Why it’s time for gig workers to rethink organizing

The placards and picket lines commonly associated with unions have no place in the gig economy. Neither do collective bargaining, labor strikes, or brawling in the streets with strikebreakers.

These are hallmarks of a bygone era. While labor unions can be a powerful force, they are of little value to the people working today for food delivery and ride-sharing companies such as DoorDash, Grubhub, Lyft, and Uber.

In 1954, 35% of all U.S. workers belonged to a labor union. Today, it’s only 11%.

The time has come for workers to find new and more innovative ways to secure livable wages and benefits. I’ve studied this issue extensively. I believe one option is for gig workers to band together, acquire stock in gig-economy companies, and sway management decisions as a powerful block of shareholders.

PLIGHT OF GIG WORKERS

Here’s why that’s necessary: The plight of gig workers has become one of the world’s most notable labor issues. As gig-economy companies continue to grow, they face a rising number of legal and legislative challenges from California to the United Kingdom. These upstart companies often forgo paying minimum wage, workers’ compensation, retirement benefits, and the like. In response, some policymakers and labor advocates want gig workers classified as employees in a bid to force rideshare companies and the rest to compensate workers in the same way other businesses must.

The gig-economy powers argue their drivers and delivery people are contractors. They say attempts to classify gig workers as traditional employees would not only drive them out of business, but would also strip the workers of the freedom to set their own schedules, a big reason people choose gig work.

Against a backdrop of legal and legislative wrangling, all that’s certain is that if the players involved aren’t careful, they could derail an industry expected to generate $455 billion by 2023—one that millions of consumers and workers worldwide have come to depend on.

Attempts by lawmakers to settle the issue have so far produced mixed results at best. The first effort was kicked off by California’s AB5, which went into effect on Jan. 1, 2020. Proposition 22, a bill sponsored in part by DoorDash, Uber, and Lyft, passed and overrode AB5 later that year, but has since been challenged in the courts. Multiple other states, including Massachusetts and Illinois, are considering passing their own laws. None of the proposed legislation has come close to satisfying all the stakeholders. In addition, a lot of the people who claim to advocate for gig workers—for example, union administrators and labor activists—don’t include drivers and delivery people among their ranks. They also don’t appear to understand their needs.

HISTORY IS WITH GIG WORKERS

That’s why I believe it’s up to the workers to look out for their own interests. If workers became a powerful group of shareholders, history has shown they would stand a better chance of obtaining the compensation they want.

Examples of this include investor uprisings this year at ExxonMobile and Chevron. In both cases, shareholder activists—angry over each company’s alleged unwillingness to protect the environment—forced major changes at both oil giants. ExxonMobile saw two board members replaced, and Chevron relented to the pressure to reduce the company’s carbon emissions.

In the book The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon, author David Webber details how workers have pooled their money in the past in the form of pension funds to bring about change at companies. Webber noted that workers at Safeway, the grocery store chain, called a strike in 2003 after management lost money on several poor acquisitions, and then attempted to make up losses by slashing wages. The strike had little impact, but CalPERS, the largest U.S. public pension fund, sided with the workers and assisted in removing three board members.

It’s important to remember that Uber and Lyft each offered stock to drivers when they went public in 2019, but these were one-time events and limited to long-serving and highly active drivers.

COMPETITION IS KEY

Certainly, legislators must be involved in the process. But any new regulation should prioritize maintaining a competitive environment. Preventing the formation of monopolies is critical to workers and consumers alike.

In this vein, lawmakers have a chance to help workers move to whatever service best meets their needs. Legislators should prohibit gig-economy services from implementing self-serving policies designed to discourage workers from switching services. For example, gig workers must own their ratings and reviews, not the companies.

Also, policymakers should search for solutions outside of the traditional labor models. The United States categorizes a worker as either self-employed or an employee. This is too limiting in today’s world. U.S. lawmakers should heed the example set by the U.K., where the government is testing out an intriguing third option: the independent worker. This category would entitle 70,000 U.K. Uber drivers to receive a minimum wage, pension, and other benefits, but not all the same protections and benefits afforded to those classified as employees in that country.

This may not be a final solution, but it’s a step in the right direction. The Brits are looking for balance, and that’s far better than just foisting a bunch of blanket costs (that could end up killing them) onto the companies. That won’t serve anyone’s interests.

Without a doubt, gig workers need a better way to make their voices heard, just as gig-economy companies must have a fair chance to generate a profit. That’s why it makes sense for workers to become shareholders. It creates an environment where labor and management coalesce around improving a company’s prospects.

Both sides must realize they can’t succeed without the other. For any solution to work, it must be one that raises all boats.

Matthew Spoke is the Founder and CEO of Moves—the only all-in-one financial app helping gig workers manage their business and get ahead.