Some companies spend the months leading up to their initial public offering (IPO) promoting their business and essentially conducting a national promotional tour showing why their business is the best in the industry. Never a company to take the conventional route, Uber will spend the days leading up to its May 10, 2019, IPO dealing with a global driver strike.
Drivers have informally announced that between 7 and 9 in the morning, local time, on Friday, they will log off Uber, Lyft, and Juno platforms to protest how Uber treats its drivers, who are contract employees. The New York Tax Workers Alliance (NYTWA) announced it will also strike “in solidarity” with rideshare drivers from the hours of 7a.m. to 9a.m. local time and encouraged protests at major transportation hubs and company offices around the country.
Why are They Protesting?
Many drivers work for more than one rideshare service, which is likely why so many Lyft and Juno drivers are participating in the strike. However, as the rideshare industry has grown, more and more drivers feel they are not adequately compensated or cared for by their parent companies The NYTWA, which certainly could have a vested interest in seeing the Uber IPO tank, announced that the strike is to highlight the need for “higher wages and livable incomes, job security, and regulated fares.” At present, drivers say they feel exploited, particularly given that many Uber executives are likely to become millionaires by the closing bell on May 10.
Drivers for other services, including members of the NYTWA, say they are going to strike with Uber drivers to show support and highlight the message to Uber’s rivals as well as to the company itself. The drivers may encounter some difficulties when it comes to getting results thanks to widely varied messaging. While Rideshare Drivers United wants elected driver representatives on the boards of rideshare companies, 10 percent commission caps on driver earning, and an hourly minimum wage, others say they need healthcare, vehicle maintenance budgets, and a way to work for the company without having to take on debt, which one-third of drivers say they have done. Still others say they simply want transparency for the algorithms that determine how much they make per ride.
Preparing for the Fallout
While strikes by Uber and Lyft drivers combining with strikes from local tax companies could disrupt travel for thousands of Americans, it could be a boon for taxi drivers who opt to go to work instead of standing “in solidarity” with the rideshare drivers. Airports are lining up extra taxis for the day of the strike, and passengers report they are investing options like heavy and light rail as well as bus systems to reach their destinations.
Regarding the strike, Uber simply stated, “Drivers are at the heart of our service – we can’t succeed without them – and thousands of people come into work at Uber every day.” The company promised to “continue working to improve the experience for and with drivers.” However, since Uber and other rideshare companies have repeatedly insisted that taking drivers on as traditional employees instead of contractors will hurt their business model, it seems like this promise could worry investors ahead of Friday’s IPO. They also point out that the “gig” model of employment, wherein drivers work when they want but companies have fewer obligations to them, offers other benefits to drivers that a traditional employee-employer relationship would not.
Wall Street analysts have been largely silent on the topic of how the strike will affect the IPO, but Wedbush analyst Dan Ives did warn that investors should view driver protests as an “added risk” in the offering. Ives predicted that if Uber pushes to take more of the share of the fare from drivers, minimum wage guarantees could result. This could be particularly problematic in major ride-sharing markets like Los Angeles and San Francisco, he said.
Tell us what you think:
- Should Uber go ahead with its IPO?
- Should rideshare drivers have the same benefits traditional employees do even though they are contract workers?
- Are you buying Uber shares this Friday?
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