Portside Date: April 25, 2016

Author: Giuseppe Eroico

Date of source: April 25, 2016

Stanbury Forum

In examining the current regulatory framework and models of organization of the taxi industry and the effects of Uber and the other Transportation Network Companies (TNC’s) disruption of the status quo, there is going to be a substantial restructuring of the individual for-hire transportation system.

The taxi industry has historically been heavily regulated for a number of reasons. Foremost has been the safety of passengers and the public. Municipal governments have extensive functions devoted to ensuring that those who are licensed to drive for hire, have no criminal or civil violations that would indicate they might pose a risk to the public or passengers, and in particular, more vulnerable members of our communities such as senior citizens and others. It should be kept in mind that when one enters the car of a stranger, they are forfeiting a certain amount of control and therefore security. Beyond the immediate concerns of personal security, the regulated taxi industry has civic responsibilities. The taxi companies fulfill obligations to serve communities with services that left to their own devices they would likely not provide such as access for the disabled and to serve lower income areas where senior citizens depend on for-hire taxi services.

In contrast, Uber has ushered in the beginning of change in urban mobility as the millennial generation is more inclined to live without owning a personal automobile with all its attendant costs and impact on the environment such as emissions and parking. Albeit, this has come at the costs of eschewing first, passenger and public safety and avoiding regulation by the subterfuge that they were a ride-sharing service, and second, by reducing driver earnings after dominating a city market. Being able to dodge the financial burdens of traditional taxis in capital, facilities, and regulatory overhead has enabled Uber to bring the prorated price of for-hire transportation down to the point that a young person confronted with the high costs of purchasing, insuring, and parking a vehicle in an urban environment finds “Ubering” a competitive alternative.

The reality now is that Uber is a titan, with a market valuation of $62 billion, and there is no going back. What urban elected leaders and municipal governments will confront moving forward is how to even out the levels of regulation, and corresponding cost, between the sectors of taxis and Uber/TNC’s. Will the taxi industry regulation and cost be reduced to reconcile a system of fair competition? In Los Angeles, Mayor Eric Garcetti has asked the Taxi Commission to “take all steps necessary to ensure equal competition.” Or will Uber/TNC regulation be increased so they have the same burden of safety and security? The California Public Utilities Commission has in recent times questioned if TNC’s should be regulated by them. Should the taxi cab and TNC industries be regulated by the same authority? In California, municipal governments regulate taxis, however the State Public Utilities commission regulates TNC’s. They will each have to become more like the other: in the case of taxis, for survival; in the case of Uber because local governments have an imperative to ensure safe and secure transportation for the citizenry.

In the creation of a new expanded for-hire urban transportation sector, Uber, Lyft, and Sidecar now have upwards of close to 200,000 independent contractors driving for them. According to information from Uber, approximately 30% drive fulltime. In Los Angeles there are approximately 22,000 Uber drivers. Hence, about 6,000 drive fulltime. There are approximately 2,300 taxi drivers licensed in Los Angeles. Now that Uber has reached market dominance, it has been slashing rates for drivers. And the drivers have reacted. They have begun to organize among themselves and are forming fledging groups uniting drivers. They have been mounting various protests such as strikes at La Guardia Airport in New York and in San Francisco leading up to the Super Bowl.

In some cities, local unions have been doing organizing work with Uber and taxi drivers to a lesser or greater extent. For the most part, Teamsters seem to be applying the same organizing model they have struggled with for many years with port truckers by concentrating the fight on having them converted to employees. Labor and others seem to be waiting on the outcome of the class-action lawsuits that seek to convert Uber drivers from independent contractors into employees. Organized labor is in a unique position as the entire urban for-hire transportation system is restructuring. This restructuring is happening largely without the voice of those who do the work. That organized driver voice needs to be part of the process as broad regulatory decisions are being formed about the future of the industry. The taxi and Uber drivers both have a common cause to level the playing field. Otherwise the TNC operators such as Uber will continue to drive wages and regulations downward. The history of how Uber has dominated this industry is rife with lawless disregard for civic regulation to the extent that they are banned in a number of cities and countries around the world. Navigating legislation and policy with the collective will and voice of workers is what unions do.

One place where Uber and taxi drivers in a union are waging this fight for a fair and just system with collective bargaining is Seattle. Teamsters Local 117 has been successful in developing defensible legal positions for independent contractors to have the right to collectively bargain. The Seattle City Council voted to create a groundbreaking Ordinance establishing a process of collective bargaining for Uber and taxi drivers.

“This could be a game-changer,” said Charlotte Garden, a Seattle University professor specializing in labor law, in the Seattle Times. “You could see cities like Seattle and states run with this model in all sectors of the economy. The legal fight over this would be intense.” One challenge often quoted is that federal labor laws govern collective bargaining exclusively. However, independent contractors are outside the scope of the National Labor Relations Act, which applies only to employees. This is in effect Seattle creating a law in the absence of any federal labor laws regarding these “Gig Workers” as they have come to be called.

The other challenge that this new model will encounter is federal antitrust law price-fixing. Garden states that under a “state action defense… sovereign states, and then by extension, municipalities, should be able to pursue a range of policies in the public interest — including policies that might otherwise be anticompetitive,” Garden continues, “There are certain requirements that have to be met in order for the state action defense to apply in a case like this, including that the ordinance be drafted pursuant to a clearly articulated state policy, and that there be governmental oversight of the process and final result.”

It is widely discussed that as the model in Seattle overcomes challenges, it will be taken up in other states and cities. That momentum is already stirring in California. Assembly Member Lorena Gonzalez is planning to introduce the California Self-Organizing Act. This bill is reportedly being written to specifically encompass independent contractors who operate through a business platform or app. As in Seattle, California is building defensible structures to move forward and to give people who work in the exploding “gig economy” some basic protections and a union because at the end of the day they are workers. Various estimates are that approximately 10 to 15 million workers in the country are independent contractors. This massive increase in gig workers certainly has a correlation in the decline of union membership. Unions have been ambivalent in organizing independent contractors. It was only in the last several years that the New York Taxi Workers Alliance was affiliated and welcomed into the house of labor. There is much history of various organizing with a focus on waiting until the workers are employees. Now, the recent developments of the gig economy in the states of Washington and California are breakthrough moments of change and not only within the for-hire transportation industry.

We might want to examine the reality of the aforementioned sheer size and percentage of the gig economy workforce as well as the fact that a substantial number of those workers wish to be independent contractors for various flexibility and entrepreneurial motivations. A number of legislators, worker advocates, and business leaders are starting to acknowledge and agree a third classification is needed that allows for flexibility and protections. Senator Mark Warner told Bloomberg BNA “The fundamental nature of work is changing and I don’t believe in the future that it’s just going to be a binary choice between a 1099 worker or a W-2 worker”. Union leaders such as Laphonza Butler and David Rolf from SEIU are co-authoring positions advocating comprehensive portable benefits with people like Nick Hanauer an entrepreneur, venture capitalist, civic activist, and philanthropist.

Part of the reason drivers love taxi work is because of its entrepreneurial nature. They decide how to structure their work times and places. However, people in these roles and jobs still absolutely desire and need protections for their livelihoods, healthcare, conditions of their relationships with very powerful organizations, and all the things all of us need as workers. It does not matter if we are employees or independent contractors; we still all get out and work every day. Are there huge challenges to organizing gig workers? Yes. But there were also massive challenges to labor’s Fight For 15 campaigns. Waiting on the sidelines to see if these new legal theories would work is not the way we won in the past. We need to fight in the city halls and state houses to make it work. In the spirit of generations of labor union solidarity, we in labor need to take these workers as we find them. We need to take people as we find them, not as we wish they would be. We band together with all our brothers and sisters that work to demand fairness, equality, dignity, humanity, and respect.

Giuseppe Eroico is a longtime labor observer, activist, and union member.