’s crystal clear that a larger (and growing) cohort are doing it out of sheer financial necessity.
But millennials aren’t the only demographic affected by the financial perils of driving full-time for Lyft and Uber—it’s everyone. A recent study from the UCLA Labor Center revealed that for about two-thirds of drivers, their rideshare job is their main source of income. The downside? Over 40% of drivers admit that they have trouble paying for essentials for the job, such as gas, insurance, and basic vehicle maintenance. Thus, this leaves the net-profit margins on the skinnier side for many rideshare drivers.
Before the fall of 2015, it wasn’t uncommon for rideshare drivers, principally those who drove for Uber, to easily crest $40/hour. But long gone are the promised lofty payouts for Bay Area Uber and Lyft drivers. Once UberPool, which was quickly followed by Lyft Line, was introduced in 2015 to certain markets — including San Francisco and the greater Bay Area — drivers reported that their earnings were cut by more than half virtually overnight.
People were more than happy to save a few bucks to ride along with strangers, even if it (unknowingly) meant putting those behind the wheel in a state of financial insolvency. Though both Uber and Lyft regularly gift prolific drivers $500-plus bonuses for completing 100 or so trips in a week, it’s still a nominal amount when compared to the wage deficits they’re now facing—especially if said driver has to work 14 hours a day, every day, in order to achieve that goal.
These pitfalls only feed into a vicious cycle of drivers living out of their cars to bolster their checking accounts and “get ahead,” hoping that they’ll later secure a physical address.
Right now, the average rent for a one-bedroom apartment in San Francisco is $3,600 per month. A house? That’ll be a soul-crushing seven figures — for a fixer-upper. So for those who aren’t too math savvy, an Uber or Lyft driver would need to log somewhere north of 70 hours a week just to break even, without paying for utilities.
That’s why hotels like Travelodge, Comfort Inn & Suites, and Super 8 near SFO, for example, have become a bastion for transient rideshare drivers as well. Just ask front-desk agents, as I did — four in total. One estimated that over a quarter of the hotels are occupied by rideshare drivers seeking shelter for the next before they begin their next shift. The financial logic here: by booking hotels and hostels near surging, bustling markets, drivers will be able to make up for the initial investment—and more. In the process, drivers will also gain an actual mattress to sprawl on top of after a long day’s work.
This, too, is yet another reason why proposals for approved overnight parking lots are gaining popularity in SF and around the Bay Area, offering secure, legally sound areas in which people can find nighttime respite within the confines of their cars. San Francisco supervisors Afsha Safai and Vallie Brown are spearheading the pilot program, beginning with one Upper Yards site location at 482 Geneva Avenue near the Balboa Park BART station. Ideally, each of these designated lots would include 30-plus spots designated for homeless residents in which they could safely sleep in their vehicles overnight.
But as benevolent as such well-intended proposals are, they merely represent a three-inch bandage over a gaping bullet wound. They don’t address the gig economy’s financial shortcomings, particularly in relation to millennials and Gen-Zers; they don’t address the grossly inflated costs of living in the Bay Area and other national metros; they don’t, in the end, fasten down any sort of hope for a more stable, traditional way of life that so many of these car-inhabiting rideshare drivers yearn for.
“I don’t see myself doing this forever, because if I picture myself doing this for a few more years, I’ll go crazy,” my Brazilian source told me in closing, right before having to cut our call short to pick up a new passenger from SFO. “I just want a place to call home, a place where I can shower, sleep, and use the restroom.”
The smell of a mouthwatering meal is hard to ignore — especially when it belongs to someone else. At least that's the suggestion of a recent study that found nearly 30% of drivers are snacking from the food they're responsible for delivering.
The survey conducted by US Foods, which supplies food to restaurants, gathered information from about 500 food delivery drivers and more than 1,500 customers in America who order through apps such as DoorDash, Postmates, Grubhub and UberEats.
Respondents ranged from 18 to 77 years old, with a median age of 31. Drivers who reported working for at least one food delivery app had a median age of 30. In an effort to better understand the process of ordering and delivering meals, the company asked both groups about their "habits and pain points."
Of the drivers surveyed, 54% admitted to being tempted by the smell of a customer's food, and about half of those people actually took a bite.
"We're sorry to report that sometimes, impulse gets the best of deliverers, and they violate their sacred duty by taking some of the food!" US Foods said in a statement.
When asked if they minded if their driver snagged a few fries, the average customer response was an 8.4 out of 10 — 1 represented "no big deal" and 10 signified "absolutely unacceptable."
To remedy the problem, 85% of customers recommended adding tamper-evidentlabels or packaging, which commonly comes in the form of a sticker seal.
Some delivery services already have strategies in place.
Postmates told NPR that food-tampering cases account for less than 0.06% of the reports it receives. The delivery service, however, still requires "each person who completes a delivery using Postmates to expressly agree that all food and goods delivered will arrive in a tamper-free form and in compliance with all applicable food health and safety laws."
In an online chat, a Grubhub representative said if a customer suspects that some of the food is missing, the company will potentially open an investigation and make a refund.
UberEats and DoorDash haven't responded to NPR's request for comment.
In its delivery guidelines, UberEats said it will deactivate any account with fraudulent activity or misuse, including "claiming to complete a delivery without ever picking up the delivery item; and picking up a delivery item but not delivering it in full."
Doordash directs its drivers to not open food containers or tamper with the order in any way. If a customer suspects food tampering, the company states it will deactivate the driver's account.
Overall, restaurant food-delivery services are a growing business, transforming the way people receive their meals.
In 2018, UBS found that on average, food delivery platforms were in the top 40 most-downloaded apps in major markets.
"We think it's possible that by 2030 most meals currently cooked at home will instead be ordered online and delivered from restaurants or central kitchens," according to UBS.
An Arizona great grandfather was fatally shot on his 52nd wedding anniversary early Monday while driving for the ride sharing app Lyft, a report said.
Harold Treadwell III, 71, was killed Monday after a bullet was fired into his car after midnight while he was driving in Phoenix. He was struck in the torso and veered over the median before crashing the car, police said.
Frances Treadwell, his wife, wrote on Facebook that she had just spoken to him on the phone before he was killed. She wished him a happy wedding anniversary. “Thank you God for allowing me to have that last conversation with him so I could tell him that I loved him!” she wrote.
“May you rest in peace my sweet hubby and cowboy (that is my nickname for him!) I miss you so much already!" she said in a Facebook post honoring her late husband. Treadwell was a father, grandfather and great grandfather.
“We are deeply saddened and shocked by this loss. Our sympathies go out to the loved ones of Harold Treadwell and all those impacted by this tragedy,” a Lyft spokesperson told Phoenix’s KNXV-TV in a statement. “We are actively assisting law enforcement and will continue helping in any way we can."
Phoenix Police is working to identify a suspect. Anyone with information about the shooting is encouraged to call the department at 602-262-6151. Tips can be submitted anonymously by contacting Silent Witness at 480-WITNESS or 480-TESTIGO for Spanish, the station reported. A GoFundMe page was set up to help Treadwell's wife cover funeral expenses.
Uber Technologies Inc. said it’s in discussions with European supermarkets to roll out a grocery delivery service as rivals Deliveroo and Just Eat Plc move to compete with the likes of Amazon.com Inc. in the field.
The ride-hailing company has spoken with the U.K.’s second-biggest grocer, J Sainsbury Plc, according to people familiar with the situation. The supermarket operator this month announced it was partnering with Deliveroo to bring hot pizza to homes in four British cities.
“We’re currently speaking with a number of the major supermarkets around Europe,” an Uber spokesman said in an email.
The discussions come after Amazon led a $575 million investment in Deliveroo in May, which the delivery startup said would be used to expand its technology network to compete against rivals like Uber.
“We talk to many companies about potential partnerships that could help our customers access convenient and affordable products,” a Sainsbury spokesman said in an email.
A combination of Uber and a U.K. supermarket operator could put pressure on online grocer Ocado Group Plc, whose shares dipped after Bloomberg reported the talks before recovering to trade 2.3% higher in London. Uber gained 1.5%, with Sainsbury down 0.6%.
Ocado, which also provides its logistics technology to supermarkets, in February partnered with Marks & Spencer Group Plc to deliver groceries. U.K. antitrust regulators this month began an initial review of Amazon’s Deliveroo investment.
Uber has yet to follow its rivals in partnering with a retailer to deliver supermarket purchases. Just Eat said earlier this month that it was expanding its partnership with Walmart Inc.-owned Asda to deliver groceries to U.K. customers within half an hour.
SAN FRANCISCO — Uber said it laid off a third of its marketing team on Monday, or about 400 people, as the ride-hailing company tries to cut costs and streamline its operations after its initial public offering in May.
The cuts, which were also announced internally on Monday, are taking place in multiple Uber offices around the world, the company said. The marketing team had more than 1,200 people before the layoffs. Uber employs almost 25,000 people globally, nearly half of whom are based in the United States, according to recent regulatory filings.
Uber declined to comment further.
The layoffs are the latest shake-up at Uber since it went public two months ago. During its journey to the public markets, the company, which is unprofitable, faced numerous questions from Wall Street about whether it could make money. Ride-hailing is an expensive business, with providers often spending huge sums to recruit drivers and subsidize trips. Those doubts ultimately took a toll on Uber’s I.P.O., with the company’s stock falling 7.6 percent on its first day of trading on the New York Stock Exchange.
Since then, Dara Khosrowshahi, Uber’s chief executive, has moved to make changes at the company. In June, he pushed out two members of his executive team: Barney Harford, the chief operating officer, and Rebecca Messina, the chief marketing officer. Ms. Messina’s role was eliminated, and the marketing team was reorganized under Uber’s communications lead, Jill Hazelbaker.
In addition, Uber’s board has been undergoing turnover. Ryan Graves, Uber’s first employee and a director, stepped down from the board in May. Last week, two more board members — Arianna Huffington, the founder of Thrive Global, and Matt Cohler, a venture capitalist at Benchmark — stepped down from their positions. Both Ms. Huffington and Mr. Cohler had been heavily involved in the departure of Mr. Khosrowshahi’s predecessor, Travis Kalanick, from Uber in 2017.
In a statement last week, Ms. Huffington said she had stepped down to focus on the growth of her own company. Mr. Cohler said in a statement filed with the Securities and Exchange Commission that he was “thrilled with the company’s position.” Uber has not announced their replacements.
The company faces another test on Aug. 8, when it is scheduled to report its second-quarter earnings. When Uber reported its first-quarter results, it posted its slowest growth in years and a loss of more than $1 billion.
In an email on Monday to Uber’s marketing staff, which was reviewed by The New York Times, Ms. Hazelbaker said the 400 layoffs were taking place because the team had grown bloated and decision-making was unclear. The marketing team’s organizational charts ran to more than 388 pages, she said.
Ms. Hazelbaker added that she planned to consolidate Uber’s regional marketing teams around the world, including in the United States and Canada, Latin America and the Middle East. The marketing team oversees ride promotions, advertising campaigns and social media.
“These changes are incredibly difficult to make because they have a huge impact on people’s lives,” Mr. Khosrowshahi wrote in an email to Uber employees. “Many of our teams are too big, which creates overlapping work, makes for unclear decision owners and can lead to mediocre results. As a company, we can do more to keep the bar high, and expect more of ourselves and each other. So, put simply, we need to get our edge back.”
Uber and Lyft drivers reveal the biggest differences they've noticed between the 2 ride-hailing giants
Uber and Lyft do basically the same thing.
Sure, one is pink and the other is black; one is global while the other is focused only on the US and Canada; and one has plans for flying taxis while the other doesn't. But when it comes to getting from point-A to point-B, there's not much difference.
That's good for drivers, a massive fraction of which drive for both Uber and Lyft (and even for other smaller companies in markets large enough to have competitors like Via).
Most of the time, the experience on the competing apps is roughly the same. But after hundreds if not thousands of rides, drivers start to notice the little differences. In many cases, these vary from market to market.
Business Insider spoke to 10 drivers about their experiences. Here's what they see as the biggest differences between the two largest ride-hailing companies:
"This is the number one question I get from passengers," Ray, a driver from Miami, said. "I say which ever one where the passenger actually leaves a tip."
"Uber is far more organized and understands that by helping the drivers, it improves the customer experience," Roger, a driver in North Carolina said.
"The only reason I give Lyft a slight edge over Uber is because Uber has not updated the map in my region in a long time," Darron, a driver in Virginia, said. "One way streets have turned into two-way streets and Uber still has it as one-way."
"Uber has more riders in my area," Max, a driver in Pittsburgh, Pennsylvania, said. "Lyft sometimes adds passengers to my queue without asking."
"Lyft gives you more information about the customer," Michael, a driver in Dallas, said. "I like being able to see how long someone has had an account or how many rides they've taken. It makes me more comfortable."
"Lyft advertises itself as more driver-friendly but that hasn't been my experience," Aris, a driver in New York City, said "The distance and time to pickup averages double usually so I stick to Uber."
"The only major difference is that Uber has way more calls in my area," Horacio, a driver in Orlando, said, echoing Aris' comments.
"Uber is far more organized and understands that by helping the drivers," James, a driver in Orlando, said. "It improves the customer experience. Lyft, on the other hand, is uncaring and hides behind the internet and email," he continued. "If I treated my riders the way Lyft has treated me, I would receive a 1-star rating."
"There are differences in surge pay, differences in drive time per day, and in their support teams," Jenny, a driver in New Jersey, said. "Uber shadily up-charges business-class passengers who take the same trips every week (they've admitted to this), and many, many more."
"Lyft riders in my area are like Walmart shoppers whereas the Uber riders are like Macy's shoppers," Tim, a driver in New Jersey, said.
Uber removes driver after he used woman’s account to give himself with 5-star rating, $100 tip, report says
An Uber driver reportedly has been banned from using the app after a New Jersey woman claimed he used her account to give himself a 5-star rating and $100 tip following a recent ride.
Donna Wilson-Booker tells Fox29 that she was returning home to Willsboro from an airport when the driver – who acted polite and had helped place her luggage in the vehicle – missed what she said was an obvious turn on his GPS route.
Once she arrived at her destination, “he said ‘would you mind, can I use your app, cause of the recent incidents with passengers Uber has a problem when we go off track or off route, I just want to adjust the route’,” Wilson-Booker said.
She obliged and handed over her phone. But then hours later, when Wilson-Booker opened up the app again to leave a tip and rating for the driver, she noticed that he had already used her account to leave a 5-star review and a generous $100 tip for him, according to Fox29.
“The nerve of him to do that, I have his license plate number and his name, so I don’t know why he would do something that stupid,” she told the station.
“He really messed with the wrong person because he’s not going to get away with this,” Wilson-Booker added.
The company, in a statement to Fox29, said: “We have issued a full refund to this rider and have removed the driver’s access to the app.”
Wilson-Booker says the whole episode is a “lesson learned for other people that there are scam artists out there like that.”
Uber and Lyft suffered a setback in their months-long fight against rules that could force them to reclassify California drivers as employees.
The ride-hailing companies, along with other businesses that depend on gig-economy work, have been talking with unions about potential deals that could exempt them from state rules making it harder to treat gig workers as independent contractors and avoid additional employment costs.
One of those unions, the International Brotherhood of Teamsters, told California’s governor Thursday it’s against proposals to grant technology platform companies a pass. The move was conveyed in a letter sent by California’s State Building and Construction Trades Council on behalf of a list of affiliates including the Teamsters. It’s a blow to companies’ efforts to avoid making sweeping changes to their businesses.
“Our executive board voted unanimously to oppose any legislative proposal allowing technology platform companies to exploit workers by treating them as independent contractors with substandard protections,” according to the letter, which was sent to the leaders of the state Senate and Assembly as well as to Governor Gavin Newsom. The letter also voices the groups’ “strong opposition” to creating a separate “third category” of worker, apart from employee or independent contractor, as a special exemption for “technology platforms that actively seek to advance a more regressive economy.”
A top California Teamsters leader called out the ride-hailing companies more directly in a Thursday interview. Randy Cammack, president of the Teamsters council covering southern California, said that he is in “full agreement” with the building trades letter and opposes any exemptions for Uber or Lyft from the state’s new standard for who’s an employee. “You give these guys a break, and all these other employers would say, ‘Well, why shouldn’t we be exempt?’” he said. Cammack said his council participated in talks with Uber, but “won’t be attending any more” in the future. “Everything that I’ve heard that they want to do, I’m in total opposition to,” he said. Uber’s growth has already hurt Teamster industries like delivery, said Cammack.
Ride-hailing and food delivery companies are trying to defuse a major threat to their business models: a new standard dictating that workers can’t be considered independent contractors under California wage law unless, among other things, they are doing work that is outside the usual course of a company’s business. The state supreme court established the standard last year, and the senate is now considering a bill, passed by the assembly in May, that would codify it and apply it to a wide swathe of laws.
For a company whose whole business rests on contract workers exempt from employment laws like overtime pay, the new rules threaten huge added costs and liabilities. After last year’s landmark court ruling put gig companies on the defensive, they warned privately that the new employment rules would “decimate businesses” and appealed unsuccessfully to state lawmakers and the then governor, Jerry Brown, to shield them.
Governor Newsom, a Democrat friendly to both labor and the technology industry, has been urging the two to reach a compromise. His chief of staff has held meetings in recent months with union leaders, CEOs and workers on the issue, said people familiar with the matter, who asked not to be identified because they weren’t authorized to speak publicly. If no such deal materializes and the law advances through the state senate, Newsom could be forced to either infuriate business by signing the bill or unions by vetoing it. Newsom’s office didn’t immediately respond to an inquiry Thursday on the letter.
“Lyft is advocating for an approach in line with the interests of our driver community, by modernizing century-old labor laws that make it difficult to provide both flexibility and benefits,” CJ Macklin, a spokesman for Lyft, said Thursday in response to the unions’ letter. Davis White, a spokesman for Uber, said in an emailed statement: “We remain actively committed to discussions with labor organizations and lawmakers to improve the quality and security of independent work.”
Representatives for gig-economy companies, including DoorDash Inc., Instacart Inc., Lyft Inc., Postmates Inc. and Uber Technologies Inc., have met recently with leaders from major unions. The companies have proposed introducing legislation that would extend new perks to their drivers while excluding them from state-mandated protections for employees. In a joint editorial last month from the chiefs of Uber and Lyft, they offered to create a benefits fund for drivers, a pay guarantee for the time spent picking up or dropping off passengers and an association to advocate on their behalf.
A spokeswoman for the Teamsters international union declined to comment on how the building trades letter applies specifically to Uber. Doug Bloch, political director for the Teamsters council covering Northern California, said in an emailed statement that the union is committed to passing the bill pending in the state senate. “We think every worker should have the right to organize and the fundamental labor protections that helped build this country’s middle class,” he wrote.
The Teamsters, a union with 1.4 million members in North America, could play a pivotal role in derailing any efforts to sell a deal to other unions and to the Democrats who control both chambers of the legislature. If the industry can’t win over the Teamsters, firms could still hope to find compromise with other prominent unions that companies have met with, which include the Service Employees International Union and the United Food & Commercial Workers.
One asset for Uber is Laphonza Butler. She was president of one of the SEIU’s largest local unions until last year and is now a partner at SCRB Strategies, a California-based business and political consulting firm. There, Butler has advised and represented Uber in its dealings with organized labor on employment issues and also serves as an adviser to the presidential campaign of Kamala Harris, the Democratic senator from California. An Uber spokesman said Butler brings a valuable perspective to the company’s efforts to improve work for drivers, and a spokesman for Harris declined to comment. Butler and her firm didn’t respond to requests for comment.
In recent months, SEIU leaders have entertained the prospect of a bargain with companies. A late 2018 memo circulated by the SEIU’s California council outlined the possible benefits of legislation like what has since passed the assembly, including strengthened worker protections and, by forcing changes to companies’ business models, a path for “potentially the entire gig sector” to organize. It also laid out a list of drawbacks: many years of anticipated litigation, a “slow and difficult” path to unionization and the possibility that the governor, state referendum process or U.S. Congress subvert their efforts. “Companies will fight this option fiercely and on a united front,” according to a copy of the memo reviewed by Bloomberg.
More recently, SEIU California circulated a summary of potential alternative legislation. The proposal would provide “flexibility to platform companies and platform workers,” according to the memo. It would create systems for collective bargaining, “portable benefits” accounts and minimum pay guarantees but would allow companies that meet certain criteria to seek “flexible alternative standards” in place of those covering other employers in areas such as overtime, breaks and worker’s compensation.
Such an approach alarms some drivers. Cutting a deal that deprives app-based workers of full employee rights “will absolutely damage the future for workers,” said Nicole Moore, a Lyft driver and organizer with the advocacy group Rideshare Drivers United in Los Angeles. She said any kind of special arrangement would reverberate far beyond ride-hailing and food delivery. “Workers can be deployed from apps in any industry,” Moore said.
In public, union leaders have taken a hard line. Mary Kay Henry, international president of the SEIU, said in February that the union intends to “reach an agreement that’s not a concession.” Henry discussed the issue in a recent meeting with Newsom’s chief of staff.
Bob Schoonover, president of the SEIU’s California State Council, said Thursday that the group “has not and would not support any third classification or interpretation of employee classification that would undermine employee status and protections” granted by last year’s court ruling and the proposed law. SEIU intends to help workers “maintain and expand upon” those protections instead, he said in an emailed statement. Schoonover described the memos exploring potential compromises on employment rights as “ideas and concepts” that “should not be construed” as something more significant.
Vikrum Aiyer, vice president of public policy at food-delivery provider Postmates, urged unions not to disengage from discussions. “California and our governor are uniquely poised to confront their first future-of-work test by enacting pro-worker and pro-innovation policies that modernize the safety net,” Aiyer said in an emailed statement, “but only if labor remains at the table.”
Some business leaders are frustrated that Governor Newsom hasn’t done more to protect them, said Michael Lotito, co-chair of the law firm Littler’s Workplace Policy Institute and a member of the U.S. Chamber of Commerce’s labor and employment law litigation committee. California’s policy debate “is the most significant labor and employment issue that we have today in the country,” he said.
Lorena Gonzalez, an assemblywoman who authored the labor bill, said she has no intention of amending it to exclude gig workers. “If people don’t want to pass a bill because it doesn’t take care of multi-billion-dollar corporations, then that’s up to them -- and if the governor doesn’t want to sign one, that’s up to him,” she said. “I have every indication to believe it will in fact pass and that the governor will sign it.”
Last week, the California Senate's Labor, Public Employment and Retirement Committee held a hearing and passed Assembly Bill 5 (AB5), which promises to make it harder for companies to claim workers are independent contractors and increase the operating expenses of Uber, Lyft, and other on-demand companies that already find themselves unable to turn a profit.
Written by Assemblywoman Lorena Gonzelez (D-San Diego), AB5 codifies the California Supreme Court’s unanimous May 2018 ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles where an “ABC test” was introduced to determine whether a worker was an employee or an independent contractor. Individuals with sufficient control over how and when they did their work are independent contractors, while workers without much control are employees.
While AB5 easily passed in the Assembly this May, 53-11, it has a long and ugly fight ahead of as it must pass multiple votes in the Senate then be signed into law by Governor Gavin Newsom. Each step of the way is an opportunity for companies like Uber and Lyft to intervene and extract concessions. Newsom has been evasive about whether he’ll side with his long-time political supporters in the Bay Area or his deep bench of union endorsements, which filled his gubernatorial campaign war chest with millions.
Shortly after AB5 passed the Assembly vote, Uber's CEO Dara Khosrowshahi wrote an op-ed in the San Francisco Chronicle with Lyft's co-founders Logan Green and John Zimmer titled, "Uber, Lyft ready to do our part for drivers." In their op-ed, they declare that "our companies are no longer upstarts,” but are now “public companies that tens of millions of people rely on for mobility and for work." In response to the waves of protests, strikes, and regulatory backlash targeting their exploitative business model, the trio argues that the real problem lies with "century-old employment laws."
Over the past few months, Uber and Lyft, along with other companies like DoorDash and Postmates, have tried to negotiate with unions and propose alternatives to AB5. The major alternative proposed is a third category for worker classification. This third category would be a chimera where workers could remain independent contractors but gain some of the benefits and protections expected for employees.
While these companies are united in supporting the third category in the name of a flexible work schedule, workers and unions are not. The California Labor Federation (CFL), a group that represents most of California's unions and over 2.1 million workers, is firmly opposed to anything other than AB5. In New York, attempts by the State Federation of Labor to craft a bill that worked similar to the proposed third category were lambasted by Hector Figueroa, then-president of New York's Service Employees International Union chapter.
Undeterred, Uber and Lyft have managed to patch together a coalition of driver support, thanks in part to a manipulative campaign where they sent out a vague petition using their apps prompting drivers to "fight for driver flexibility and independence." Drivers later revealed they did not know what the petition was for and did not think they were able to opt-out of signing it. The companies sponsored a counter-protest outside the Capitol Building in Sacramento as the hearing went on. Drivers organized by the California Chamber of Commerce and a coalition of groups that worked closely with Uber and Lyft against AB5 not only were helped in putting together a rally on the day before but paid $25 to $100 to attend.
Uber, Lyft, DoorDash, and Postmates derive a huge share of their sales from California: 41 percent of all Postmates' US sales are in California, 27 percent with DoorDash, 24 percent of Lyft's rides, 17 percent of Uber's rides, and 13 percent of UberEats' sales. When Tony West, Uber's general counsel and chief legal officer, was asked whether AB5 was an existential threat to Uber, he literally laughed then listed some (but not all) of Uber’s past scandals like its numerous lawsuits, toxic workplace culture, and massive data breach in 2016, the implication being that the company could survive if it became law.
The real threat is that AB5 could become a model everywhere. Let’s take Uber, for example. Before Uber went public, it filed and released an S-1 form, a document laying out all the information necessary for investors to clearly understand a company’s operations. Uber’s section dedicated to potential risks was particularly interesting. In it, Uber said its business would "be adversely affected if drivers were classified as employees instead of independent contractors" because it "generate[s] a significant percentage" of its gross revenue from five metro areas: Los Angeles, New York City, the San Francisco Bay Area, London, and São Paulo.
Uber has never made a profit and has actually lost over $14 billion in the last four years alone. In the prospectus, Uber insists that these five major metropolitan markets are essential to its path to profitability. In reality, what Uber actually relies on is the $20 billion in funding raised over the past decade and the $8 billion in new investments after going public in May. This investor welfare covers the cost of low prices that render each rideshare trip unprofitable, of driver incentives to combat the high turnover rate of drivers, and of promotions used to drive up demand.
The investors have continued piling that money onto Uber because they believe Khosrowshahi when he talks about becoming the “Amazon of transportation” or the platform on which all transportation happens. In other words, a monopoly. After achieving a monopoly, some commentators warn that Uber will then charge whatever price it wants and use its dominant position to both pay back investors and kill potential competitors. As an added bonus, Uber promises it will turn its labor costs to zero by deploying a fleet to autonomous vehicles (which may prove to be difficult to widely adopt). That is Uber’s path to profitability.
Equity research analysts at Barclays project Uber is on track to lose $3.9 billion in 2019 and if AB5 were passed, it would cost the company upwards of an additional $500 million. A drop in the bucket. But if AB5 were to become law and other states follow California's example and pass similar laws, it could constrict these companies' already narrow paths to profitability. Investors saw no clear path to profitability in Lyft’s S-1. Postmates hopes to use the money generated from going public to expand geographically and achieve profitability. DoorDash says it’s profitable (if you don't include overhead expenses like salaries and rent). If nationally adopted, the investors behind each of these companies could cash out and bankrupt them. AB5 isn’t an existential threat, but it will cause one.
Uber Technologies Inc. (UBER), the ride sharing giant and most high profile IPO in years, has faced enormous skepticism among investors amid mounting losses despite surging revenues. That's why its shares plunged in the days following its public offering in May, though they have since recouped most of their losses.
Uber's sheer size will make it a focal point of investor attention when it announces its second quarter of earnings as a public company on August 8. Uber's $73 billion market value dwarfs, for example, auto giants General Motor Co.'s (GM) $58 billion and Ford Motor Co.'s (F) $37 billion, both of which were founded more than a century ago.
What Uber Investors Are Watching ForInvestors are likely to look at a number of key issues when the company reports earnings. Most important, they are sure to focus on whether Uber can be viable financially longterm by narrowing its financial losses as it attempts to boost revenue at a rapid rate. Investors also will want to know how much fare increases in major markets such as New York are hurting consumer demand, which is crucial to maintaining revenue growth. Investors also will want know about progress at business segments like meal-delivery service Uber Eats or trucking service Uber Freight. Both of those businesses may prove crucial in moving Uber into the black.
Analysts’ 2Q EstimatesAnalysts are expecting a 22% gain in revenue for the latest quarter, solid but not spectacular growth for Uber. But analysts expect losses to continue both for the quarter and for all of 2019, according to consensus estimates per Yahoo! Finance. In Uber’s first earnings report in May, the company reported losses of $1.01 billion, in line with analysts’ estimates while revenue beat estimates and increased 20%, per CNBC.
Regulatory PushbackOne major threat facing Uber is higher ride hailing prices for consumers, which threatens its growth. New York City, one of Uber's major markets, recently implemented new regulations for ride-hailing companies that are boosting prices for consumers in two different ways. The city is requiring passengers to pay congestion surcharges. And regulators also imposed minimum wage rules for drivers, which prompted Uber and its rivals to raise ride hailing fares. Already, total Uber trips in New York were down in May by 8% from March, according to Bloomberg.
Looking AheadGiven those challenges, Uber CEO Dara Khosrowshahi may depend more than ever on his other businesses to generate profit growth. That includes Uber Eats. Khosrowshahi says that at some point it may be logical to merge Uber Eats with a competing food delivery company.