How ‘The Drivers Cooperative’ Is Making an attempt to Compete With Uber and Lyft in N.Y.
Uber and other hail-fighting companies have promised drivers entrepreneurship for years. Drivers eager to make their own schedules signed up in droves, propelling the gig economy into a billion dollar industry.
However, some drivers never got the control and independence they expected. They struggled with the cost of vehicle maintenance, loans, and insurance, and asked if Uber and Lyft had paid a fair wage. Legislative efforts to provide them with unemployment benefits have been thwarted.
Now dissatisfied drivers and workers’ representatives are forming worker-owned co-operatives to reclaim some of the money – and power – in the gig economy.
The Drivers Cooperative, which opened in New York this week, is the latest attempt. The group, formed by a former Uber employee, work organizer and black car driver, began issuing ownership shares to drivers in early May and will start offering rides through their app starting Sunday.
The cooperative has hired around 2,500 drivers so far and plans to charge a lower commission than Uber or Lyft and to charge drivers a cheaper rate. It’s an ambitious plan to challenge the giants, and it faces the same hurdles that block other emerging players in the industry: few have the technical skills, the venture capital dollars, or the availability of readily available drivers to take one undermine established company like Uber.
Even so, drivers who joined in the effort said that even a small cooperative could make a big difference in the way they work, so they can make more money and have a say in how the company is run. The drivers’ association said it plans to pay 10 percent above the minimum wage set by the city’s taxi and limo commission and return profits to drivers in the form of dividends.
In normal times, the higher wages could attract drivers for the cooperative. But these are not normal times. Many drivers have been reluctant to get back on the road in the face of the pandemic, creating a national shortage.
In an earnings report earlier this month, Uber said it had 3.5 million active drivers and couriers in the first three months of the year, down 22 percent from a year earlier. The company responded by aggressively increasing its spending on bonuses and incentives, calling the effort an “incentive.” In March, Uber said drivers in New York City earned a median of $ 37.44 an hour.
Once the supply of drivers recovers, Uber’s wages will most likely fall. The founders of the Drivers Cooperative said members of the group struggled to keep up with their spending when they earned typical hail wages.
A Lyft spokeswoman Julie Wood said, “We are constantly working to improve the driving experience on our platform and share the goals that will enable drivers to work efficiently and independently.” to comment on the cooperatives.
The economic stress caused by the pandemic has led workers to use cooperatives as leverage against existing businesses and, they hope, to raise their wages, said Ariana R. Levinson, professor at the University of Louisville’s Brandeis School of Law, that deals with employee participation.
Though gig workers find it difficult to organize, Ms. Levinson said they have set up small food delivery and hailship cooperatives. “Independent contractors are really using the co-op model to organize and compete for a living wage,” she said.
“I’ve never seen that hunger for change that exists in drivers. Every single transaction shows exploitation, ”said Erik Forman, work organizer and founder of the Drivers Cooperative. “They believe that one way to regain control is to have control and ownership of the platform.”
Mr. Forman formed the cooperative with Alissa Orlando, a former operations manager for Uber’s East Africa business, and Ken Lewis, a black driver in New York City. Ms. Orlando said she left Uber after witnessing an outcry from the driver over wage cuts.
She began researching cooperatives during the pandemic when Uber and Lyft drivers struggled to access unemployment insurance and adequate protective gear. Mr. Lewis and his brother worked in the taxi and black car industries, but he said they dreamed of running their own business.
The Drivers Cooperative receives technical and business support from technology industry volunteers, Ms. Orlando said.
The cooperative aims to increase pay for drivers and address other common issues like predatory lending rates and surprise deactivations that keep them from the apps that connect them to passengers. The group works with the Lower East Side Federal Credit Union to help drivers refinance their vehicle loans. She hopes her efforts will further reduce her spending.
In 2017, Uber agreed to a $ 20 million fine with the Federal Trade Commission to settle claims that it misrepresented driver profits and loan terms. The company no longer offers vehicle financing.
Drivers said they would most likely continue to drive for gig companies or black car services, in addition to the Drivers Cooperative, adding that to the numerous hail driving and delivery apps on their phones.
“Working with Uber was something you do because you have no other alternative,” said Michael Ugwu, who has been driving for Uber for six years. He said he will continue to drive for Uber but will give priority to customers requesting rides through the cooperative’s app.
“Having your own business is the way forward and the way out,” said Ugwu. “Even if I make less money, I’ll focus on working together to make sure we’re successful.”
Other groups of workers are also turning to cooperatives for more leverage in the gig economy. Founded in 2019 and primarily operating in Denver, Los Angeles and Portland, Oregon, Driver’s Seat Cooperative helps drivers gather industry data on which driving and delivery apps are the most lucrative and keep independent records of theirs Revenue.
“The starting point for this was to hear the drivers’ frustrations and how they felt they were being manipulated by the algorithm,” said Hays Witt, CEO of Driver’s Seat. “Data is reported back to the drivers in different ways on each platform. Drivers have a hard time judging what works best for them. “
Mr Witt said Driver’s Seat aimed to sell congestion and traffic data to cities that gig companies receive little transparency about their environmental impact. The cooperative also plans to open membership to drivers this year.
“People are trying to figure out, ‘How do we hold onto the value we generate and turn away from this over-extractive model?'” Witt said. “It comes up because there is a real problem and cooperatives have a real solution.”
Mr Lewis, a founder of the Drivers Cooperative, said drivers like him have wanted to create apps like Uber since it was launched but didn’t know where to start. Although some efforts were made across the country, such as the LoCo delivery co-op, New York had nowhere to go.
“The drivers would say, ‘Why can’t we do this alone?'” Said Mr. Lewis. When the opportunity arose to join a cooperative, he thought, “We fought without change. Let me make one last try. “