Uber Dreaming

How Uber CEO Travis Kalanick drove right over Stephen Colbert, and a few inconvenient truths
by Steven Hill

Editor’s Note: Last week Stephen Colbert turned his Late Show turned into a happy place for Uber CEO, Travis Kalanick. ‘Fawning’ was the word I think I’m looking for to describe Colbert’s handling of Kalanick, who doesn’t need or deserve kidglove treatment. At this time, Uber is facing challenges around the world to its claim to be just a phone app and not a taxi company. This week the Constitutional Court in France is/was due to announce its findings in what’s shaping as a landmark case largely (but not solely) to do with Uber drivers allegedly operating in France without commercial licences. In Brazil, Uber – and local taxi drivers – are locked in a grim battle for survival. In Denmark, there are similar battles over Uber allegedly not paying taxes and its drivers lacking insurance.

On Scoop, I’ve written before about Uber’s use of a highly dubious distinction between “employees” and “ independent contractors” that Uber routinely invokes to deny that it is a taxi company. It’s an identical argument to the one fought here over work conditions within the New Zealand film industry. Famously, a worker called James Bryson brought a case to court over the terms and conditions of employment on the Lord of the Rings films. Unfortunately, the NZ Supreme Court findings ( ie that Bryson was in reality an employee eligible for workplace safety, insurance, annual leave and sick leave provisions) were overturned when Prime Minister John Key capitulated to pressure from Warners over The Hobbit, and cravenly changed our employment laws to suit the studios.

In the face of the latest incident of Uber flimflam on Colbert’s show, Werewolf is publishing under a Creative Commons licence, a rebuttal by the US author and Uber critic, Stephen Hill.

Stephen, I realize it’s only entertainment and that your job is to make people laugh. But when you bring on a very un-funny fellow like Travis Kalanick [pictured left], it seems you and your production team should think a little more cleverly about how you put lipstick on that pig. This is not at all a defence of Big Taxi, which in many cities has provided crappy service for years. Those who believe that ride-sharing companies like Lyft, Sidecar and even Uber have provided a badly needed alternative will get no argument from me.

But that doesn’t mean that Kalanick wasn’t dancing circles around you, Stephen. It’s not just that you edited out of the final TV broadcast the shouting dissenters in your audience who tried to dispute the Uber CEO’s typical claims. But your fact checkers and production team should have prepared you better for not letting Kalanick turn you into his tool, like Judith Miller and the press pack at a State Department briefing.

Stephen, below are rebuttals to a few of the claims made by Kalanick, which any quick search on Google by your prep team would have revealed are full of, well, let’s not call it bullshit but Uber-shit.

1. Uber’s “highly paid” drivers. Kalanick likes to criticize the taxi industry for its various practices, and there’s a lot to criticize. But Kalanick then uses that to make the case that it’s so much better for Uber drivers, telling Stephen that “as an Uber driver, you make more dollars per hour.”

Uber-shit. The fact is, nobody really knows how much Uber drivers earn. The only numbers available come from Uber, and if it is one thing we know about this company, it’s that you can trust its numbers about as much as you can trust China’s or Greece’s numbers.

For example, not that long ago Kalanick claimed to the Wall Street Journal that Uber drivers were pulling in $100,000 per year. An Uber ad I saw on Craigslist in August 2014 announced to prospective drivers “make over $1850 per week,” which works out to over $96,000 on an annual basis. Despite the “doesn’t pass the laugh test” quality of those figures, they were cited in the media for months. The Washington Post uncritically reported the median wage for an Uber driver as $90,766 a year, based on nothing more than an Uber blog post

In his arrogance, Kalanick challenged reporters to take 10 rides and ask those drivers for their pay stubs. Several journalists did. Buzzfeed’s Johana Bhuiyan obtained pay statements from eight out of 11 of the drivers (the rest refused to provide them). None came even close to earning $100,000. After subtracting the driver’s costs of driving in New York City – which can easily amount to nearly $10,000 per year for gas, insurance, maintenance, car payments and more – those Uber drivers didn’t make much more than taxi drivers on an annual basis. Some Uber drivers claim they don’t even make minimum wage. One of the drivers Bhuiyan followed around said, “When you look at expenses, you don’t make anything for Uber.”

Oops. So to put lipstick on its pig, Uber brought in Obama White House spin-meister David Plouffe who commissioned a study by Princeton University economist Alan Krueger, an Obama White House economic advisor. Once again using Uber’s internal data, the Krueger report said that drivers earned on average $17 an hour in Los Angeles and Washington, D.C., $23 an hour in San Francisco and $30 an hour in New York. Again, the media dutifully reported this, but failed to point out that this completely undermined Kalanick’s previous estimate of $100,000 a year, since to make that kind of money on that hourly wage meant that drivers would have to strap themselves into their cars anywhere from 9 to 16 hours per day, 365 days a year.

But the Krueger report also did not take into account drivers’ considerable expenses. Adding to its laughability, the January 2015 report was based on data collected in November 2014. Yet just as the Krueger report was being released, Uber once again slashed its drivers’ earnings by increasing the percentage of each fare the company takes. When Uber first began, the company’s share was only 5 percent of each fare, now it’s closer to 30 percent. So the Krueger report was based on outdated data.

When the Krueger report was released, and while the pliant media dutifully reported Uber’s positive spin, the online chat boards of Uber drivers lit up with hundreds of sarcastic, derisive comments. “This is also why when a drug company tests its own drug you take the results with a big spoonful of salt,” wrote one driver. Wrote another driver: “Uber is great, according to studies commissioned by Uber . . . my study says I make less than minimum wage.”

2. Surge pricing really works! Stephen mildly challenged Kalanick about Uber prices tripling during disasters when demand quickly spikes as people flee the disaster’s epi-center. Kalanick, an Ayn Rand acolyte, defended his goofy obsession, telling Colbert, “When demand outstrips supply, the price comes up,” as if this is a simple thing that only a computer algorithm can solve. But driver testimonies and academic studies have shown how surge pricing backfires.

Underpaid Uber drivers have figured out that one way to fight back against their stingy Uber overlords is to wait for the surge. Experienced drivers learn to stay off-line and monitor the rider app, and if enough of them do that it creates an artificial shortage that causes the prices to spike. In online driver forums, drivers actively discuss strategies like “chasing the surge,” when they all race to the part of town lighting up with the surge. One study of surge pricing found that “If someone in the newly underserved area now needs a car they wait longer...Uber’s surge pricing instead depletes drivers in adjacent areas.” In short, surge pricing encourages drivers to stay home and wait on the sidelines, artificially creating a shortage of drivers and igniting the surge pricing algorithm, driving up the prices for customers. If Travis Kalanick is going to nickel-and-dime his “driver-partners” (as he likes to call them), the drivers will fight back with the means at their disposal.

3. Self-driving cars are good for…drivers. Stephen also asked Kalanick about the Uber chief’s touting of self-driving cars, saying “You say Uber is good for drivers, but you said you want self driving Uber cars…you’re employing robots at that point, how is that helping livery drivers?”

Kalanick gave his usual bland speech about “you can’t stop the progress of technology.” But frankly, Travis Kalanick’s touting of self-driving cars is just a smokescreen. His company will be the last to go to self-driving cars, and here’s why. Uber’s business model depends on exploiting human drivers who bring their own cars to Kalanick’s profit-churning machine. One of Kalanick’s chief rationales for saying Uber is a technology company and not a taxi company is because the company does not own any cars. But if he doesn’t have any drivers, whose cars will he exploit? Won’t he have to purchase or at least lease his own fleet of cars, just like a (gasp) taxi company?

Colbert didn’t even attempt to raise any of the usual Uber “parade of horribles” that I detail in my book—Raw Deal: How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers—using grossly underinsured drivers, faulty background checks (a type which the FBI has estimated has a 43 percent error rate), breaking local livery laws and refusing to pay livery taxes, making veiled threats against critical journalists, using passengers’ personal data and tracking technology (which the company calls “God View” and “Creepy Stalker View”) to stalk them. When one of its drivers hit and killed six year old Sofia Liu, and badly injured her mother and brother as they were traversing a crosswalk in San Francisco on New Year’s Eve 2013, Uber washed its hands of any responsibility. Why? Because the company claimed that the driver was an “independent contractor,” not an employee. Yet the driver had a previous reckless driving record in Florida, including being arrested for driving 100 mph into oncoming traffic while trying to pass another car–something Uber’s faulty background check failed to uncover.

Unfortunately, Stephen Colbert mostly gave Travis Kalanick another opportunity to spout more Uber-shit on national television. The old Stephen Colbert show would have had a lot more fun with this very un-funny company, putting its CEO on the hot seat. Instead, the new Stephen Colbert show mostly tossed softballs. What a pity. It could have been a highly entertaining interview indeed.

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3 Comments on Uber Dreaming

  1. Uber announced today that it will be occupying an historic/iconic building in Oakland, which has caused an outbreak of indignation on the Oakland History Facebook group page, with people fulminating either before or against the company. My favourite posted link in a comment on the thread is this one: https://youtu.be/O3ZOKDmorj0

  2. I use Uber a lot – as they told me in a personalised email last week, in 6 months I have travelled 1272 kilometres, ‘met’ 175 drivers and ‘saved’ $1072. I’ve probably saved a lot more than that, actually. I have always used taxis heavily, and I don’t drive a car. Lately I came to resent the lack of service and accountability from firms like Co-op; especially their outrageous $3 surcharge for eftpos. So I switched to Uber. I’ve heard the stories about evil Uber.. But I talk to drivers too. Mostly they have good thing to say. The only negatives i have really heard are from drivers gaming the system – those who are signed to Uber but really are driving for other cab companies and picking up Uber jobs on the side when it’s quiet. I think the old school needs a good shakeout.

  3. You have to balance any discussion on the above with a mention of how appalling the work conditions are for taxi drivers in regular NZ taxi companies. Common to have to pay a couple of hundred a week for “sign hire”, “radio hire”, etc etc, then sit around all day for one ride. Unless you pay the company another 3 hundy to be a “premium” driver – when any long distance high paying fare phones in, they get the call. Off sick and can’t drive – the crooks, I mean, taxi company keeps charging the “hire” fees. Uber look like the model corporate citizen next to many NZ cab companies. Maybe things are different in othe countries.

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