= a company that uses a mobile application to find available private cars for people looking for an alternative to taxi cabs.

Description

Mark Pesce:

"This trip I got to experience a brand new car service, Uber. Designed to work with a high-end smartphone, it is an app that shows your location on a map of San Francisco, along with cute icons showing nearby Uber cars. You request a pickup, then that request gets transmitted to those cars; when one of the drivers agrees to pick you up, the other car icons disappear, and you see that driver’s icon make its way across the map, toward you. It’s wonderful, because it takes all the mystery out of a car service - you know how far away the car is, and how long you’ll have to wait.

While Uber is pleasant for the passenger (it costs anywhere from one-time to three-times a normal taxicab), it’s a complete revolution for the drivers. Limousine drivers live by their bookings, which are generally spaced well apart; hence, the drivers often have some unpaid downtime. Those drivers can now launch the Uber app on their own smartphones, bidding for jobs as they come in. They can earn 50 per cent more on a shift, because they’re more fully utilised. By taking the inefficiencies out of the system, Uber was able to create a rival taxi service in San Francisco with nothing more than a few computers and a smartphone application. They didn’t need to buy any cars, hire any drivers, or lease any office space.

Uber is expanding, moving into Silicon Valley’s Palo Alto, New York and Austin, Texas -- where you can to book a pedicab through the service. As the service expands, taxi companies throughout the developed world won’t know what hit them: Uber (or an Uber-clone) will quietly move into their markets, completely disrupting the business. When it comes to Australia, the oligopoly of Macquarie’s CabCharge won’t stand a chance. This is the new way of doing business: radically more efficient, more money to the drivers, and better customer service." (http://www.abc.net.au/unleashed/45026.html)

Statistics

Study on the Average Income of Uber drivers

Trebor Scholz:

"In 2015, a Princeton study showed that Uber drivers in 20 cities are netting about $17.50 an hour, which, according to drivers, comes out to anywhere between $10 and $13 an hour after subtracting the cost of gasoline, insurance, auto payments, and auto maintenance. Los Angeles approved a $15-an-hour minimum wage, which puts Uber in violation of this law. Now, anyone with basic awareness of the Fair Labor Standards Act of 1938 would say that such payments must be illegally low; they don’t meet minimum-wage standards.

...

In 2015, more than half of all Uber drivers do not stay longer with the company than twelve months. To learn more, read Steven Hill’s Raw Deal. How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers. " (http://www.rosalux-nyc.org/wp-content/files_mf/scholz_platformcooperativism_2016.pdf?)

Discussion 1

Douglas Rushkoff: What I think about Uber

Douglas Rushkoff:

"My problem with Uber all along has been that it’s optimized for a really specific utility, but at the expense of others. It’s a bit like online universities, which offer courses isolated from the fabric of education or a learning community. That’s the nature of any digital business: you get what you program for, but lose everything else — and sometimes it doesn’t come back.

Remember what Clearchannel did to the FM dial? They bought it all up, and replaced local stations and deep music knowledge with long-distance, computer-generated play lists. It was all excused as free market capitalism; thanks to VC they had more money, so they were entitled to purchase the landscape. Eventually, the non-local Clearchannel FM stations proved they weren’t profitable enough to sustain the company’s valuation, so Clearchannel began selling them. But the institutional knowledge enjoyed by those original FM stations was gone.

Uber may be of great utility in the limited frame of providing low-cost rides for people with iPhones. But it does not serve any of the other functions that a local taxi service does. Meanwhile, its programmed not just to provide rides, but to take out competition. It is a platform monopoly in the making. This is because it cannot support it’s multi-billion-dollar valuation by being a ride broker.

Uber needs to create a platform monopoly so that it can leverage into other verticals, from logistics to self-driving cars. If anything, Uber’s drivers are the R&D for Uber’s driverless future. They are spending their labor and capital investments (cars) on their own future unemployment. And even that would be okay, if they were shareholders in Uber capable of participating in those future profits — but it’s not a worker-owned cooperative at all.

As every economist since Adam Smith and before has known, the factors of production are land, labor, and capital — and sometimes entrepreneurial effort. But the current digital economy rewards only capital, and acts as if acknowledging the contributions of land and labor were a communist, regulatory plot.

The people providing the labor and the communities providing the territory for Uber’s operations deserve an equal say in the way the company works, and revenues the company earns." (email, october 2015)

Uber is just another centralized firm

Agile Elephant:

"what are these replacement economic entities going to look like when the firm sheds transactions? Who will operate and own them? Will they be bedded in the “society at large” or not? There is an implication in Kilpi’s work that these are not intermediary structures, the WTF essay assumes they will be set in these newfangled Internet networks and called “Plaftforms”. However, if you look at the example given in the essay as a harbinger of the new – Uber – it is clearly just another Firm, using t’Internet rather than t’Phone. As to value exchange, it remains a centrally placed intermediary. All links lead to and from Uber. All transactions (logistical and financial) are routed through Uber’s servers, within its own network. If this is a “new” network economy, it is a highly centralised and closed network, with all nodes owned and run by Uber, as any before. All that “society at large” is doing is supplying or ordering a taxi ride and paying for it at the edge if the network, as it did before, just that now its by App transactions rather than ‘phone or hail ones.

In this case one “traditional” Firm, the original Taxi Company (or in fact many Taxi Companies), have just been replaced with another, newer, one – Uber. A new Firm has used newer technology to reduce the transaction costs in a well worn existing business model (order taxi – route taxi – pay taxi) and is now using good old fashioned In-Firm competitive advantage to take market share from existing Firms with higher transaction costs. Uber only needs a “very different kind of management” insofar as it is managing more machines, less people in its workflow. It’s network is a good old heirarchical network, just more automated.

...

Transaction Costs per se are clearly only a part of this story.

Just follow the money – these UberFirms would not have “Unicorn” valuations if the surplus in the value chain was going to be spread across a host of other small players in a network, their backers are taking a Firm bet on where much of the surplus ends up.

And follow the spend – its all about market growth, including using investment money to undercut incumbents to gain mass market share fast, and increasingly to lobby against forces trying to recreate level playing fields in terms of regulation & employment laws.

In fact the major economic drivers of these UberFirms’ advantage are not the technology driven transaction cost reductions from ICT, but the labour and regulatory savings. And this has been true overall for many a decade. The big driver of outsourcing was lower regulatory and labour costs in developing countries, not the transaction cost reduction from adoption of ICT on every desk and cheap global telephony. What has really changed in UberFirms is who the employees nominally work for, their working conditions, and which regulations the UberFirms believe they can avoid.

...

What has happened in effect is that though the processing capability of a “wired” customer or service supplier has gone up dramatically, this typically has not facilitated any major societal value shift or new societal network emergence. If anything, the history of the Internet since c 2010 is an increasing walling off of what were once open societal network areas, even as end user devices have got more powerful. What has happened is that an increasing part of the “hard to automate” workflow is outsourced to the supplier and user at the network edge (via their smartphones) and much within is automated. But whether it’s Google ousting Yellow Pages, Apple iTunes ousting Tower Records (Napster was truly Societal, and look what happened there 😉 ), Amazon ousting the local bookshop or Uber ousting a Taxi firm near you, a Firm is still very much in charge." (http://www.theagileelephant.com/transaction-costs-lead-to-network-economies-wtf/)

Discussion 2: Transportation Economics

Uber and its effects on Taxi Monopolies

Laura Perez:

Focused on Canada, but permit systems exist in many other countries, by :

"Due to its generally lower prices as well as its innovative and effective technology, Uber has been able to secure its place in the taxi industry through stealing a big portion of their clientele from traditional taxi companies. The best example of this is in San Francisco, where the average number of trips made by using traditional taxis has fallen by 65 per cent since 2012. However, such a huge shift in the market cannot be explained simply by the arrival of a well-designed application.

Uber has been able to create competition in a field that is particularly archaic. Driven by the blind profit motive of the capitalist system and ruling over a quasi-monopolistic market, large taxi companies have had little reason to invest to improve customer service. Rather than upgrade their system to adapt to a clientele that has evolved in the technological era of smartphones and social media, they have chosen to continue using an inefficient and outdated system.

Uber is a transportation system that is part of the “sharing economy” which has become vogue in recent years. As is with the app AirBnB, Uber allows its users to avoid the usual commercial channels by using the Internet as a tool to make direct commercial agreements with other users.

If you want to go somewhere with Uber, simply login to the app with your smartphone. Within seconds, Uber will offer you a choice of drivers nearby. These drivers are other users like you or I who do not have to pay for any special licence. All they need to do is undergo some legal verifications and a have valid driver’s licence. You can choose your driver based on the reviews that have been given to them by other users and then you leave your own review after you are done. The fare is set by Uber, which you pay by credit card through the smartphone app. After that, the company retains 20 per cent of your payment and the rest is transferred to the driver.

Uber users claim that the service is faster, better and is up to two times cheaper than a traditional cab. It is therefore no surprise that this company which began in San Francisco has been growing freakishly fast as its service spreads like wildfire across the entire planet. Uber is now worth more than $40 billion (US).

It is also no wonder that this has given the taxi industry a headache. In Montreal, cab companies are complaining that they have lost upwards of 30 per cent of their clientele to UberX.

Taxi drivers therefore find themselves in a precarious situation. In France, in cities such as Paris and Marseilles, drivers are unionized. Working for Uber is therefore a way to circumvent the collective bargaining agreement and submit the unionized drivers to unfair competition. This is undermining the solidarity of the workers fighting for better pay and better working conditions. In most countries however, taxi drivers are not unionized - far from it. In Canada for example, the working conditions of cab drivers are quite miserable.

First and foremost, the taxi system in Canada requires that drivers purchase a permit. These permits are of a limited quantity depending on the city. In Montreal, there are currently 4,437 licenses in use.

Taxi drivers therefore have two choices: buy a taxi permit and work for themselves or rent a car connected with a permit owner.

The limit to the number of licences goes hand in hand with the law of supply and demand. More permits means lower prices, fierce competition and increased stress for the drivers. Fewer permits means a scarcity of cars for clients, higher prices and above all, a skyrocketing price for the taxi permits themselves.

In Montreal in 1992, the price of a taxi permit for downtown Montreal was fixed at $25,000. In 2007, it had climbed to over $230,000. Although the organization Fintaxi allows drivers to obtain loans easily, they still have to pay this huge sum at an interest rate of 10.95 per cent. This is a cheaper interest rate than the big banks, but it is interest nonetheless.

And how do cab drivers manage to repay these loans? To use Quebec as an example, according to Industry Canada, 69 per cent of drivers earned less than $20,000/year. Some drivers do earn more, somewhere between $30,000-40,000 but this is usually due to working upwards of 70 hours a week. Between interest, gas and taxes, take home income is thin and loan repayment stretches over many years.

The newspaper Star Phoenix recently shed light on the taxi system in Ottawa and showed the concentration of the industry in this city. The company Coventry Connections owns nine tenths of the cab companies in Ottawa including Blue Line, DJ’s and West-Way. In addition to this, the vice-president of Coventry Connections, Marc-André Way possesses 87 taxi permits himself.

In Vancouver, according to the magazine The Dependant, the four main cab companies – Yellow Cab, Blacktop/Checker Cab, Maclure’s Cabs and Vancouver Taxi – collectively own all of the 588 taxi permits issued by the Passenger Transportation Board.

These companies subsequently resell their permits for a total of $800,000 for a whole taxi. Usually they divide the permit into two daily work shifts of 12 hours – one for the night and one for the day. To obtain half a permit, it therefore costs $400,000. The purchaser can be anyone who holds a valid driver's licence and has enough money. The purchaser, following this, in order to make maximum profit then rents the taxi licence out to those who do not have the means to own one at the cost of $2,500/month for a “half-cab.”

These intermediate buyers thus inflate the price paid for a taxi as the driver needs to ensure that they have enough money to cover the rental, gas, insurance and at the very end of the list, a living wage. Uber has gotten around all of this.

In Toronto, investigations made by some of the big daily papers like The Globe and Mail have addressed the monopoly of taxi companies and permits. Journalist Peter Cheney revealed a few years ago that Mitch Grossman and his family possess over 100 of the permits distributed by the city. When a driver wants to use one of these licences, Grossman makes them buy an overpriced taxi cab, financed by his family firm, Finance Symposium, at interest rates up to 28 per cent. None of these licences are in the name of Grossman himself, but are in the name of different cab companies in order to circumvent regulations on the owning and renting of taxi licence plates.

In Toronto, among the giant holders of taxi permits are big investors who live in Florida and Israel. In just five years, more than 30 per cent of all revenue in the taxi industry was found in the pockets of foreign investors.

Metro News and the Edmonton Sun have also uncovered the existence of taxi monopolies in Edmonton and Calgary.

Uber arrived on the scene as an unwelcome guest, with its advanced technology, light years ahead of the archaic methods of the traditional cab companies. The taxi industry in Canada has sat back on its laurels for decades. Uber’s innovations (the mobile platform, the ability to rate drivers, online payment etc.) are ideas that cab companies could have established themselves easily, but due to lack of competition and with many politicians in their back pocket, they had no reason to do so. Why invest in new technology when they already control the market?

Under capitalism, companies do not act in the interest of providing the best service to the customer, but rather in the interest of securing the maximum profit possible and a bigger market share. This means that once a company has a monopoly on the market, it does not need to invest to improve services, which would just mean unnecessary added costs. On top of this, the company does not need to fear that customers will abandon it for its competitors. This is why the virtual monopoly exercised by cab companies has contributed to the obsolescence of their system. Seeing the decline of the industry and its inability to get out of this rut, even Montreal Mayor Denis Coderre recently modified the taxi regulations to make them accept pioneering technology such as accepting payment by card!

Now that Uber has threatened the market share of the big cab companies, these companies have started to adjust. In response to Uber, Diamond Taxi in Montreal recently launched an application which allows clients to pay via smartphone. A little late!" (http://marxist.ca/analysis/1069-the-uber-controversy-reveals-the-rottenness-of-the-taxi-industry.html)

How Uber is Changing Limousine and Transportation Economics

Excerpted from Mark Pesce's Next Billion Seconds:

"Limousine drivers like Charles love Uber, too. Before the service launched, those drivers would spend half their time doing nothing, idling their hours while waiting for the next pickup call to come in. Drivers now add Uber jobs to their regularly scheduled pickups, nearly doubling their earning power within the same eight-hour shift. Mobiles have given limousine drivers the same economic acceleration that mobiles gave the fishermen of Kerala fifteen years ago – creating a highly efficient market which satisfies an increased demand, dramatically improving the earning potential of everyone connected.

Economists recognize that when a sudden change in market dynamics produces a burst of new wealth it encourages people to enter the marketplace. A ‘gold rush’ begins, as everyone looks for a way to vacuum up some of the new-found fortune. Most markets have ‘barriers to entry’ – to be a fisherman, you need a boat and rigging and nets and a crew; to be a driver you need a rather pricey limousine. These barriers make it difficult for the market to become immediately overcrowded, but the lack of competition increases the incentive for everyone already participating in the market to maximize their productive behavior. The more productive you can be within a closed but growing market, the more you will earn.

For Uber drivers, this means putting their limousines where they’re most needed. But they’re not alone in this, so the busiest parts of the city are also those with the greatest supply of drivers, which means drivers still have to wait for jobs. Even closed markets can be locally oversupplied – particularly where participants within a market can smell all the money to be made.

Uber drivers run a companion version of the smartphone app that Uber customers use. This app allows them to bid on pickups, but does not reveal the location of any of the limousines around them, competing for the same business. Uber’s drivers have less information than Uber’s customers. As a consequence, limousines tend to cluster, because drivers don’t know that they’re all converging on the same small – and presumably lucrative – area.

My driver Charles has a solution for this dilemma: he owns two mobiles, and runs both Uber apps. The driver app delivers pickup requests, while the customer app reveals the locations of any limousines nearby. “One evening I came into the city,” Charles reports, “and there were four limousines within a block.” Knowing this, Charles moved on, finding another, under-served area of the city, and got plenty of work.

Uber may not want its drivers to know about the location of other drivers, but it wants to reveal that information to its customers, so drivers simply poke holes in the wall that separate the two sides, peering through, and learning where to position themselves for greatest profit. The drivers use all information on offer – from every source – to give themselves the greatest advantage.

Charles says he’s one of the few Uber drivers using his smartphone to give him the inside track with a degree of omnipresence. It’s a technique new to him, and he doesn’t say whether he thought it up himself, or if he copied it from another driver. Either way, as Charles’ success becomes more visible, his peers, watching what he does, will copy his keys to success. What he knows will be replicated throughout the fleet of drivers until this exceptional behavior becomes pervasive and normal.

Soon, Uber will either need to provide drivers with all of the information drivers provide to Uber, or every Uber driver will use two mobiles, one for orders, and another for omnipresence. As drivers learn more about one another, they learn how to avoid economically damaging behaviors, such as clusters. The drivers self-organize, spacing themselves throughout an area in a way which generates the greatest economic advantage for each individual. They will act as a unit – as if they all answered to a common mind – although they have no central command, accept no controlling influence, and simply work to maximize their own financial interests. This emergent behavior – seen first along the Kerala coast – is the inevitable consequence of connectivity." (http://thenextbillionseconds.com/2012/03/13/19-loop/)

How Ubers Algorithmic Monopoly is Destroying Open Cab Markets

" it’s important to recognize just what Uber actually represents. Uber started out named UberCab, and ‘uber’ is a German word which means ‘over’ or ‘better than’ or ‘the ultimate’. So UberCab meant, the ultimate cab. At the core of Uber’s strategy has been lobbying and advocacy to make sure that it can get into regulated cab markets. And this is so Uber can ‘disrupt’ and destroy them.

A healthy cab ecosystem relies on expectations of a market (with price-fixing by political authorities, mostly taxi commissions). There have to be people trying to hail cabs, and cabs driving around to find customers. As more people use Uber, there will be fewer people trying to hail cabs, and fewer cabs picking up people, which will lead to reduced expectations cabs will be available, and so on and so forth. Gradually the ‘open cab market’ will be displaced by a closed Uber service. I’ve already noticed it’s harder to hail cabs where I live, capacity is often taken up by Uber riders.

Open cab markets aren’t gone, but they will die eventually. They will go the way of open cattle, pig, and chicken markets, which mostly don’t exist anymore due to concentration in the meat market (read The Meat Racket for a great understanding of what happens when markets are captured by big business).

Uber’s ascendance hasn’t come without controversy. A lot of people are focused on the company’s use of surge pricing, which is when the company charges more money to customers because there is ostensibly high demand, such as during snowstorms or during New Year’s eve. It’s a controversial practice, to say the least.

The CEO of Uber, Travis Kalanick, has responded by basically saying ‘deal with it, it’s market-pricing.’ His argument is that higher pricing brings more drivers into the market, matching supply with demand. It is the optimal way to get as many people home as possible.

His argument, though, is phrased somewhat oddly. Kalanick notes “we are not setting the price, the market is setting the price.” But then, non-ironically, immediately adds “we have algorithms to determine what that market is.” In other words, the prices his company sets in the markets that his company controls are somehow, well, natural. So complaining about this is like complaining about the rain.

This is, of course, absurd. Uber is aiming for an algorithmic monopoly, control of a market through contract pricing. That the contract pricing is done with a complicated algorithm doesn’t make it a market, it just makes it complicated. Standard Oil would love this rationale.

There are three big issues with Uber’s model.

One, Uber controls all of the information in this so-called ‘market’. One of the premises of a market is relatively balanced information on the part of both the buyer and the seller. But Uber is neither a buyer or seller, it’s a broker. And as a broker, it shows the buyer and seller only what it wants to. Its algorithm is not regulated nor is it transparent, so neither the buyer or the seller has any credible information. This isn’t a market, it’s a monopoly. It’s a special type of monopoly, an algorithmic monopoly. It may mimic market-style pricing, or it may not. That’s up to Uber.

We’ve already seen that Uber withholds supply to drive up prices, as illustrated by a text message encouraging drivers to stay home so pricing would surge. Uber denies doing this, but even the denial proves the point that Uber absolutely controls all aspects of the ‘market’. Here’s the company’s PR on the text message debacle.

...

"The company wanted to reward new drivers…." But wait, how is ‘rewarding drivers’ consistent with market pricing? Markets don’t reward anyone, they simply clear at a price. So the answer is, it’s not a market, it’s contract-pricing controlled by Uber.

Right now, the only competitive force working to constrain Uber is the open cab market (well there’s politics, but that’s being swept away effectively). As this disappears, will Uber’s algorithms, aka the magical market, adjust as well? I think we can count on it. Uber believes in supply and demand, and when Uber is the only supply, well…

The second problem is simpler to explain. Cab drivers have a history of discrimination, whether it’s not picking up African-Americans or refusing to go to certain neighborhoods. Uber solves this problem, as Latoya Peterson explains in Racialicious. Here’s a sample comment.

A good example of race, class, and gender intersecting and the cost of racism and sexism. As a black woman I don’t get discriminated with Uber and feel safer than hailing a cab since my ride is tracked but if I couldn’t afford Uber, oh well. I take Uber all the time and have never been sexually harassed or treated rudely like I have the many times I’ve taken cabs in DC over the past 10 yrs.

Getting rid of racism is a good thing. But in eliminating one problem, this service introduces another. You have to have a smartphone and credit to use Uber. As Uber displaces the regular cab market, racism as a screen for cab drivers will decline. But the new screen, which will be contained in the magic market, aka Uber’s algorithm, will be whether you have a credit card and a smartphone. That means you can’t give someone twenty dollars for cab fare. It means that an entire slice of the population simply can’t get into Uber’s magic market.

And three, Uber is quietly gaining enormous power, almost feudal power, over its drivers. Remember, Uber wanted to ‘reward’ drivers with a great paycheck. This works both ways. Are you an Uber driver who is complaining too much about Uber stealing your tips? Well, gosh, it seems like the magic algorithm keeps giving you bad customers. Or no customers. Or think a few years down the road, when there is nothing but Uber in certain localities. Then Uber can raise prices on consumers, who may have other options and can squeal. But it can also lower prices paid to drivers, and these drivers are dependent on Uber for their livelihood. In fact, Uber is even starting a financing program for its drivers, so they can get loans for cars.

Remember, the customer doesn’t even pay a driver, the payment goes through Uber. What are these drivers going to do when Uber totally controls the market? Sue? Ha, not if they want the algorithm, I mean the market pricing, to ‘reward’ them. And let’s be clear, when a company offers low cost financing for capital investment for independent contractors and controls all aspects of the transaction and customer relationship, these are no longer independent contractors. They are employees. Only in this case, they are employees who have taken on debt to work for Uber. Uber has figured out that it is cheaper to trick people into thinking they are independent contractors and get them to risk their capital. Then Uber can happily take the profits. I guarantee you, if Uber thought its capital would be best used to run a fleet of cars, it would simply hire people straight out to be drivers. That it’s not doing that suggests something.

Uber is a fascinating and convenience-inducing shift in urban logistics, for now. I’ve used it. But what the company is really doing is supplying a governing service, replacing taxi commissions, and taking a fee for doing that. This means no input from the public, and since the public seems to hate politicians these days, maybe that’s what people want. But still, to the extent that there is interest in democratic decision-making, algorithmic monopolies are something antitrust authorities should watch. Right now Uber is wringing a lot of inefficiency out of the taxi industry. But eventually it will have so much power that it will introduce problems of its own." (http://mattstoller.tumblr.com/post/82233202309/ubers-algorithmic-monopoly-we-are-not-setting-the)

Discussion 3: Uber and its drivers

The real Uber experience from a driver point of view

Claire Callahan Goodman:

"As a former software developer, I was interested to see how the apps work together to get the closest driver to the rider as fast as possible. The first thing I found out was that Uber’s software sometimes wildly underestimates the number of minutes it takes to reach a rider. The driver has 10 seconds (and sometimes less) to accept a request, which shows the number of minutes to reach the rider. If you accept the request, you see the address of the rider. About half the time, the number of minutes estimated is substantially less than the real time it will take.

Let me give you an example. I received a request indicating it would take “three minutes” to reach a rider. I was in downtown Oakland and the rider was north of the Berkeley campus. With stoplights and traffic I knew it would take 15-20 minutes to reach the rider. As I began driving, I phoned the rider and gave him my ETA. He canceled to try again for a closer driver – and I don’t blame him.

This happened to me over and over again that night. At one point, I was on Piedmont Avenue in Oakland, and I kept getting ride requests “three minutes” away – that is, three minutes away from Piedmont Avenue in Berkeley. Could it be possible that Uber’s GPS software does not use map coordinates to calculate distance? It certainly seemed to be true, considering that this same error happened all night, until I finally logged off in order not to get “dinged” for too many cancellations.

Having accepted a rider, the driver has no idea of the destination. The rider(s) get in, and tell you where they’re going. I often had four riders at a time. Many times, I drove two miles to pick up four college kids and drive them six blocks to a different pub. This was a typical experience in my college town. That’s a money-losing ride.

If you accept each ride request sent to you, you will end up a long way from home. You must then go “offline” and drive home. This is standard taxi driving – but for less money.

I didn’t want to do this job full-time. Hourly rate is what mattered to me. Uber kept me very busy, but the software malfunctioned at least 50 percent of the time, leading to cancellations when I let the rider know the real ETA. Uber has lots of hidden charges and fees. However, since I was driving during “surge” hours, with back-to-back riders, my hourly rate should reflect the best hourly rate one can earn, driving for Uber. Bottom line: After subtracting all their charges and fees — plus Uber’s 20 percent — driving for Uber during surge pricing, with a constant flow of riders, pays less than $10 per hour. Then you must deduct insurance, fuel, maintenance and taxes. At least for me, driving for Uber is not worth it. And that’s a shame. Because I know the area, speak English and communicate professionally with riders. But I also demand closer to $15 per hour.

Also, considering the company’s huge profits, Uber owes it to the little guys doing their driving to provide much better software, real-time accurate time estimates, and a usable GPS for drivers who don’t have one in their car. To initiate a call to the rider, you now have to dial a number. This should not be necessary. The driver app should have a button for “call rider.” Drivers should not have the option to text a rider while driving! They have one now.

It’s physically painful to read about Uber’s ridiculously high earnings. They charge less than taxis for the same service, then deduct their 20 percent before paying their drivers. The driver assumes the expense of insurance, fuel and maintenance. I can only assume the other drivers have not done the math. This business model could work, and the quality of drivers would be much better, if Uber reduced its percentage of the take to 10 percent. That will only happen when enough drivers do as I have done — and quit.

I only tried using Uber as a rider once. I had to get to a local hospital for minor eye surgery, but I was not supposed to drive myself home. My first Uber request resulted in an estimated “nine minute” wait. After waiting 20 minutes, I called the driver, who did not speak any version of English I am familiar with. He claimed to be relatively near my house but was unable to tell me how he was going to get there. I canceled and tried again. This time I got a young woman who also apparently didn’t speak English well. After waiting, again, I called her too. Asking where she was, I was given two wildly different answers, in quick succession. Nonetheless, I asked her if, from her current location, she knew how to reach my address. She admitted she had no idea. Her lack of ability to understand me made it impossible to give directions. Neither of these drivers called to let me know they weren’t coming, or to ask how to get to my location. I drove myself." (http://www.salon.com/2014/11/30/i_quit_miseries_of_an_uber_driver/)

The Rise of the Precarious Contract Worker

BY KYLE CHAYKA:

"It’s ... creating a new, precarious branch of the labor force in the name of innovation and job-creation.

Take the race to disrupt the taxi industry, for example. Uber and Lyft are competing in the hot contest for market share to make more cars available to more people for more money—some of it flowing to the individual drivers, of course, but with the companies as the main beneficiaries of capital. The two businesses are constantly undercutting each other, offering new deals and better services to customers—but not to their drivers, who form a vital yet underserved part of their business plans.

Several months ago, Lyft launched in Brooklyn, where I live. To promote the service, the company offered riders 50 free rides—as long as the rides were under $25 each and you used up your 50 credits within two weeks of signing up. Though the launch was a little buggy, coasting around the city in free cars was great, and the drivers loved it, too. The initial subsidy meant that the drivers who were early adopters never went without a fare, and users were likely to spend more time and money on the platform than they otherwise would have.

Lyft and Uber both market themselves in part as a way for amateur drivers to take on taxi work as a kind of wholesome, self-driven small business, like the postindustrial equivalent of selling vegetables out of a home garden. The Lyft honeymoon had the giddy feeling of being given free money for parties on both sides of the user/driver relationship. Several drivers even told me about users who had them start a ride, cancel it when it neared the $25 mark, then restart the cycle while they were still in the car, linking together multiple free trips to cover larger distances. (The app makes spending money frictionless; it also made not spending money frictionless.)

Everything was great. And yet the Lyft drivers were not quite what the company portrayed them as. Lyft and Uber both market themselves in part as a way for amateur drivers to take on taxi work as a kind of wholesome, self-driven small business, like the postindustrial equivalent of selling vegetables out of a home garden. In Brooklyn, where Manhattan’s yellow cabs are scarce and private car services dominate the landscape, many of the drivers who jumped to join the new digital workforce were actually those who were already in the market.

In each smartphone-hailed car I’ve ridden in here, the driver has been juggling a collection of devices that wouldn’t look out of place on the desk of a technology company chief executive. There’s an iPad emerging from a stand near the shifter, an iPhone with an app running mounted on top of the dashboard, and yet another phone in the driver’s hand. One machine is for Lyft, the other for Uber, the last for the car service that likely rents them their car. In my experience, there’s no such thing as a pure Lyft driver. Rather than working for a single taxi company, these drivers are hustling between several services that each provides them with just a portion of an income and no stability whatsoever.

This is what Kevin Roose calls Silicon Valley’s “contract-worker problem” in New York magazine. “The freelance model is being abused,” Roose writes, “with workers being treated as if they were on payroll without getting any of the benefits afforded to payrolled employees.” It’s also called the “1099 economy”—normal full-time employment practices are being disrupted as more and more workers transition to a time- or commission-based pay scale.

The structure has its benefits, chief among them allowing workers to set their own hours. But in the grand scheme, the optimism with which CEOs approach how they have apparently liberated blue-collar workers is delusional. “We can’t tell [drivers] what to do or how to do their job,” Steven Hsiao, the CEO of Spoonrocket, a company that delivers fresh-cooked meals to San Francisco residents using contracted drivers, told Roose. “They’re their own entrepreneurs.”

The comparison is laughable. Entrepreneurship comes with a huge amount of risk and precarity. That’s fine when you’re buoyed by useful technology skills, experience, and stock holdings, as Hsiao doubtless is. When you’re a driver whose “entrepreneurial” endeavor depends on the whims of the companies you’re working for—who are themselves backed by unstable venture funding—the benefits of being your own business seem less desirable.

Companies like Uber, Lyft, Homejoy, and Fiverr are platforms for labor the same way Twitter and Tumblr are platforms for content. And both content and labor have become devalued as a result of their growth." (http://www.psmag.com/navigation/business-economics/uber-lyft-homejoy-dangerous-rise-temporary-technology-worker-91270/)

Uber feeds on class inequality

1. Leo Mirani:

"There are only two requirements for an on-demand service economy to work, and neither is an iPhone. First, the market being addressed needs to be big enough to scale—food, laundry, taxi rides. Without that, it’s just a concierge service for the rich rather than a disruptive paradigm shift, as a venture capitalist might say. Second, and perhaps more importantly, there needs to be a large enough labor class willing to work at wages that customers consider affordable and that the middlemen consider worthwhile for their profit margins.

Uber was founded in 2009, in the immediate aftermath of the worst financial crisis in a generation. As the ride-sharing app has risen, so too have income disparity and wealth inequality in the United States as a whole and in San Francisco in particular. Recent research by the Brookings Institution found that of any US city, San Francisco had the largest increase in inequality between 2007 and 2012. The disparity in San Francisco as of 2012, as measured (pdf) by a city agency, was in fact more pronounced than inequality in Mumbai.

Of course, there are huge differences between the two cities. Mumbai is a significantly poorer, dirtier, more miserable place to live and work. Half of its citizens lack access to sanitation or formal housing. Another distinction, just as telling, lies in the opportunities the local economy affords to the army of on-demand delivery people it supports. In Mumbai, the man who delivers a bottle of rum to my doorstep can learn the ins and outs of the booze business from spending his days in a liquor store. If he scrapes together enough capital, he may one day be able to open his own shop and hire his own delivery boys.

His counterpart in San Francisco has no such access. The person who cleans your home in SoMa has little interaction with the mysterious forces behind the app that sends him or her to your door. The Uber driver who wants an audience with management can’t go to Uber headquarters; he or she must visit a separate “driver center.” There is no denying the seductive nature of convenience—or the cold logic of businesses that create new jobs, whatever quality they may be. But the notion that brilliant young programmers are forging a newfangled “instant gratification” economy is a falsehood. Instead, it is a rerun of the oldest sort of business: middlemen insinuating themselves between buyers and sellers.

All that modern technology has done is make it easier, through omnipresent smartphones, to amass a fleet of increasingly desperate jobseekers eager to take whatever work they can get." (http://qz.com/312537/the-secret-to-the-uber-economy-is-wealth-inequality/)

2. RICHARD (R.J.) ESKOW:

"Uber’s philosophy, whether consciously expressed or not, is that life belongs to the highest bidder – and therefore, by implication, the highest bidder’s life has the greatest value. Society, on the other hand, may choose to believe that every life has equal value – or that lifesaving services should be available at affordable prices.

If nothing else, the Sydney experience should prove once and for all that there is no such thing as “the sharing economy.” Uber is a taxi company, albeit an under-regulated one, and nothing more. It’s certainly not a “ride sharing” service, where someone who happens to be going in the same direction is willing to take along an extra passenger and split gas costs. A ride-sharing service wouldn’t find itself “increasing fares to encourage more drivers” to come into Sydney’s terrorized Central Business District.

A “sharing economy,” by definition, is lateral in structure. It is a peer-to-peer economy. But Uber, as its name suggests, is hierarchical in structure. It monitors and controls its drivers, demanding that they purchase services from it while guiding their movements and determining their level of earnings. And its pricing mechanisms impose unpredictable costs on its customers, extracting greater amounts whenever the data suggests customers can be compelled to pay them.

This is a top-down economy, not a “shared” one.

A number of Uber’s fans and supporters defended the company on the grounds that its “surge prices,” including those seen during the Sydney crisis, are determined by an algorithm. But an algorithm can be an ideological statement, and is always a cultural artifact. As human creations, algorithms reflect their creators.

Uber’s tweet during the Sydney crisis made it sound as if human intervention, rather than algorithmic processes, caused prices to soar that day. But it doesn’t really matter if that surge was manually or algorithmically driven. Either way the prices were Uber’s doing – and its moral choice.

Uber has been strenuously defending its surge pricing in the wake of accusations (apparently justified) that the company enjoyed windfall profits during Hurricane Sandy. It has now promised the state of New York that it will cap its surge prices (at three times the highest rate on two non-emergency days). But if Uber has its way, it will soon enjoy a monopolistic stranglehold on car service rates in most major markets. And it has demonstrated its willingness to ignore rules and regulations. That means predictable and affordable taxi fares could become a thing of the past.

In practice, surge pricing could become a new, privatized form of taxation on middle-class taxi customers.

Even without surge pricing, Uber and its supporters are hiding its full costs. When middle-class workers are underpaid or deprived of benefits and full working rights, as Uber’s reportedly are, the entire middle-class economy suffers. Overall wages and benefits are suppressed for the majority, while the wealthy few are made even richer. The invisible costs of ventures like Uber are extracted over time, far surpassing whatever short-term savings they may occasionally offer.

Like Walmart, Uber underpays its employees – many of its drivers are employees, in everything but name – and then drains the social safety net to make up the difference. While Uber preaches libertarianism, it practices a form of corporate welfare. It’s reportedly celebrating Obamacare, for example, since the Affordable Care Act allows it to avoid providing health insurance to its workforce. But the ACA’s subsidies, together with Uber’s often woefully insufficient wages, mean that the rest of us are paying its tab instead. And the lack of income security among Uber’s drivers creates another social cost for Americans – in lost tax revenue, and possibly in increased use of social services.

The company’s war on regulation will also carry a social price. Uber and its supporters don’t seem to understand that regulations exist for a reason. It’s true that nobody likes excessive bureaucracy, but not all regulations are excessive or onerous. And when they are, it’s a flaw in execution rather than principle.

Regulations were created because they serve a social purpose, ensuring the free and fair exchange of services and resources among all segments of society. Some services, such as transportation, are of such importance that the public has a vested interest in ensuring they will be readily available at reasonably affordable prices. That’s not unreasonable for taxi services, especially given the fact that they profit from publicly maintained roads and bridges.

Uber has presented itself as a modernized, efficient alternative to government oversight. But it’s an evasion of regulation, not its replacement. As Alexis Madrigal reports, Uber has deliberately ignored city regulators and used customer demand to force its model of inadequate self-governance (my conclusion, not his) onto one city after another.

Uber presented itself as a refreshing alternative to the over-bureaucratized world of urban transportation. But that’s a false choice. We can streamline sclerotic city regulators, upgrade taxi fleets and even provide users with fancy apps that make it easier to call a cab. The company’s binary presentation – us, or City Hall – frames the debate in artificial terms.

Uber claims that its driver rating system is a more efficient way to monitor drivers, but that’s an entirely unproven assumption. While taxi drivers have been known to misbehave, the worldwide litany of complaints against Uber drivers – for everything from dirty cars and spider bites to assault with a hammer, fondling and rape – suggest that Uber’s system may not work as well as old-fashioned regulation. It’s certainly not noticeably superior. " (http://www.salon.com/2015/02/01/the_sharing_economy_is_a_lie_uber_ayn_rand_and_the_truth_about_tech_and_libertarians/)

Alternatives to Uber

Discussion

What might a driver-owned Uber look like?

Excerpted from Nic Wistreich:

“There’s at least three options…

1. Like Uber/Lyft/etc, but a giant Coop.

A logical starting point would be simply to recreate Uber/Lyft/etc, with their global network of offices, drivers, marketing and technical infrastructure, as a driver-owned coop, operating either non-profit or with its profits distributed amongst drivers. It would need to be a large, well financed (Uber has raised $7bn over 12 rounds https://www.crunchbase.com/organization/uber), dynamic organisation with a legal and customer service team in every country it operated in.

A single-coop competitor is appealing at first because it would be easier to manage, brand and offer users quality assurance. It would however require a commonly agreed-upon set of regulations and pricing, which every taxi would have to follow, so would have considerable power to set pricing and behaviour amongst its members. This inevitably would run against national and regional differences between taxi services. Internal voting and localised rules could mitigate some of this, but given there are no successful giant democratic coops working on an Uber scale of 160,000+ drivers to hold as an example, there’s a reasonable risk it would become as unaccountable and top-down as any large business. It would still create a monopoly with the potential to be restrictive for users and drivers in demanding a one-size-fits all set of rules. Given how much money it would require to get started it would also have a number of investors doubtless wishing to influence direction.

This isn’t to say such a structure couldn’t work, but by centring so much potential power, it seems to miss many of the advantages of networked systems, including greater competition and opportunities for innovation.

2. A federation of existing taxi companies all funding and using the same software

Another approach would be to build on existing taxi companies who already have relationships with drivers?—?and often leasing agreements and insurance schemes around their fleet of cars. This would both distribute more control out beyond the central coop, responsible for creating software, and work to build upon an existing networks, brands and services, rather than trying to throw them all out of business.

The coop in this instance would produce ‘white label’ software to manage drivers and payments for each of the companies, and also a single app which the user downloads. At this point either all the companies in each city and region would need to agree on and use the same prices, or the app would need to indicate that different cars were from different companies and had different prices. By letting each taxi company set their own prices this would create greater potential for competition and variation?—?car company X with the older cars is 20% cheaper than taxi firm Y which only has recent Sedans, while company Z has 100% electric fleet of Tesla cars.

As well as offering more choice and competition, it also removes from the main coop the burden of verifying and approving new driver’s identifies or providing customer service. It is more closer to an infrastructure, software-as-service company, serving it’s members, who are all established companies. On a simple level, this already exists?—?a company like Mowares offers an Uber clone from $400 http://venturebeat.com/2014/09/11/yes-a-build-your-own-uber-for-x-kit-costs-only-400/. What a coop?—?owned by all the local taxi companies paying for installs?—?could further do, is ensure that each install could communicate with each other and produce a single app for users to download that connected them to all of their local taxi companies.

However this fails to liberate drivers from the middle-man, the taxi company, an extra cost which Uber has removed. Part of Uber’s success is replacing the expense of taxi offices, switchboards and phone receptions with software, and thus reducing the cost of journeys. So this coop model may always end up more expensive than Uber or Lift as it needs to pay both driver, the coop producing the software/service and the taxi companies representing the driver. While some companies, such as executive car services, with account management, may offer sufficient value to justify the added cost, it’s hard to imagine the cost-conscious end of the market acting in the same way. It also doesn’t help the driver who, for whatever reason, doesn’t want to join the local taxi-company, which may be an issue in areas where there is only one taxi service?—?nor does it help the end user discriminate between a taxi company with a great reputation and one with far worse service.

However, a service which lets drivers register directly has a greater administrative burden, and legal liability, around verifying drivers and their licensed vehicles. To do this job well it ends up becoming much closer to the first option above.

All that I’ve read and my thinking for most of the summer seems to move between these two models?—?either a large centralised coop that verifies individuals who join up but that risks being undemocratic, or a more decentralised, federated system that only works with companies who in turn take responsibility for driver management and verification.” (https://medium.com/@netribution/db6ce8ba3fdb)

Articles

Ackerman, Seth. “How to Socialize Uber.” Jacobin. April 7, 2015. [8]

Cassano, Jay. “Taxis Unite: Denver Taxi Drivers Are Forming Their Own Cooperatives.” FastCoExist. February 4, 2015. [9]

DePillis, Lydia. “Can taxi unions build an app to take on Uber?.” The Washington Post. January 19, 2015.

Hansen, Mary. “What If Uber Were a Unionized, Worker-Owned Co-Op? These Denver Cabbies Are Making It Happen.” YES! Magazine. April 10, 2015. [10]

Harris, Kyle. “Cabby-owned Taxi Cooperatives on the Rise.” Shareable. January 5, 2015. [11]

“Montgomery County Council Approves Bills to Improve Taxi Service, Compete With Companies Like Uber.” NBC Washington. July 21, 2015. [12]

Shu, Catherine. “Korea’s Daum Kakao Prepares To Launch Kakao Taxi As Uber Faces Legal Woes.” TechCrunch. January 13, 2015. [13]

Delli Santi, Angela. “From Organizing to Mobilizing: United Transportation Alliance Launches App-Based Taxi Service.” AFL-CIO Now. March 25, 2015.

Nix, Naomi. “Union-backed taxi service starts in Newark, amid regulatory debate about Uber.” NJ.com. March 20, 2015.

More Information

How much do drivers really make ?

http://www.slate.com/articles/business/moneybox/2014/10/uber_driver_salary_the_ride_sharing_company_says_its_drivers_make_great.html

http://nypost.com/2014/11/02/ubers-claim-of-90k-average-pay-for-drivers-is-overestimated/

http://www.businessinsider.com/how-much-money-uber-drivers-really-make-2014-7

http://beta.slashdot.org/story/210435 : Taxi Medallion Prices Plummet Under Pressure From Uber

Uber

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