Corporations like Uber and Amazon are the byword for innovation and technological advances - the app to connect drivers with passengers, the ability to obtain virtually anything under the sun within minutes, and ultimately, of course, the driverless car. Such corporations do not make it easy to regulate work. It's almost as if they're so busy innovating, and creating opportunities for many workers to earn a wage and hence be less poor, that they haven't taken a moment to spare a thought for the regulatory challenges.
The litigation about Uber's duty to pay its ‘partner-drivers’ a full raft of employment rights such as the statutory minimum wage, sick pay, paid holidays, etc, is driven by an underlying concern with economic inequality. Part of the argument is that ‘Uber drivers often work very long hours just to earn enough to cover their basic living costs. It is the work carried out by these drivers that has allowed Uber to become the multibillion-dollar global corporation it is.’
This argument reflects the familiar concern about the inequalities of fortune associated in people's minds with unregulated markets. In this way the innovation in working relationships that has been presented by firms like Uber becomes inextricably tied to broader inequality concerns. Alas, in order to redress the underlying inequality the innovation itself inevitably comes under fire.
Uber’s argument is that ‘The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want.’ It is also obvious that consumers like the prices and the reliability of the service. Yet when legal claims are brought by drivers who are struggling to make ends meet, the concern understandably shifts to a quite different question, namely the shocking poverty of the drivers compared to the staggering wealth of Uber.
At that point it's game over, and uttering words like 'freedom' and 'flexibility' just pours fuel onto the fire. When Uber appears in court looking like Mr Scrooge and the drivers present as poor urchins with nothing for their Christmas dinner, there can only be one result: Uber must pay. They can afford to. This is called the deep pockets theory of justice. You can afford to pay, so cough up. What about the innovation that drove the business model in the first place? Well, who cares? As long as we re-engineer the wage disparity we’re happy. A bit less money for Uber, a bit more money for the drivers, sorted.
Quite clearly, reducing inequality has become more important than facilitating wealth creation. There is no way people will get past these figures: ‘Uber, which is valued at $62.5bn (£51.5bn), said that in September 2016 its drivers received an average wage of £16 an hour after the company's service fee for using its app.’ $62.5 billion for Uber and a pittance for the drivers? Uber should pay up!
One way to look at this type of problem - innovation bound up with increasing inequality - is to keep the two issues separate.
That way we won't conflate evaluation of the flexible working arrangements offered by Uber with our concern to reduce economic inequality. First question is, do these flexible working arrangements result in more and better opportunities for people to make money driving for Uber and for consumers to get a good service at an attractive price? This is a quite separate question from whether it’s socially acceptable for Uber to earn £51.5bn while the poor driver earns £16 per hour.
It’s always possible to hit Uber with regulations that slash their profits and force them to share nicely with the drivers, but if fares go up and the drivers earn less because their returns are docked by Uber to cover the sick pay and the other benefits it would have to fund to comply with the regulations then nobody would be better off, unless we count only those who will sleep better at night knowing that at least they’ve done their bit to reduce income inequality. Society as a whole would be more equal, which is always a nice thought.
But this disregards the wider economic effects. The same arguments apply when innovation displaces jobs, as we are now afraid might happen when the workplace is flooded with robots. Shouldn't we ban robots? Because any sane person would be beyond humiliated to be fired just so they can be replaced by a robot that never calls in sick and never takes days off to go to its niece's wedding and what not. Surely we need to ban robots before they outwit us and take over the entire galaxy?
Not really. Instead, it's time to take a deep breath and look at the bigger picture.
As the rising tide lifts all boats, this produces overall gains for both the rich and the poor.
Scholar, Writer, Friend