The CEO of Uber is a political refugee. Dara Khosroshahi, 51, who immigrated to the US as a boy after the Iranian revolution in 1979, when the family’s pharmaceutical and consumer-products group was nationalized by the new regime.
Four decades later, Mr. Khosrowshahi (apparent cause-line-SHAH-hee) leads himself to another successful venture that has become the goal of the government. Last year the California Legislature passed a law known as AB5, which aims to create “gig companies” like Uber’s employees who are now independent contractors as employees.
“Laborism” is an apt description of the ideology of California Democrats. AB5 was operated through unions, which seek to organize hundreds of thousands of gig workers and other freelancers. The National Labor Relations Act and antitrust laws do not allow independent contractors to form unions. The lawmakers therefore passed AB5, intended to force companies to reclassify themselves as employees. This presents an existential threat to the business models of Uber, DoorDash, Instacart and Lyft-based platforms that engage customers with workers in return for payment deductions. They allow drivers and food couriers to work for multiple platforms whenever and wherever they want.
“We’ve always been an engine for people to find a bridge, to essentially earn, or to get an education, to take care of a loved one,” Mr. Khosrowshahi says. “More than 90% of our drivers actually work less than full-time. . . . And the amazing thing about Uber is everyone has a different story. I was talking with a driver partner who loved being his own CEO and writing a script part time. Another started driving as she was taking care of her ailing mother. ”
Uber would be required to classify drivers as employees according to the number of hours they work, regardless of the prescribed schedule to workers, including meal breaks and state-mandated benefits. Uber has opposed doing so, but was ordered by a state judge in August. On October 13, an appellate court has been set up to hear arguments in the case.
Mr. Khosrowshahi argues that making changes to Uber’s platform in California gives drivers more control that makes it compliant with AB5: “Riders now pay drivers directly; We charge a commission. Drivers can now set their own prices. If they want more business, they can decide to reduce the price; If they overestimate their time, they can choose to increase their price. They have full information about whether they accept the ride. ”
“If you are considering the opinion that Uber is an employee with this new model, you would be of the opinion that AirBnB is employing its hosts and eBay is employing its vendors. We are really The new model has a technology platform that is essentially allowing riders and drivers to transact together. And we think a lot complies with AB5. ”
However, Uber and other app-based gig companies are spearheading the campaign for an initiative on the November 3 vote to exempt AB5. Proposition 22 would guarantee 120% of the local minimum wage to customers that they spend around customers or food. Those who work at least 15 hours a week will also be eligible for a subsidy to purchase health insurance on the Affordable Care Act exchange.
Companies in California’s history have spent more than $ 180 million in this campaign. Labor unions have spent only $ 6.6 million in protest, but they were helped by Attorney General Xavier Becerra, who gave the initiative a somewhat balanced title: “App-based transportation and distribution companies from providing employment benefits to some drivers concession.”
A poll last week by the Institute of Government Studies at the University of California, Berkeley showed 39% of voters supporting Proposition 22, with 36% opposed and 25% unspecified. Ironically, the irony was strongest among young people — the demographics that made the platform’s earliest customers.
Launched in San Francisco in 2009, Uber quickly expanded to other large cities, prompting a furious response from taxi companies and regulators. Its flamboyant founder Travis Kalanick was accused of promoting “brow culture” and ignoring reports of sexual harassment, which prompted private investors to exit him in 2017.
Mr. Khosrowshahi, who worked as Expedia’s CEO for 12 years, was tapped to clean up the company’s image before going public in 2019. He is more traditional than his predecessor and fluent in Wall Street lingo.
The Kovid-19 epidemic, he says, “is becoming a huge tailwind for our distribution business. That business has grown very rapidly, which we announced increased revenue by more than 150% last quarter. And it Is a very important economic engine for restaurants and other small businesses. ”
Uber acquired food-delivery platform Postmates this summer and now controls 37% of that market, second only to DoorDash (45%). “I think this new change in behavior is going to be sticky, and sticky for some time,” Mr. Khosrowshahi says. But he hopes customers will finally start eating again: “I think there’s a theater to eat, which obviously I personally like very much.”
Drivers are getting a headward to return to the road. “In the US, drivers are a bit slower than what we see in other countries. In other countries we see a lot of drivers, and there is a strong supply, and demand, because things bounce back, ”he says. “In the US, drivers are a bit more reticent to come back and drive. And we think that something may have to be done for unemployment benefits. ”
As part of the CARS Act, Congress created independent contractors for unemployment compensation for the first time in March. In addition, the profit was “increased” to $ 600 per week. The increase ended in August, but President Trump raised it through an executive order at $ 300 a week.
If gig workers can collect unemployment, is there a case for companies to provide them with other benefits, as AB5 requires? “I think that to provide a stricter benefit package, whether it’s health care or time off, I think drivers will not be met on their terms,” Mr. Khosrowshahi says. “The vast majority of drivers, on a 4-to-1 basis, do not want to be employees. They value flexibility. ”
Even though voters approved Proposition 22, Democrats in other states, such as New York and Illinois, have proposed similar legislation. So are the Democrats in Congress. This has led to speculation about the replacement of drivers with machines. Mr. Khosrowshahi says Uber intended self-driving cars to expand its business, but computers are not expected to replace human drivers. “The way I think about self-driving in my network, the same happens in factories,” he says. “Robots perform the most rote, predictable tasks. I think the same would happen in self-driving. As we introduce robot cars, they will do the simplest route. And they will actually allow us to lower the price of Uber, which will then bring more demand to the network, which will allow us to actually hire our own drivers.
“So when 100% of our routes are run by drivers, it can go down to 50% over a period of years, but it will be 50% of a market that is 10 times larger, and eventually, it will result in us. More drivers are required on the platform. ”
Automated cars can take children to sports practice, free parents, or take suburban commuters to city offices. If they say that more people move to the suburbs as a result of the epidemic, it will help us and not hurt us. “Some of these areas don’t have transit as an option, so it’s either car ownership or it’s Uber.”
A cultural change is also underway. “If you look at our society, then driving a car becomes a part of people’s identity – whether you live in a city or you live in a suburb. My son now — I’m trying to convince him to learn how to drive, and it’s not just a necessary step for him. The day I could get my license, I left, I practiced, I couldn’t wait, “he laughs. “But I think for the younger generations, and even now for the older generations, the value of getting back my time, to be able to work or talk in the car. Out to dinner. Being able to go and get some drinks, and not worry about how you’re going home. I think the value is universal, whether you live in a big city, or a small town, or a In the suburb. ”
Or in the Middle East. Uber’s Dubai-based subsidiary Careem employs thousands of female drivers, including Egypt, Pakistan and even Saudi Arabia. But then as his family history of Mr. Khosrowshahi shows, rulers often try to kill their golden tomorrow.
Ms. Finale is a member of the editorial board of the journal.
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8