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December 21 2016

Will Seattle’s Driver Unionization be the End of Uber, Ridesharing?

Patrice L. Onwuka

The sharing economy, tech companies which create markets for freelance workers to find employment online, works so well because it offers workers access, ease, and flexibility. That may all be at risk if workers are allowed to unionize in Seattle.

Last month, Seattle rolled out proposed rules for Uber and Lyft drivers to unionize. The regulations enforce an ordinance passed by the City Council last December, which gave independent contractors (taxicabs, for-hire transportation, and ride sharing drivers) the right to unionize, but if they do, all drivers would be forced to join. Unions will push for minimum wages, limits on hours, benefits, and other demands that will drive up the cost of doing business.

The contentious part is that not every driver will have a say, despite being forced to join the union and abide by the contracts they establish.

This week, the Seattle agency which drafted the new rules held public hearing to tackle the big question of whether driving for Uber is contract work or a job. The next step will be a vote and the implications are major.

Ridesharing, which is the biggest sub-industry in the sharing economy, allows licensed drivers of any gender, age, race, occupation, and history to earn money by using their vehicles to give rides to perfect strangers. The arrangement is informal and done through online apps like Uber and Lyft. The cost to passengers is often much less than traditional taxicabs. Drivers also service neighborhoods and pick up individuals that cabs refuse. In addition, evidence demonstrates a decrease in drunk-driving incidents because of ride sharing.

Yet, the benefit to drivers is so much more. Ridesharing provides extra income for stay-at-home moms while the kids are in school as well as supplemental incomes to retirees. It can also be the main source of income for workers who’ve had a hard time finding a job. Students use the income to pay for college and even those with jobs find a flexible second job driving during lunch breaks and before and after work.

This flexible and financially beneficial arrangement is what makes ridesharing so attractive to drivers and riders, but that arrangement is at risk if regulators force them to unionize. Workplace regulations that make hiring and firing difficult, limit opportunity to those with records, and add costs will morph ridesharing companies into regular transportation companies already burdened with regulations.

As an Uber spokesman explains:

Under a collective bargaining agreement, drivers could get guaranteed minimum pay and maximum hours, along with other benefits.

But those benefits would change the way companies like Uber do business, potentially causing them to cap the number of drivers allowed on the platform at any one time, said Uber’s Hambley. Or take more drastic action.

“The future of ridesharing in Seattle is at stake,” Hambley said. “There are things that could happen to make it very difficult for our business model.”

Even more many drivers are comfortable with their current contractor arrangement and don’t want to see drivers unionized at all:

A retired nurse, [Deborah] Jeffs used to belong to a union and wants no part of paying dues again. She resents the Teamsters and taxi cab companies for pushing a union vote, a system she says would drive her off the road.

“I think in a capitalist market, competition is nice and important,” Jeffs said. “So if the taxi cabs want to compete with Uber and Lyft, why don’t they provide some of the same services, or why aren’t they nicer?”

If this passes in Seattle, it’s a matter of time before other major cities take up the banner and run with it, putting ridesharing in jeopardy nationwide.

Unionization won’t be limited to just ridesharing. All sharing economy companies are in danger if their contractors are turned into employees and unionize. Gone will be the flexibility and lower costs that the technology-driven innovation of our generation has delivered to our society.

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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