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Seattle University law professor John Kirkwood; Teamsters 117 leader Dawn Gearhart; Seattle Councilmember Mike O’Brien; and moderator Mitch Ratcliffe of Bia Kelsey speak at Thursday’s event.

The second floor meeting space at Galvanize in Seattle felt like City Hall for a few minutes on Thursday afternoon.

Speaking at a Bia Kelsey conference about the on-demand industry, Seattle City Councilmember Mike O’Brien participated on a panel that discussed how companies like Uber and Lyft treat — and pay — their drivers.

mikeobrien1
Mike O’Brien.

O’Brien introduced a first-of-its-kind legislation late last year that creates a way for Uber, Lyft, and taxi drivers to unionize and gain benefits typically given to employees, as a way to combat income inequality (drivers are currently treated as contractors). The Seattle City Council approved the legislation 8-0 in December, but the law has yet to take effect.

As Uber and Lyft continue to lower prices for customers — uberX’s per-mile rates have dropped 50 percent since uberX launched in Seattle three years ago — many are concerned that drivers aren’t being paid adequately for their work. O’Brien is one of them.

“How do we allow the workers in this industry to have some voice and leverage?” O’Brien said. “The workers benefit when the market is expanding, when they have more customers — how can they share in the prosperity with Uber? Instead, what we have now is Uber valued at $63 billion and drivers that work full time making less than $3 an hour after deducting expenses. The playing field is so out of balance; the power dynamic is so out of balance.”

On Thursday, the discussion got a bit heated — similar to the scene during City Council meetings about this topic — when a few audience members voiced concern with the new law. Abdul Yusuf, a manager at Eastside for Hire, told O’Brien that for-hire drivers have long enjoyed the flexibility that comes with working as independent contractors.

Photo via uberX.
Photo via uberX.

“The unions came into our driver community, even before Uber and Lyft started here, and made us fight against one another,” he said. “We’ve tried to stay away from labor negotiations. The City of Seattle has dealt with this industry without unionizing — why is it getting involved now?”

Henry Yates, a public affairs consultant who represents the Flat Rate for Hire Vehicle Association, noted that drivers are “doing well” and are making “significantly more than what was talked about here.”

Yates added that drivers, many of them immigrants, like having the schedule that gives them time to pray throughout the day, or take their family members to the doctor when needed.

“Many of these immigrants have benefited from this independent contractor model with the way it’s working now,” Yates said. “It’s a good system.”

O’Brien responded by saying “unions are also very democratic organizations, and the intent with this legislation is exactly that.”

O’Brien’s unique plan is to let drivers that have a minimum threshold of trips join a “Driver Representative” organization that would then allow them to negotiate pay rates and employment conditions. These organizations would have 120 days to demonstrate that “a majority of drivers for a specific company choose to be represented.” From there, they would be able to participate in collective bargaining conversations on behalf of their drivers.

Councilmember Mike O'Brien chats with Eastside for Hire Manager Abdul Yusuf (left) and
Councilmember Mike O’Brien chats with Eastside for Hire Manager Abdul Yusuf (left) and Flat Rate for Hire Vehicle Association leader Henry Yates (second from right).

But there are “significant” issues with the legislation related to anti-trust issues, said John Kirkwood, a law professor at Seattle University who spoke on the panel today.

“The state of Washington has allowed the City of Seattle to regulate the product market here for taxi services,” Kirkwood noted. “But there’s no clear intent to displace competition in the labor market. The state of Washington has not clearly authorized Seattle to allow collective bargaining in the labor market.”

Uber driver Don Creery.
Uber driver Don Creery.

Seattle Mayor Ed Murray also voiced concerns and declined to sign the bill in December, citing “several flaws” including the burden of administering the law, but noted that it would still become law without his signature.

Then last month, the U.S. Chamber of Commerce challenged the city’s decision to give drivers the right to unionize, saying it “violates federal law in at least two ways” and threatens to “burden innovation, increase prices, and reduce quality and services for consumers.”

Whether Uber, Lyft, and taxi drivers actually want a union remains to be seen. Don Creery, a leader of the App-Based Drivers Association — which is affiliated with local union group Teamsters Local 117 — drives for both Uber and Lyft and said there actually isn’t much “flexibility” when driving for these companies.

“I feel like I’m an employee,” he said. “I can choose what hours I work, but the freedom ends there. Everything else is dictated by the company.”

Creery, who supports O’Brien’s legislation, said he hopes that drivers can maintain their status as independent contractors but have more rights and get more support from Uber and Lyft. He added that he would be willing to “trade freedom for 30 percent more money.”

Uber CEO Travis Kalanick.
Uber CEO Travis Kalanick.

“Most drivers I talk to, we don’t really want to become employees,” he said. “The independent contractor situation is attractive, but it’s stifling at the moment. It’s our hope that the collective bargaining law will clear this up.”

Uber has dealt with lawsuits and pressure from workers rights advocates over the past few years who contend that drivers should be classified as employees, not contractors. The company, which says it has more than 10,000 drivers in Seattle, is against O’Brien’s law and some drivers said they’ve recently received calls from Uber explaining why collective bargaining and unionization is bad for them. Uber also recently hired a well-known union avoidance law firm.

Uber CEO Travis Kalanick, meanwhile, spoke at the TED conference in Vancouver earlier this week and criticized city regulators for “standing in the way” of the company’s mission to help reduce congestion.

Kalanick also noted that reducing rates helps get more customers on Uber’s platform, which then creates more rides per hour for drivers. Based on internal data, the CEO said overall driver income is going up.

To that point, O’Brien said he’s frustrated that Uber does not share its data with the city, unlike taxi companies, which are required to do so. At the end of the day, O’Brien said, Kalanick’s main priority is to increase profit and maximize value for shareholders.

Seattle ranks second on Zillow's list of hottest housing markets in 2016. (Kurt Schlosser, GeekWire)
(Kurt Schlosser, GeekWire)

“I would say that just because the owner of a $63 billion company says drivers are doing fine, while some say they are struggling, I don’t think it’s responsible for me as a regulator to blindly trust that,” he said. “I would love to have the data to see what is actually going on.”

O’Brien, as he’s repeated over the past several months, made it clear that he’s supportive of new technology and innovation — but he also prioritizes equality and fair pay.

“As a city, I want to make sure we are a place that does embrace innovation and technology and new business models, but does it in a way that supports everyone throughout that ecosystem,” he said. “Everyone should benefit and that’s not what we’re seeing right now with the transportation network companies.”

O’Brien is also worried about drivers that initially relied on Uber for a full-time job when rates were higher, but now might not be making as much salary. He used Microsoft and Amazon — two tech giants based in the Seattle region — to prove his point.

“Imagine a world where all of us who have full-time jobs start to lose those jobs because someone sets up a system where anyone can do that job part-time and erodes our ability to make a living,” he explained. “If someone did that to tech workers at Microsoft or Amazon, government regulation would react swiftly because of the people whose jobs would be taken away. Unfortunately, when the jobs we’re talking about are largely held by immigrants, we do not react as swiftly and we didn’t in this case. When Uber first started in Seattle, they were clearly operating outside of the laws and regulations, and yet we as a city did not step in and stop them. I take some responsibility for that and I’m not proud of that.”

Added O’Brien: “The legend of Henry Ford was that he wanted his workers to make enough money to afford their product. [Uber] drivers can’t afford to use their own product when they want to go on a date or see a movie with their family — that is a tragedy that a city like Seattle needs to avoid.”

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