By David Bush
The transportation network company Uber has had a rough couple of weeks in Toronto. Two weeks ago over 500 cabbies protested Uber by surrounding City Hall, snarling traffic in the downtown core. Days later an UberX driver crashed into a taxicab injuring two passengers. Just a couple of days after that when Toronto’s subway unexpectedly shutdown and taxicabs were at a premium, Uber’s real time supply and demand pricing system was charging five times the normal rate for a ride. Stranded passengers were at the mercy of Uber’s price gouging. And just the month before an Uber driver in Vaughan was arrested on charges of sexual assaulting a passenger.
All of these events were taking place just as the city of Toronto is pursuing a permanent injunction against Uber’s activities. The city is arguing that Uber is a taxicab company and therefore they must be regulated like one.
Uber’s lawyer argued that the company is “simply putting passengers in touch with drivers. They do not trigger the municipal licensing code’s scheme and are not subject to them.”
Uber also argued that regulating their company is in effect a violation of their charter right to free expression. The company’s position is that they are an informational network that connects drivers and passengers for a small fee. The case is still before the courts, though if the reaction of Judge Sean Dunphy to the city’s arguments is anything to go by, Uber looks set to avoid meaningful regulation.
This is an outcome that would please Mayor John Tory who is an Uber supporter. In fact two key members of Tory’s 2014 campaign team, John Duffy and Nick Kouvalis, were hired by Uber – Duffy is now a lobbyist for Uber at City Hall, while Kouvalis is pollster working for Uber.
The Uber model
Founded by Travis Kalanick and Garrett Camp in San Francisco in 2009, Uber is now a billion dollar multinational company that is the face of the new so-called “sharing economy.” Uber appeared in Toronto in 2012 as a simple web app that connected taxicabs and customers. Last fall it launched UberX in Toronto, its real time ride-sharing app allowing anyone with a car and insurance to offer rides for a fee.
Uber’s corporate model, like much of the sharing economy, aims to connect users and producers of services for a small fee using accessible web technology. This is supposed to create greater choice for users and greater flexibility for producers of services by bypassing traditional corporate control and government regulation. Uber sees itself not as a taxicab company but merely a web-based communications company facilitating those connections.
It in fact actively denies it is even an employer. Uber describes its operation as “seamlessly connecting riders through our apps, we make cities more accessible, opening up more possibilities for riders and more business for drivers.”
In reality Uber operates a business that depends on a low-wage and extremely precarious workforce. It not only pays a pittance to its drivers, but it offloads the risk and responsibility onto its workers. Uber claims to offer a five million dollar insurance plan for its users. But in reality their insurance policy, which it has failed to disclose despite a court ruling to do so, does not provide comprehensive or sufficient coverage for drivers or passengers. UberX drivers are required to have valid personal automobile insurance but it is unclear whether operating as a commercial vehicle through Uber invalidates that insurance. When UberX drivers do get in an accident they are summarily fired or “deactivated” in Uber parlance and routinely have trouble accessing Uber’s insurance information.
UberX drivers are required to be over 21, have a four-door car that is no older than a 2005 model. On average Uber collects 20 percent off each ride – but the pricing is set by Uber’s real-time pricing index, which is designed to gouge customers in times of need. This fluctuating pricing mechanism also hurts drivers as Uber’s model is about undercutting cab fares with bargain basement prices. Lower prices, means lower wages, more rides and more kilometres for drivers.
By the end of the year Uber plans to expand its driver pool in Ontario to 15,000, most of whom will be located in the GTA. And Uber is just the beginning. Another U.S. based ride-sharing company, Lyft, is already lobbying the city of Toronto to enter the market.
Uber’s model aims to eliminate meaningful regulation. It operates under the free-market assumption that user ratings will self-govern the industry. Customers rate their experience out five and drivers who fall below a base standard set by the company, roughly a 4.6 rating, are fired or in Uber parlance “deactivated”. Passengers are also rated and ones with a lower rating may not be picked up. While the self-governing protocols of the industry might be a good way to discipline workers to work harder, it by no means is a substitute for real regulation.
The taxicab industry
The denial of standard employment relations is nothing new in the taxicab industry, where workers are classified as independent contractors. This classification prevents workers forming legally recognized unions and weakens their ability to exert their collective bargaining power. What is different about Uber is that so far its model skirts even the basic standard regulations found in the industry.
To be a taxicab driver in Toronto means being regulated. That means having a criminal record check, driving a qualified car, taking training courses, having $2 million in commercial automobile insurance, having your fares regulated by the city, your driving background reviewed yearly and paying for a license from the city to operate.
Toronto has had nearly four years of continuous review of taxicab licenses. Currently there are just over 4,800 taxicab licenses issued (3,451 standard, 1,313 ambassador and 85 accessible) with over 10,000 drivers. Last year city council passed legislation phasing in a single Toronto Taxi License which requires holders to drive 167 hours a month (previously a license holder could purchase a license and then rent or lease it out without driving). In effect the reform was a move towards an owner-operator fleet.
With big money at play this reform, which was supported by the iTaxiworkers Association but opposed by current license holders, will be reopened after the city decides what to do with Uber.
Lowering the floor or fighting back?
And what should be done with Uber? It is hard to imagine an industry that is more exploitative and more disempowering for workers than the taxicab industry. But somehow Uber and the advocates of the sharing economy have found a way to lower the bar.
While Uber’s operations are expanding around the globe, the company has also faced stiff opposition from both municipalities and workers themselves. In Montreal taxicab workers have been protesting Uber for months and authorities have begun to step in. Vehicles from UberX drivers have been seized and the offices of Uber have been raided. Across the U.S. in cities such as Los Angeles, Seattle and New York Uber workers have protested the company’s exploitative practices. In California a group of Uber workers have formed a driver’s association affiliated with the Teamsters. Similar efforts by UberX drivers across Europe are also taking place.
With precarious employment and inequality on the rise in Toronto (and across the country) workers and the labour movement are fighting back by demanding a raise in the minimum wage and decent work. These struggles have the potential to not only materially improve workers’ lives, but to build solidarity and strength across the whole working class. But if Uber is allowed to further erode workplace standards this will dramatically hinder those efforts.
Uber and other sharing economy companies are running roughshod over regulations, work standards and workers. This will only embolden other employers and encourage them to adopt some of Uber’s hyper-exploitative practices. This must be challenged not just in the courts, but also in the streets. And ultimately if Uber is intent on ignoring workers’ rights and undermining basic regulations and ruining workers’ lives, then Uber must die.