A landmark court ruling against Uber may rewire our relationship with labor.
Josh HarkinsonSep. 3, 2015 6:00 AM
A taxi driver protests against Uber.
No company right now elicits a wider range of emotions than Uber. The on-demand ride service has grown in six short years from an idea hatched by a couple of San Francisco tech bros to a $50 billion juggernaut that serves millions of users in 290 cities. Its name has not only become a verb, like that of Xerox or Google, but shorthand for an entire industry. Now an army of start-ups offers quick, cheap delivery of goods and services—everything from maids and mechanics to pizza and pot—by independent contractors tethered to smartphone apps. If you live in a major city, earn decent money, and know how to punch buttons on your phone, then you can thank Uber and its ilk for making your life a hell of a lot easier.
But that world as we know it may soon come to an end.
On Tuesday, a federal judge in San Francisco awarded class-action status to a lawsuit in which three Uber drivers contend they are employees, not independent contractors. If they win the lawsuit, the driversmust be reimbursed by the company for gas, workers compensation, and other benefits. Uber has said losing the suit, which could involve 15,000 of its former drivers, might force it to fundamentally rethink its business model. And maybe that's exactly what needs to happen.
Uber has disrupted not just powerful taxi monopolies but also a sizeable swath of the American middle class. By flooding city streets with gypsy cabs operating under the guise of a "ride sharing" service, Uber evaded regulators, delighted consumers, and put an end to what had once been a passable way to make a living. In San Francisco, for instance, the cabbie who leads the city's Taxi Drivers Association reported last year that his take-home pay from driving had dropped by 50 percent. Lured over to Uber by recruitment ads promising $40 an hour, many professional drivers eventually found that after paying for gas, maintenance costs, and Uber's cut of the profits, they ultimately made less than minimum wage.
The system used by Uber and its imitators is often called the "1099 economy." The people who work for these companies don't file W-2 tax forms; instead, they file the independent-contractor form, the 1099-MISC. The benefits of using 1099 contractors are obvious. You only have to pay contractors for the time they spend providing services, not for lunch breaks or vacation time. You need not provide health benefits, unemployment insurance, or retirement plans. And contract workers don't even need to be fired if they screw up, since they were never formally employed by you to begin with. You simply boot them from your app and move on.
Tech start-ups didn't invent the 1099 economy, but they've dramatically expanded it. Most companies that market themselves as "Uber for __" use independent contractors, including some that are backed by tens of millions in venture capital. The dozens of 1099 start-ups in the Bay Area include Washio (Uber for laundry); Eaze (Uber for marijuana); Handy (Uber for handymen); and Spoonrocket, Postmates, and DoorDash (Uber for food).
Last year, Kevin Roose, then a writer for New York, hired a house cleaner through Homejoy, a company backed by $40 million in venture capital funding from well-respected firms such as Google Ventures. Roose asked him where he lived. "Well, right now I'm staying in a shelter in Oakland," he said. It turned out that he was homeless, as were other Homejoy cleaners used by Roose's friends. (In July, Homejoy shut down, citing lawsuits brought by cleaners who claimed they were misclassified as independent contractors).
Most 1099 start-ups insist their approach is better for workers. They're typically allowed to set their own hours and, in the words of Steven Hsaio, the CEO of SpoonRocket, to become "their own entrepreneurs." Such flexibility and autonomy might be ideal for students, artists, and anyone else looking to earn a few extra bucks in their free time, but it's hard to see how it benefits people for whom such work is the sole means of making a living.
"If we want to live in a country where you can have a job and work 9 to 5 and have that be enough, then maybe we want to think about what these business models are doing to the larger economy," Veena Dubal, an expert on the "sharing economy," said recently on a San Francisco radio show.
"In the taxi industry, which Uber has effectively been trying to replace, at some point not too long ago, you had workers who were able to do this professionally," said Dubal, an associate professor at the University of California-Hastings College of Law. "There's something to be said for this work being professional labor and for people being able to support their families and send their kids to college and buy homes."
In fact, a backlash against the 1099 economy is well underway. Last year, a federal appeals court ruled that 2,300 FedEx delivery drivers in California were being misclassified as independent contractors since FedEx exercised broad control over their schedules and methods. And in June, the California Labor Commissioner sided with an Uber driver who challenged his classification as an independent contractor, ruling that the company had acted like an employer by maintaining substantial control over workers' behavior. Uber is appealing the ruling.
If Uber is forced to revamp its business model, it could spell the end of the low-cost service economy that many affluent urban consumers have come to take for granted—and a few venture capitalists might get slightly less rich. But on balance, the change will put the economy on a more sustainable track. Service workers might have a better shot at earning a living wage. And consumers will still be able to order $13 grilled Hawaiian tuna at the click of a button.
Several thriving on-demand start-ups, among them Munchery (a competitor to SpoonRocket) and Alfred (a competitor to Homejoy) treat their workers as employees and offer full-timers benefits such as health care. Others that had previously used independent contractors, such as BloomThat (Uber for flowers), Shyp (Uber for packages), and Luxe (Uber for valet parking), have recently made the switch.*
None of this means the gig economy is going away, of course. There will always be people like my friend James, a self-employed childrens' book illustrator who has long delivered pizzas to help pay the bills. Lured by Uber's recruitment ads, James bought a four-door Mini Cooper last spring and went to work shuttling people around. But he quickly discovered he was only making about $12 an hour, not including wear and tear on his car. So in February, James gave up the Uber gig and went back to working for the same old-school San Francisco pizza joint—where he's classified as an employee, meaning he gets reimbursed for gas.
"A lot of people are treating Uber like a full-time job but are not getting anything from it," he says. "I was often making twice as much delivering pizza as I was working for Uber."
Correction: An earlier version of this article stated that Shyp and BloomThat use independent contractors. BloomThat now uses W2 employees and Shyp is in the process of making the transition. Mother Jones regrets the oversight.
Irrigation water appears to be a major loophole in the USDA's organic food safety program.
The US Department of Agriculture's organics standards, written 15 years ago, strictly ban petroleum-derived fertilizers commonly used in conventional agriculture. But the same rules do not prohibit farmers from irrigating their crops with petroleum-laced wastewater obtained from oil and gas wells—a practice that is increasingly common in drought-stricken Southern California.
"No one expects their lettuce to contain heavy chemicals from fracking wastewater."
As I reported last month, oil companies last year supplied half the water that went to the 45,000 acres of farmland in Kern County's Cawelo Water District, farmland that is owned, in part, by Sunview, a company that sells certified organic raisins and grapes. Food watchdog groups are concerned that the state hasn't required oil companies to disclose all the chemicals they use in oil drilling and fracking operations, much less set safety limits for all those chemicals in irrigation water.
A spokesman for the USDA's National Organics Program confirmed that it has little to say on the matter. "The USDA organic regulations do not directly address the use of irrigation water on organic farms," said the spokesman, who asked to be quoted on background, "but organic operations must generally maintain or improve the natural resources of the operation, including soil and water quality."
Of course, that's easier said than done. USDA organic regulations do not require farms to perform water quality tests, and irrigation water is not evaluated as an input by the Organic Materials Review Institute, which vets products used on organic farms. Calls placed to California Certified Organic Farmers, which certifies organic farms in California, were not returned.
On Monday, California Assemblyman Mike Gatto, a Democrat from Glendale, introduced a bill that would require crops irrigated with wastewater from oil and gas operations to be labeled as such. "No one expects their lettuce to contain heavy chemicals from fracking wastewater," he explained in a press release.
That's especially true if their lettuce is labeled "organic," adds Adam Scow, the California director of the environmental group Food and Water Watch: "I think most people's logic would tell them that's not a practice consistent with organic standards."
The author of the "Cannabis Manifesto" dishes on racist drug laws, hemp jewelry, and California's weed-fueled world domination.
Josh HarkinsonAug. 17, 2015 6:10 AM
Steve DeAngelo at a protest in Oakland, California
Steve DeAngelo is best known as a lifelong cannabis activist and the founder of Oakland's Harborside Health Center—California's largest and, by many accounts, most respected pot dispensary. In 2012, US Attorney Melinda Haag initiated civil forfeiture proceedings against Harborside, which does $25 million a year in sales, on the grounds that it had grown too big. If the case goes to trial, DeAngelo has vowed to demand a courtroom large enough for "every single one of the 220,000 patients who depend on us for health care." While maintaining an activist approach, DeAngelo has also become a leading pot entrepreneur as president of the Arcview Group investor network. His new book, the Cannabis Manifesto, will be published in September.
Mother Jones spoke with DeAngelo last week about his time as a teenage runaway, his experiences in the Yippies, and his predictions for the future of pot.
Mother Jones: When you were a teenager growing up in the DC suburbs in the early 1970s, your parents busted you for smoking pot and seized your stash. Then you ran away from home for a few weeks. How old were you?
Steve DeAngelo: Thirteen.
MJ: What would you tell your kids if they wanted to smoke pot?
SD: I don't have kids so I am not in that situation, but I think one of the best ways for kids to learn about cannabis use is to see people who are close to them using it responsibly. If cannabis is not the forbidden fruit, teenagers are generally not that interested in it until they get to be 16, 17, 18 years old. Of course, I don't advocate that anybody who is not legally qualified should use cannabis, but I do know that there are a lot of parents who share alcohol at the family table with their kids before they reach 18 or 21 years of age as a way of introducing responsible use to them. And I think that's probably the most appropriate way for young people to be introduced to cannabis use.
In the fruit and veggie cornucopia that is California, local farmers markets sell everything from brandywine tomatoes and lemon cucumbers to hedgehog mushrooms and fresh medjool dates. But no farmers market can match the selection of the one in the Mendocino County town of Laytonville, which offers, among other things, an ample supply of heirloom cannabis.
Admittedly, this is not a typical farmers market. It takes place just once a year, at a hippie enclave replete with UFO murals and Ganesh shrines, and only certified medical marijuana patients may enter (though there's a doctor on site to help with that). But it does offer the spectacle of actual farmers selling their own produce and pot side by side.
Emily Hobelmann of the Lost Coast Outpostvisited last year and was wowed by the selection:
All told, I saw squash and apples and pears and peppers and world-class cannabis flowers. I saw leeks and tomatoes, peaches and dab rigs. I saw picked beans and marijuana clones, carrots and cold water hash.
If you happen to be up that way, you can stop by between 11 a.m. and 4:20 p.m. next Saturday.
In January, Intel raised the bar in Silicon Valley by setting concrete targets for hiring women and minorities. While other major tech firms had cut big checks to groups that promote workplace diversity, Intel was the only one to commit to measurable change, pledging to make its workforce reflect the diversity of the tech talent pool by 2020. Some saw the goal as overly optimistic, but Intel's midyear diversity report, released today, shows that it is largely on track to meet its goals.
Overall, more than 43 percent of the company's new hires since January have been women or racial minorities such as African-Americans and Hispanics:
These numbers may not seem particularly high—African-Americans, after all, make up 13 percent of the American workforce but just 3.5 percent of Intel's. But they do compare favorably with the talent pipeline for technical jobs. (Just 4.5 percent of computer science degrees last year went to African-Americans). And the overall demographics in the tech sector are pretty skewed to white dudes:
Compared to those industry-wide numbers, Intel is still falling behind in hiring African-Americans. Yet a comparison of workplace demographics in December and July shows that it's making progress on several fronts:
Though these shifts aren't huge in percentage terms, they are notable for a company with tens of thousands of employees. The biggest jumps in minority representation have come within the company's leadership ranks—which still remain heavily white and male:
Rev. Jesse Jackson, whose Rainbow PUSH Coalition has played a major behind-the-scenes role in Intel's efforts to diversify, issued a press release praising the company. "Rainbow PUSH argues that companies must set measurable diversity and inclusion goals, targets, and timetables," he said. "Due to CEO Brian Krzanich's steady and visionary leadership, Intel is doing that and more."