In the New York Times, I acknowledged companies like Uber need to step up and work with governments to provide all gig workers with benefits and protections, while also preserving their freedom and flexibility.
Despite the fact that drivers overwhelmingly don’t want to be employees, some continue to believe the only way to support these independent workers is to force them into the employment system, where they would receive the benefits associated with traditional jobs. But employment comes with a cost: hundreds of thousands of drivers would lose work opportunities overnight.
Uber conducted an analysis to measure the economic impact of requiring all drivers in the U.S. to be employees. Before COVID-19, nearly 1.2 million drivers in the U.S. were actively earning income on Uber’s platform each quarter. According to our research, if Uber instead employed drivers, we would have only 260,000 available full-time roles—and therefore 926,000 drivers would no longer be able to work on Uber going forward. In other words, three-fourths of those currently driving with Uber would be denied their ability to work.
Even if we had a mix of part- and full-time roles, nearly the same number of drivers—roughly 900,000—would still lose work. Using the typical estimates of the average share of part-time workers at U.S. companies, Uber would only be able to provide 40,000 part-time roles, for a total of 280,000 jobs.
Last week, the U.S. Bureau of Labor Statistics released its latest jobs report, showing 661,000 jobs were created—but job growth is slowing pace. Layoffs aren’t: unemployment claims remain high, with more than 1.4 million Americans filing for unemployment benefits through states and the Pandemic Unemployment Assistance Program for the first time during the week ending September 26.
At a moment when our nation’s economy remains fragile, denying work to nearly 1 million Americans would have far-reaching impacts on a recovery.
The impact of a switch to employment is so large for the simple reason that employment is structured very differently than app-based work—which is why today no company gives their employees the same flexibility drivers on Uber have. Drivers choose app-based work precisely because it is so different from employment, and so much more flexible: no one tells them where, when or how to work. They don’t have to sign up for shift, clock in or out, or perform a certain number of trips.
As an employer, however, Uber would be forced to actively manage drivers’ schedules, hiring a specific number of employees based on a baseline volume of consistent business. Uber would hire fewer drivers to each do more trips, and require them to work a certain number of hours. This would be hardest on part-time drivers, who would be more expensive to employ, because the cost of their employee benefits would be spread over fewer working hours. For drivers, that’s a big trade off: 91% of drivers in the U.S. work fewer than 40 hours a week today.
To be clear, I’m not arguing that gig work is perfect. On the contrary, in my op-ed, I wrote that we should be honest about how independent work must improve to meet the needs of the moment. I believe America needs to change the status quo to protect all workers, not just one type of work. Instead of eliminating opportunity for nearly a million people, we should endeavor to improve the benefits and protections for gig workers. Their success, supported by a stronger safety net, would help bolster our nation’s economy.
Our Working Together proposal aims to do just that. We propose creating new benefits funds that would give gig workers cash they can use for the benefits they want, like health insurance or paid time off. All companies would be required to participate, so benefits follow the worker even if they move between platforms. If this requirement had been in place across the U.S. in 2019, Uber would have paid out more than $655 million to drivers, giving them extra cash to put back into the economy—whether it’s to save for retirement or take a paid vacation.
Conversely, the negative economic impact of forced employment would be crippling on both the national and state level. Our analysis found that 158,000 work opportunities would be eliminated in California alone, leaving 76% of California drivers without the ability to earn on Uber. This is of course at a time when California’s unemployment rate is 11.4%.
This profound impact is not unique to California. There are still 12 million unemployed Americans across the country, with the unemployment figures reaching 7% or more in 25 states. In Massachusetts, which has had one of the highest state unemployment rates in the nation at 11.3%, we estimate a loss of 42,000 work opportunities throughout the state.
The pandemic has created challenges for everyone, including the app-based drivers who have been on the front lines doing essential work for our communities. It has also shined a light on the outdated, unfair nature of our employment system, and the need to strengthen protections for independent workers. Those protections need not come at the expense of the flexibility drivers want, nor at the exclusion of nearly a million Americans looking to get back on their feet or bridge to their next opportunity. There is a path forward that achieves both: improving gig work without eliminating its most important features. I hope to work with policymakers to redefine what it means to be a gig worker.
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