The week of February 28, 2016

Can we build a humane alternative to Uber?

By Nithin Coca

By now, most people have recognized “the sharing economy” as more a convenient slogan than as heralding a new era of prosperity. Thanks to forward-thinking platforms such as Airbnb and Uber, we were told, the sharing economy would let people work in whole new ways. But lately there’s been turmoil in what’s now more widely known as the on-demand or gig economy. Upset at persistent fare cuts, Uber drivers have staged strikes in New York, San Francisco, and Pittsburgh. The strikes occurred despite a lack of union representation, though the Seattle city council recently passed a law that, if upheld, would let Uber and Lyft drivers unionize. Meanwhile, affordable housing advocates in San Francisco proposed a ballot initiative that would have slowed Airbnb’s growth in the city, and the company spent an unprecedented $8 million to defeat it.

So what happened to the promise of the sharing economy? “What initially looked like innovation eventually cranked up the volume on income inequality,” says Trebor Scholz, a gig economy expert and associate professor of culture and media at the New School. “Digital laborers are getting up every morning only to join an auction for their own gigs.”

“Digital laborers are getting up every morning only to join an auction for their own gigs.”

That’s occurred against the backdrop of the larger American economy, with its record wealth inequality and stagnant wages for middle and lower class workers. Caitlin Pearce is an associate director of strategic initiatives with the Freelancers Union, which seeks to represent many workers in the gig economy. She sees advantages in the kind of on-demand work offered by Uber, TaskRabbit, and others—such as flexibility and access to new job markets—but also some worrying trends. “Obviously there is a lot of concern when we have freelancers competing in a marketplace that looks like a race to the bottom,” says Pearce. “They are starting to negotiate against each other.”

It seems likely that casual, project-based work isn’t going to go away any time soon. The question labor advocates are now asking is how to make the gig economy work for workers, ensuring that the kind of no-benefits, below-minimum wage, independent contractor arrangements now so common don’t become the only option. “The economy of the future—whether that is house cleaning, content creation, pet care, or whatever—is going to include gigs. We have to make sure that it isn’t making itself profitable at the expense of the people doing the work,” says Kati Sipp with Hack the Union.

Part of the problem activists face is a concentration of power. Just a few platforms, from Amazon’s Mechanical Turk to Uber, Airbnb, TaskRabbit, and a handful of others, dominate the on-demand economy. These companies are designed to maximize returns for investors; often, that means shortchanging those who are doing the actual work of coding, driving, or standing in line. And those same companies are hiring legions of lawyers to remake policy and laws in their favor while also facing challenges in the courts. Right now, deep pockets and wide-ranging networks—Uber, the poster child of the on-demand economy, is a global operation valued at more than $60 billion—make it hard to envision a challenge to their dominance.

But advocates see another way to influence the future of the on-demand economy: with technology. Specifically, by challenging today’s closed, corporate-controlled platforms with alternatives that are worker-owned, open source, and transparently operated. The vision is of a cooperative platform that’s part open-source foundation, part nonprofit, and part traditional co-op; it would remove the cutthroat profit motive that drives down wages while providing workers a voice in their own employment.

“Cooperative platforms are a mode of doing business that is democratic, which puts people before profit,” says Nathan Schneider, a media studies scholar in residence at University of Colorado Boulder. “It’s become especially urgent when we see the experience of the most vulnerable workers in society, who are seeing their lives affected by the existing exploitative platform economy.”

The traditional cooperative, though, has existed for decades and tends to be local, like a grocery store or a bakery. It keeps money in the community and creates a direct and often overlapping connection between workers and consumers. That doesn’t mesh well with the existing, venture capital-funded on-demand platforms, which need massive scale to prove their often outsize valuations and to prove they can dominate what are often considered winner take-all sectors. (Uber, remember, is just 7 years old and is already a global force.)

But an open competitor wouldn’t need to match massive scale. Instead, it could offer a gateway to an interconnected network of local cooperatives.“For instance, you could imagine Uber replaced by an open-source app that everyone could download and use wherever they went, but depending on where they were, it would reach different cooperatives, meaning more local control. And a lot of times, things are better-run at a local level,” says Schneider.

If the problems of scale can be surmounted, there’s still a bigger problem: money. The millions that flow into Uber, for example, allow it to severely undercut taxi fares in order to gain market share. (The assumption being, of course, that once it’s become dominant, Uber will raise prices to become profitable.)

“It is so hard to create cooperative platforms and make them fight giants who are backed by VC funds.”

That massive war chest is partly what doomed La’Zooz, a Israel-based platform that would have competed with Uber. “We couldn’t find the needed support from the community,” says Eitan Katchka, founder of La’Zooz. He’s currently working on, a platform for ride-hailing that would allow users to create their own networks. But, he says, “it is so hard to create cooperative platforms and make them fight giants who are backed by VC funds.”

If cooperative platforms can compete on a technological level with the dominant players of the on-demand economy but can’t match their bankrolls, they might have to appeal to more than customers’ wallets. Here advocates point out that people are willing to pay a premium for products and services produced or rendered ethically—think of the fair trade, organic, or slow-food movements.

Good design would let cooperative platforms tout their commitment to workers. “In the interface of the cooperative app, you could make very clear how your platform is superior, morally, ethically, to those extractive platforms,” says Scholz. Moreover, without having to worry about investor returns or profitability, they could potentially offer competitive prices (notwithstanding the subsidies made possible by VC money).

That leads to the final challenge: policy. Governments are often more eager to provide incentives to large companies claiming to be job creators than to local co-ops. Schneider, however, says he sees that changing. “More and more people involved in public policy are realizing that that strategy is very limited and unsustainable, and if we want to build lasting, local wealth, cooperative enterprises are a very powerful tool to do that,” he says.

Scholz is starting a platform cooperative foundation, which could receive grants to create open-source programs to be used by cooperatives around the world. And alternatives to the dominant players have already arrived. The National Domestic Workers Alliance recently launched Fair Care Labs, aimed at creating platforms that give domestic workers—who were exploited and reliant on gigs long before on-demand apps emerged—more control over their work. In Colorado, a union-backed taxi co-op called Green Taxi launched with $500 financial commitments from more than 700 drivers, though the group still faces regulatory challenges.

A single co-op might not sound like much compared to Uber’s global juggernaut. But advocates say it’s just the beginning, and it’s a small and necessary step toward making the on-demand economy more humane for the people working in it. At least, that is, until the driverless cars arrive.

Illustration via Bruno Moraes