Seattle’s ordinance allowing Uber and Lyft drivers to unionize cleared a legal hurdle last week as a District Court judge dismissed an attempt by the U.S. Chamber of Commerce to block the ordinance from being implemented. Supporters of the ordinance have justified it by offering up the usual trite narrative about a powerful company using its legal power and political muscle to oppress its employees. The truth, however, is that unionization in ridesharing would be good for the politically well-connected, and bad for Uber and Lyft drivers.
On its face, the drive to unionize Uber and Lyft drivers is logical. Why should workers in the ridesharing economy lack the protections that those in other industries receive? Clearly, Uber and Lyft’s opposition to this ordinance is nothing more than a large and rapidly expanding corporation trying to avoid paying out benefits, right?
Well, wrong. Unionization efforts are rooted in an outdated business model. The core attraction of this new economic model is convenience. Being an Uber or Lyft driver can be a weekend job, a second job, or just a way to make some extra cash. This is why more than nine out of ten Uber drivers report satisfaction in being able to balance Uber driving with the rest of their lives, and eight out of ten report being satisfied with their experience driving for Uber overall.
Unionization would ruin this business model. By requiring Uber and Lyft drivers to be classified as full-time employees, Seattle would force Uber and Lyft to allow unions to negotiate minimum hours of work, minimum wages, and compulsory union dues, among other things. This would drive up rates for users of ridesharing apps, and reduce flexibility for drivers. Unionization is a solution in search of a problem, as only about 20 percent of drivers for Uber drive more than 15 hours a week, the same number that report that Uber is their only source of income.
The common argument in favor of unionization for workers is that corporations have much more power than the individual employee. However, Uber drivers set their own hours and working conditions, and thus have no need for protection against “exploitation” on those fronts. What they don’t control is benefits, like mileage reimbursement, which is why companies like Uber and Lyft should be able to experiment with providing such benefits without having to classify their workers as employees. Rather than trying to cram Uber and Lyft drivers into an area of employment law that does not apply to them, governments should recognize that ridesharing drivers are a new type of employee in need of a new class of employment.
Despite the fact that a strong majority of Uber and Lyft drivers see themselves as contractors, not employees, union organizations continue to push strongly for ordinances such as Seattle’s to be passed. The reason for this can likely be seen in declining union membership rates. Though union membership once boasted rates as high as 35.4 percent in 1945, today only 6.6 percent of private-sector workers are unionized. Most American workers no longer need or want to be part of unions, so unions are scrambling to force them to.
As Jared Meyer explains, unions’ benefit plans are essentially Ponzi schemes that are failing due to declining youth membership. Unions need young, unionized workers’ paychecks in order to fund these benefit packages, but they are running out. With these facts in mind, what better target than ridesharing drivers, over half of whom are under 40? Whether these drivers actually want to be a part of the union is irrelevant.
Seattle’s ridesharing ordinance would put economic progress at a standstill. As the American economy moves towards a business model that is better suited to the millennial generation that is entering it, politicians should not stand in the way simply to protect well-connected industries and organizations. If Uber and Lyft drivers do not want to be part of a union, we should not force them.