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The Sharing Economy Is Labor’s Next Hope

Spencer Platt/Getty

When Uber, Lyft, Handy, and a handful of other companies funded by venture capital began earning huge amounts of money after investing in the informal economy, it was because they understood a simple equation. In exchange for providing the name, job site, and payment for a given task—automated through a proprietary algorithm—an independent contractor would agree, in turn, to provide a service and hand over a sometimes-sizeable commission for the privilege of working. On quick inspection, the math works out: At-will workers earn extra money through a simple system that rewards flexibility, and the VC-funded concerns keep costs low by technically not employing laborers. Broadly speaking, then, the sharing economy is just a technologically sophisticated update of the barter economy.

This would all make sense, if the companies weren’t stepping into already-familiar territory for workforce agencies—like home-care service providers and livery services—and, by extension, into the middle of a burgeoning labor movement led by the independent contractors themselves. For decades, laborers in these fields have been organizing and sharing information with one another; the result is a consolidated push for better treatment, like new labor protections in standard contracts. When Uber and its ilk entered the market, they unwittingly gave the laborers—who now felt themselves maligned by bad labor practices—just what they needed to galvanize their organizing efforts: a shared boss.

The informal economy—which refers to sectors not regulated by the state, and here I want to highlight domestic workers, taxi drivers, and repair people—have long operated in conditions that fluctuate depending on who employs them. But laborers in these fields have scored several recent accomplishments in states across the country, including the establishment of a minimum wage for their work, overtime, and break time. Still, even with these protections, the informal economy is rife with deplorable conditions: Workers are not always paid, they are not guaranteed paid vacation time, and have no job security of any sort. For many of them there still isn’t a larger organization to connect to, a standard contract to refer to, or even the luxury of taxed earnings to sue for. On top of that, the workers are isolated from one another, unable to compare wages or discuss treatment. That changed when Uber showed up.

“I met other domestic workers on a daily basis at the playground, and it was there that we began talking about our conditions,” said Barbara Young, who has worked as a nanny in New York City for 17 years. For the past eight years she’s been an organizer at the National Domestic Workers Alliance, which has been working since 2007 to better conditions for domestic workers and help pass laws that protect them. “The other women at the park showed me the labor laws that we were excluded from, and how the abuse that was happening to a lot of us at our jobs was because of this exclusion.” (Taxi drivers, too, have their own organizations—like the New York Taxi Alliance—that advocate publicly on their behalf.) 

Besides the parks where nannies met and the garages where taxi drivers could congregate and discuss fares (and before cheap access to the Internet), there weren’t many opportunities for workers in the informal economy to connect with one another and organize for better conditions. Slowly, however, through community groups, online forums, and general awareness of similar conditions, workers began to make their sector a whole lot less informal. After the rise of Uber, Lyft, Handy, Instacart, and other online services, informal workers now had central authorities they could fight in the open with the organizing power they’d been building for years. In the process of disrupting informal parts of the economy, the startups had created an even larger worker pool than previously existed, with a much greater appreciation and understanding of exactly how badly they were getting ripped off. And that’s where the monster these startups have created becomes a real problem.

“More and more, Uber drivers feel like they’ve been betrayed by the company because the rates have dropped by so much, or drivers have gotten banned from the service because they wouldn’t do a fist bump, or other silly things. They’ve been banned from the services for things that you normally wouldn’t be able to lose your jobs over,” said Dawn Gearheart, an organizer for Teamsters Local 117 in Washington State, which has become closely affiliated with the App-Based Drivers Association, a group that “promotes fairness, justice, and transparency in Seattle’s personal transportation industry.” Started in 2013 by drivers who felt their rights were being violated by both Uber and Lyft, the association scored its largest victory in December, when it pushed a bill through the Seattle City Council that will allow Uber and Lyft drivers to unionize and collectively bargain with the startups.

But a victory like this is just the beginning of the battle for workers who want fair treatment in the contract economy. For one, the Seattle legislation could run up against antitrust laws regarding price-fixing by independent contractors—the bane of any type of freelance worker organizing. To hopefully avoid that roadblock all together, several class action lawsuits against Uber, Handy, and other companies have sprouted up across the country over the misclassification of workers as contract laborers and not employees. (A case in California appears especially troubling for Uber—although they might fight that case until they replace all drivers with robots, so there’s that.)

If the lawsuits prevail and contractors at these companies are granted employee status, then tech companies will have successfully replicated an existing model on a much larger scale. Unfortunately for them, that scale is way too big. A Fortune study into the costs of classifying all drivers as employees paints a dire picture for Uber; it would most likely not be able to afford to stay in business. Uber, Lyft, and similar companies are now fighting for their lives across the country (and the world), and will spend unholy amounts of money on high-powered and well-connected lawyers to continue to circumvent labor laws. Every step of the way, workers will be facing an opponent with nearly unlimited resources and no apparent interest in compromise.

The National Labor Relations Act was signed into law in 1935, but it wasn’t until 1941 that Ford Motor Company finally recognized a union, after years of intimidation and beatings by henchman. An Uber union most likely won’t form tomorrow, or possibly ever, but the nationwide class-action lawsuits and Seattle legislation are a result of years of organizing efforts in the informal sector, a process started long before venture capital began sniffing around those parts. Now that these fields are global and the stakes are even higher, the groundwork for activism done over the past few decades has become very important. The future of labor is once again in the hands of the courts. But this time the workers have a voice.