Judge Ethan Schulman was not impressed by these arguments. The US Supreme Court, he said, had produced three tests to decide whether someone was an independent contractor or not. They are that the person a) should be “free from the control and direction of the hiring entity”; b) “performs work that is outside the normal scope of the activities of the hiring entity”; and c) “habitually exercises a trade, occupation or independent business of the same nature as that involved in the work performed”. Since it was evident that the defendants could not meet criterion b, the judge said, “The likelihood that people will outweigh their claim that the defendants misclassified their drivers is overwhelming.” QED.
Reading a court transcript is not often good for blood pressure, but this is an exception. It shows what happens when a sharp judicial mind comes face to face with the pretensions of the neoliberal racketeering that sails under the flag of convenience of the odd-job economy.
This “economy” is neoliberal because it embodies the idea that society is made up only of markets and individuals. In the case of Uber / Lyft, there is a market for rides and there are individuals who can drive. A software platform is therefore designed to connect said individuals to those who need their services. The owner of the platform has no obligation towards the atomized people who provide the service: they are free to work (or not) and are “managed” by an algorithm and the drivers do not have any of those expensive rights which arise from being a “normal employee” ”. The pricing of services is determined by an algorithm: in the event of a thunderstorm, the cost of a trip increases; when there is a lull, they go down. Really, the concert economy is a Hayekian dream.
The efforts of small economy businesses to pretend they are not employers are comical. Some time ago the Financial Times got hold of an internal Deliveroo manual. Never say “We pay you every two weeks,” he advises; instead, it’s “the riders’ invoices are processed fortnightly”. Never say “Yesterday you were late to start your shift”; instead, it’s “Yesterday you logged in later than you agreed to be available”. And of course, never mention “uniforms”: they are “designer clothes”.
So much for the neoliberal lexicon. But the odd-job economy is also a racket because it is based on a questionable business model. Many businesses burn money like it’s old-fashioned. Uber lost $ 8.5 billion in 2019, for example. “We have suffered significant losses since our inception, including in the United States and other major markets,” the company wrote in its SEC filing. “We expect our operating expenses to increase significantly for the foreseeable future and we may not achieve profitability.”
The reason Uber is unprofitable is that its rides are cheaper than those of conventional taxi companies. And it’s a feature, not a bug: it’s a strategy to drive conventional businesses out of business. The money it burns belongs to investors (like the Saudi sovereign wealth fund) who bet that once the company is the only one standing, they will have a monopoly asset in their hands. It is “creative destruction” in its most vicious.
None of this means that the services provided by companies in the odd-job economy are neither useful nor valuable: at the very least, the pandemic has established it. But, like the more conventional tech giants, they grew exponentially at a time when relevant laws were late or, in some cases, not enforced. The significance of the California judgment is that this is finally starting to change. And about the weather too.
What i read
Calculate this …
“Why is computer science part of the social sciences”. Truly unexpected essay – by a computer scientist – in a major academic journal.
“The withering away of the state”. Sober editorial by Nathan Gardels on the Noema magazine website.
Riddle of the plot
“QAnon was a theory on a bulletin board. Now he’s headed for Congress ”. Charlie Warzel, writing in the New York imes, on how a bizarre conspiracy theory continues to gain traction in the United States.