Friday , April 19 2019
Home / Noah Smith / Guest post: Roy Bahat on Uber, Lyft, and the future of work

Guest post: Roy Bahat on Uber, Lyft, and the future of work

Summary:
Roy Bahat is the head of Bloomberg Beta, a venture capital firm focused on the future of work. In this guest post, he explains what he thinks is wrong with the way the "ride sharing" companies treat their workers.____________________________________________________________________ AS GOES UBER, SO GOES THE NATION HOW MIGHT IT LOOK TO NEGOTIATE A “TREATY OF SILICON VALLEY?” Roy Bahat Lyft could go public as soon as this week, with Uber tailgating. For either to succeed, they have to stop the rot at the core of their business: their drivers are suffering. Like a factory worker in a 1950 auto plant, Uber and Lyft drivers epitomize the struggles of many Americans today. To solve their drivers’ challenges, Uber and Lyft might need to strike a new bargain for all of American work, a new

Topics:
Noah Smith considers the following as important:

This could be interesting, too:

FT Alphaville writes The IMF’s Tobias Adrian on stability

Jacob Funk Kirkegaard writes Europe’s New Leaders Need to Think Now about the Next Economic Downturn

[email protected] (B. H.) writes Historians and Economists

Scott Sumner writes Now is the time to reform the Fed (don’t blow it)

Roy Bahat is the head of Bloomberg Beta, a venture capital firm focused on the future of work. In this guest post, he explains what he thinks is wrong with the way the "ride sharing" companies treat their workers.

____________________________________________________________________

AS GOES UBER, SO GOES THE NATION

HOW MIGHT IT LOOK TO NEGOTIATE A “TREATY OF SILICON VALLEY?”


Lyft could go public as soon as this week, with Uber tailgating. For either to succeed, they have to stop the rot at the core of their business: their drivers are suffering. Like a factory worker in a 1950 auto plant, Uber and Lyft drivers epitomize the struggles of many Americans today. To solve their drivers’ challenges, Uber and Lyft might need to strike a new bargain for all of American work, a new “Treaty of Detroit.”

The Treaty of Detroit, just after World War II, established employers as the providers of benefits. Then, the big three automakers rang up outsized profits, which depended on working people welding, painting, and assembling. Those people suffered unacceptable conditions, like many gig workers today, so they organized.

United Auto Workers chief Walter Reuther pressed General Motors to create the standard for a full-time job in America: health insurance, vacation, enough of a wage to provide for a family, regular raises, and money for retirement. He negotiated, in one word, security.

--

Our economy and society are different today. Family lives come in many forms, and our workforce is more diverse. In a family headed by a single parent or by two working parents, all work, not just full-time jobs at profitable companies, must provide for stability.

Lyft and Uber, like many companies in the new economy, have been unable to provide their workers with a stable and complete livelihood. Still, with their bully pulpit and their relationship with millions of Americans, they might be our best hope for provoking change.

That change starts with something unfamiliar to Uber and Lyft: partnering with government. Instead of using their muscle to whine to cities about taxi regulations, Uber and Lyft should call on government to lift the floor for working people. They could ask the federal government to pay for healthcare, joining the conversation about Medicare for All (as they did during the discussions about the Affordable Care Act). Government could set a minimum wage for drivers, as New York just did, so we riders pay our fare share.

Lyft and Uber could enable drivers to choose their own paths, in what’s now called “lifelong learning.” Uber offers online college classes for free at Arizona State. Driver centers could offer GED-equivalent classes, or help drivers build their network and then learn how to network. Imagine if drivers, who Lyft and Uber chose to brand as “independent entrepreneurs” at the height of the employee-or-contractor game, actually received support to become genuine entrepreneurs -- like financing, or access to mentors to help them with business plans? Or better: Uber and Lyft could buy services from companies owned by their own workers, to create the spark of demand that gets them going.

This company-supported learning might extend to developing drivers’ careers at Uber and Lyft. Unlike a retail store, where the cashier sees the manager every day and gets a shot to build a relationship and prove they can do that job, the app-is-my-boss experience gives drivers only the thinnest exposure to management. So Uber and Lyft need to invent ways to get drivers into corporate headquarters, or risk permanent castes dividing their workforce.

Maybe workers conceded too much in the Treaty of Detroit, and drivers should organize to have a representative on Uber and Lyft’s boards? Uber’s CEO, Dara Khosrowshahi, talks about his family coming from struggle. What if the Dara Khosrowshahi of 2030 is someone driving for Uber right now?

Despite the avalanche of investor money that blanketed Uber and Lyft, they barely earn enough revenue to pay their costs. It’s hard to imagine them paying more for driver healthcare. They’re also locked in a do-si-do where if one raised prices to pay drivers more, we riders would probably just pick the other one -- you know you would. So a “Treaty of Silicon Valley” would need government to both level and raise the playing field.

---

After the Treaty of Detroit, the President of General Motors said “what was good for the country was good for General Motors, and vice versa.” Uber or Lyft might say the same today. The technology companies driving changes in work need to call on government and workers to strike a new bargain, and then do their part to invest in those workers’ futures. Big corporates, who have long shifted work from employees to contractors, might follow -- and we might all agree to a new treaty that will hold for another 70 years.
Noah Smith
Noah has been a finance professor at SUNY Stony Brook, an economics PhD student at the University of Michigan, an academic editor in Japan, and a physics major at Stanford. He is currently hard at work on solving all the problems of the world. So don't be surprised when all your problems suddenly vanish.

Leave a Reply

Your email address will not be published. Required fields are marked *