Uber’s executives might get wealthy from its initial public stock offering set for next month, but its drivers will be unjustly left out of the wealth, charged the New York Times in a class-warfare article headlined, “He Has Driven for Uber Since 2012. He Makes About $40,000 a Year.”
The article, by David Streitfeld, tells the story of Peter Ashlock, 71, of Cotati, Calif., who has racked up 25,000 trips as an Uber driver since 2012 in a car that has 218,000 miles on it – “nearly the distance to the moon,” the reporter wrote.
“While he is an integral part of Uber’s success, Mr. Ashlock is barely getting by,” Streitfeld wrote. “His 2018 tax return will show an adjusted gross income in the neighborhood of $40,000, better than 2016 and 2-17. But he has maxed out his $3,200 credit limit at the local Midas car-repair shop and needs to come up with $5,000 to pay his taxes. He has Social Security but no savings to buy a new car that will let him keep working.”
This is Uber’s fault because “Silicon Valley has always been a lottery where immense wealth is secured by a few while everyone else must hope for better luck some other time,” Streitfeld wrote. “Rarely, however, has the disparity been on such stark display as with Uber. Its stock market value is expected to be about $100 billion, which would make it one of the richest Silicon Valley public offerings of all time.”
That’s great for “Uber’s founders, the Japanese conglomerate SoftBank, the elite venture capitalists Benchmark and Google’s GV, Saudi Arabia’s Public Investment Fund and the mutual fund giant Fidelity.” Also, Travis Kalanick, a co-founder ousted after a series of scandals, “reaped $1.4 billion by selling fewer than a third of his shares to private investors in 2017.”
But for independent contractors, such as Ashlock, the picture is different. They are not eligible for employee benefits, such as paid vacations or stock options. Long-term drivers, such as Ashlock, will receive bonuses of $100 to $10,000, matching its competitor, Lyft, which went public in March.
Ashlock’s situation “illustrates the hollow promise of the so-called gig economy, which billed itself as being superior to the usual manager-employee relationship. It promised to harness the power of technology to liberate the struggling millions,” Streitfeld wrote.
Streitfeld wrote that “old-style taxi companies were an ideal villain” because drivers had to spend more than $40,000 per year just to lease their taxi, ‘so that wealthy taxi company owners can reap the benefits of drivers having no other option to make a living,’” he wrote, quoting from a 2014 press release from Uber.
Driving for Uber, on the other hand, “was sustainable and profitable,” he wrote. “Drivers were described as entrepreneurs with a median income of $74,000 in San Francisco and $90,000 in New York.”
Streitfeld wrote that Ashlock spent a decade as a cabbie in San Francisco, earning “about $500 a week, equivalent to $1,500 now;” only then, he had to buy the gas but not pay for repairs or upkeep.
Ashlock, he wrote, made more than $88,000 driving in 2018, but he had to pay $20,000 in commissions and fees. “He can deduct $30,000 on his taxes for gas and depreciation,” Streitfeld wrote. “A small class-action settlement and Social Security helped his bottom line, but payments on an old student loan hurt it.” Later in the story, it reveals Ashlock made another $23,000 driving for Lyft.
In other words, Ashlock is a fairly typical entrepreneur. He has bills that relate to his business and some that don’t. He understood the bargain going in, and he does not claim Uber misled him or took advantage of him in any way during his time driving for them. He says only “That was Uber’s big innovation – make the drivers absorb the overhead.”
The story never says what share of the IPO should go to Ashlock and fellow drivers nor why.