This past Monday, Uber CEO Dara Khosrowshahi penned an op-ed piece in The New York Times, saying gig workers deserve better in response to California’s new law, Assembly Bill 5, requiring companies like Lyft and Uber to classify their drivers as full-time employees:
Why not just treat drivers as employees? Some of our critics argue that doing so would make drivers’ problems vanish overnight. It may seem like a reasonable assumption, but it’s one that I think ignores a stark reality: Uber would only have full-time jobs for a small fraction of our current drivers and only be able to operate in many fewer cities than today. Rides would be more expensive, which would significantly reduce the number of rides people could take and, in turn, the number of drivers needed to provide those trips. Uber would not be as widely available to riders, and drivers would lose the flexibility they have today if they became employees.
So Uber’s business model can’t support drivers-as-employees. Boohoo.
Let’s be clear though: Uber was not established to provide a flexible lifestyle for drivers.
So what is Khosrowshahi proposing?
I’m proposing that gig economy companies be required to establish benefits funds which give workers cash that they can use for the benefits they want, like health insurance or paid time off. Independent workers in any state that passes this law could take money out for every hour of work they put in. All gig companies would be required to participate, so that workers can build up benefits even if they switch between apps.
Let’s not forget the terms under which Khosrowshahi was hired after Travis Kalanick was forced to resign as Uber’s CEO in 2017:
Dara Khosrowshahi could get a huge payday — totaling more than $100 million according to a source — if Uber’s IPO valuation hits $120 billion and stays at that level for 90 consecutive days.
The Uber CEO will also get the payout for selling the company for $120 billion, according to a disclosure the company’s its S-1 documents.
Having a bunch of fairly paid employee drivers at Uber could take a serious bite out of that $100 million carrot.