On Wednesday, Uber and Lyft drivers in major cities across the country went on a one-day strike, asking for living wages in the face of both companies’ multi-billion dollar IPO evaluations. While drivers picketed, Democratic Rep. Deb Haaland of New Mexico released a statement in support of those drivers saying that, "This is about fairness. Uber and other billion dollar multi-national corporations are not paying their fair share. Instead, they are passing the buck to their workers, increasing financial insecurity for folks who are working hard to put food on the table and keep a roof over their heads. The gig is up.”
Rep. Haaland is referring to the ride-hailing companies exploitation of a loophole in our tax code that has allowed them to consider their millions of drivers “independent contractors,” and not employees. This means that these drivers file 1099 forms, not W-2 forms. In doing so, Uber and Lyft have been able to shirk the responsibility of paying taxes on the Medicare and Social Security costs most employers have to pay. Normally, a W-2 employee would have to cover this distinction. This has allowed companies in the “gig economy,” like Uber and Lyft, to pretend they do not have any obligation to their millions of drivers, other than the “contract,” they’ve set.
Of course, according to a study cited by Rep. Haaland out of MIT, this means that drivers are making less than minimum wage in the states they work. There are competing studies that put the average hourly wage a little bit higher, but as gas prices rise, drivers find themselves incurring more and more costs. Meanwhile, Uber’s CEO Dara Khosrowshahi was reportedly paid $45 million last year. Just him. By himself. And he made less than the COO, Barney Harford, who made a cool $47.3 million.
Rep. Haaland’s proposed reform would put multinational corporations in a bind that they deserve. It would force these companies to have to pay not only the employer but also the employee portions of their 1099 “independent contractor” earnings. This is more than they would have to pay if those employees were simply regarded as employees with W-2 earnings. However, if they choose to reclassify those 1099 contractors as W-2 employees, those companies would be on the hook to “extend the other protections that W-2 workers have.”
This is a very progressive bit of pro-labor reform being proposed by the new representative from New Mexico. The libertarian fantasy of a gig economy where everyone is happy has been a scam, benefiting a new set of industrialists, now called “tech geniuses.”