Uber driver protests ahead of IPO spell uncertain future for gig economy

Drivers around the world are striking and protesting Wednesday in response to Uber’s initial public offering in a dispute that highlights the growing divide between the booming tech industry and struggling working class.

When Uber goes public this week, it could be valued at up to $91 billion. The offering will mint more than a few new millionaires in Silicon Valley, which is a hard pill to swallow for many drivers who say their rates are dropping.

Drivers say they are frustrated by declining rates and a lack of transparency from Uber in how the company calculates their pay. The demonstrators also take issue with Uber’s IPO filings with the SEC, which predict incentives for drivers will drop.

“They make it virtually impossible for a passenger to understand how much the drivers are getting and they also make it very difficult for the drivers to understand what’s going on,” said Walt Ellis, an Uber driver in the Seattle area who is planning to protest Wednesday.

Uber spokesperson Nathan Hambley said in a statement to GeekWire that the company will “continue working to improve the experience for and with drivers.”

“Drivers are at the heart of our service ─ we can’t succeed without them ─ and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road,” Hambley said.

It’s difficult to pin down the percentage of ride fares that Uber takes because the company changed the structure for paying drivers in 2017. Early on, riders paid drivers for each ride and Uber took a percentage. Today, Uber pays out drivers on a per-mile and per-hour basis.

Estimates of Uber’s take rate vary. The Economic Policy Institute found that about a third of what passengers pay goes to Uber. That amounts to a little under $12 an hour on average. Uber estimates its take rate ranged from 12 to 25 percent in 2018, depending on the geographic area, according to the company’s SEC filing.

In the documents, Uber warns investors that it could lose drivers because of “potential reductions in incentives” and “dissatisfaction with our brand or reputation.” Many drivers see those warnings as signs that their pay will decrease.

“Now that they’re going public, they’ve even in their SEC filings stated their attempts to mine whatever profit they can off the backs of their drivers because that’s shareholder interest,” Ellis said.

Ellis is affiliated with Teamsters Local 117, a labor organization that has been at loggerheads with Uber for years. The Teamsters played a critical role in the passage of a Seattle ordinance that empowers Uber and Lyft drivers to bargain collectively. That ordinance passed in 2015 but has been jammed up in courts since.

The Teamsters organized the Seattle demonstration, which will take place Wednesday near Seattle-Tacoma International Airport. Timed with the event, the labor group released a report that found Uber and Lyft have a median take rate of 31 percent in Seattle, based on an analysis of 560 trips.

“This is what is fueling a lot of the driver action around the country to say, ‘we are the folks who pay for a car, we are the folks who put gas in that vehicle, we are the folks who bear all of the risk on the road, and we deserve a fair shot,” said Teamsters organizer Joshua Welter.

Uber disputes the report’s claims. “Our platform powers opportunity for drivers, fueling the future of independent work by providing drivers with a reliable and flexible way to earn money,” Hambley said in response to the report.

Matthew Wald of Drive Forward, a drivers association co-founded and sanctioned by Uber, said the Seattle demonstrators, “do not represent the views of the thousands of drivers providing rides every week in the Seattle area,” in a statement.

Uber’s IPO is expected by the end of the week. The company is warning investors that the issues raised by Wednesday’s demonstrations could pose problems for Uber’s underlying business.

Drivers are currently classified as independent contractors without the same protections that full-time employees receive. If that were to change, Uber said in its SEC filing, “we would incur significant additional expenses for compensating drivers, potentially including expenses associated with the application of wage and hour laws (including minimum wage, overtime, and meal and rest period requirements), employee benefits, social security contributions, taxes, and penalties.”

“Any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition,” the SEC documents say.

Editor’s note: This story has been updated with comments from Drive Forward.