The other dude in the car

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In “How Uber Explains Our Economic Moment,” MIT’s Andrew McAfee describes a short trip he recently arranged with the big ride-sharing company:

My driver said he’d been with Uber ever since he’d graduated from his master’s program in IT project management last year. This profession was, according to him, going through hard times. In the wake of the great recession steady jobs had been replaced by short-term contracts, and there weren’t even a lot of these to be had. As a result he was now competing against much more experienced people for each new gig that came up, and he hadn’t had a lot of success since graduating.

So to cover his monthly fixed costs of student loan payments (on more than $100k in debt), rent, and health care he was driving for Uber. A lot. He estimated that he spent more than 60 hours a week behind the wheel. This allowed him to pay his bills, but not to build up any real savings.

McAfee emphasizes the bright side of this poignant tale:

To which I say good for him, and for Uber. This is a guy who could be sitting around waiting for the dream job he’d gone to school for, collecting unemployment, defaulting on his loans, and/or dropping out of the labor force for good. Instead, he was working hard at a job that was available.

That’s true, and worth noting, though I would guess the driver is paying a high opportunity cost in spending so much time driving a gypsy cab in order to make his school loan payments. It seems like a tough squeeze, and as McAfee goes on to point out, the ongoing automation of sophisticated jobs, including much of the traditional work done by IT departments, doesn’t exactly brighten the guy’s career prospects.

It’s worth remembering, too, that one of Silicon Valley’s dreams is to use self-driving cars to replace the nation’s taxi fleets. Uber’s CEO, Travis Kalanick, has made it clear that that’s his company’s plan, as The Verge recently reported:

Kalanick was visibly excited at the prospect of developing a fleet of driverless vehicles . . . “When there’s no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle. So the magic there is, you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away.” Asked about what he would tell the Uber drivers who will some day [get] replaced, Kalanick said that day was still a long way off. But it’s also inevitable, he said. “I’d say ‘Look, this is the way of the world, and the world isn’t always great.’ We all have to find ways to change with the world.”

I suppose when Uber deploys its autonomous cabs, McAfee’s driver will be grateful to have been freed up to find other fulfilling work in the sharing economy—walking people’s dogs, maybe. You have to change with the world.

“Sharing” is a nice word, but, as Kalanick’s remarks reveal, there’s a deep current of cynicism running just under the surface of the sharing economy. The companies that operate the clearinghouses, and skim the lion’s share of the profits from the aggregate transactions, present a very different face to the folks driving the cars and renting out the rooms than they do to their investors and entrepreneurial peers. It seems revealing that Douglas Atkin, Global Head of Community at room-sharing company Airbnb as well as chairman of Peers, a lobbying outfit for sharing companies launched last year, wrote a book titled The Culting of Brands: Turn Your Customers Into True Believers. He argued that cults provide excellent models for marketers looking to establish a deep bond of loyalty with customers:

Cults will flatter you. They will make you feel special and individual in a way that you are unlikely to have felt before. They will celebrate the very things that make you feel different from everyone else; the members will get to know you deep down, and they will love you for what they find. And you will love them.

This is the marketing strategy that underpins the sharing economy, as Mike Bulajewski explains in a thoroughgoing critique of the practice at his Mr. Teacup blog:

What’s crucial to realize is that proponents of “sharing” are reinventing our understanding of economic relations between individuals so that they no longer imply individualism, greed or self-interest. Instead, we’re led to believe that commerce conducted on their platforms is ultimately about generosity, helpfulness, community-building, and love. It’s what enables TaskRabbit to claim that hiring a stranger to do your laundry, perhaps for less than minimum wage, is really about “neighbors helping neighbors,” as they put it. The company’s mission is to “revolutionize the way people work — by redefining what it means to be neighborly.” … The marketing of almost every startup in this space is saturated with this mood.

But, as Bulajewski goes on to point out, the neighborly sharers are, to the companies running the clearinghouses, contract laborers. They represent a vast and ready pool of workers, like McAfee’s struggling driver, who don’t qualify for the extensive and expensive benefits and protections provided by law to regular employees:

Silicon Valley entrepreneurs have created businesses that provide contract labor not covered by the federal regulations that employers find so burdensome. As Uber general manager Ilya Abyzov put it, “A driver contracting with Uber is not a bona fide employee.” … What would happen if the dreams of the investors and executives at these startups came true, and large parts of the economy became dominated by their business models? Employers that hire full- or part-time workers today—paying them minimum wage, overtime and unemployment, disability and social security taxes, and unable to discriminate against them—would switch to a cheaper, less regulated and more vulnerable workforce to do those same jobs. Having lowered their labor costs, they’re able to offer lower prices to consumers, forcing their slower competitors who rely on regular wage labor to adopt the same practices or go out of business. … The sharing economy is clearly not the kind of economy where wealth and prosperity is shared between rich and poor. On the contrary, it worsens income inequality and concentrates wealth in the hands of those who need it the least.

And, as Uber’s Kalanick made clear, if an even cheaper labor model comes along—robots, say—the contract workers will get the boot, without “any real savings” to fall back on. The other dude in the car is dispensable. The spirit of neighborliness goes only so far.

6 Comments

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6 Responses to The other dude in the car

  1. Tim

    What a great post! It is always interesting to read how your ideas and observations relate to education. This generation of young people caught between their parents’ understanding of society and the tumultuous upheavals in a workforce altered by globalism and technology are taking on huge debt to act out faded promises of success. Equally it seems the corporation has freed itself from all forms of citizenship and social responsibility. Without a generally accepted belief that there is opportunity to achieve desired goals, revolution seems a natural outcome.
    In schools there seems little change in philosophy or practice to prepare the young to become fully functional citizens in this new social and economic system, instead everything is designed to sort winners from losers based on archaic practices.
    I’d enjoy if you and Dr. Yong Zhao http://zhaolearning.com/ would get together and exchange ideas.

  2. These guys–and I’m sorry but most of them are guys– are scary as all get out. For them, people are already exchangeable and expendable as robots and the carefree way they dispose of their employees makes me mad and worried.”‘Look, this is the way of the world, and the world isn’t always great.’ We all have to find ways to change with the world.”

    I’m glad that more and more people are talking about the hypocrisy of these “technology is changing the world for the better every day, in every way” CEOs and their reps. There was a time when only Evgeny Morozov and Jaron Lanier were openly critical of all the “We are the World” hype. But is anyone proposing ways to bring a hint of humanity to a model of capitalism that hasn’t been this brutal since the Gilded Age. Since what Bulajewski says is spot on:

    “Silicon Valley entrepreneurs have created businesses that provide contract labor not covered by the federal regulations that employers find so burdensome” can technology businesses using contract labor be subject to more regulation than they are now? As far as I can tell, that’s the only way they are likely to become more “neighborly.” What a great post! This blog never disappoints. Thank you.

  3. Cindy Wolff

    Kalanick’s response to replaced drivers stinks of the cheese he is moving while he belittles us mice.

  4. Cynner

    Ever thankful to the universe to be kinda’ old and still be part of the old economy. Whew!

  5. More on Uber.

    Typically the Europeans aren’t quite so ready to open their arms to competition unfettered by regulation. Sigh, Free Enterprise over here might be getting a little too free for comfort.

    http://bits.blogs.nytimes.com/2014/08/14/uber-to-fight-ban-in-berlin/?_php=true&_type=blogs&partner=rss&emc=rss&_r=0

  6. Seth

    To quote a tweet of the great parody account Prof J*ff H J*rvis (which satirizes SillyCon Valley boosterism):

    “Just had a great @lyft in Palo Alto. Driver writes for NY Times on the side. Drives a Jaguar!”

    Nick, I don’t know if you’re intentionally trying to smuggle laudable bread-and-butter economic advocacy into generalized tech anxiety. But under the circumstances, I suppose I shouldn’t criticize that if it works.