Uber and Lyft drivers as employees: check your mood affiliation at the door

A reminder that if drivers become employees and so no longer can be on both Uber and Lyft, welfare will be lower with higher prices and higher wait times. See this paper. papers.ssrn.com/sol3/papers.cf In Australia, driver multihoming is baked in.

That is a tweet from Joshua Gans.  Keep in mind Uber or Lyft could simply insist on “unihoming” as a condition of employment, as indeed George Mason will not let me take a part- or full-time job teaching at another university.

Comments

The service that gets the most drivers will be the ones that don't insist on exclusivity. That's other online services that run 2-way markets don't insist on it either like Amazon and Ebay.

George Mason should revisit their employment agreements if they want to keep talent like you Tyler. Jack Dorsey works full time at a few companies, as does Elon Musk, as did pre-prison Carlos Ghosn. Remember athletes like Bo Jackson or Deion Sanders?

FYI, your framing and Joshua's serves as mood affiliation.

Go to Amazon and order a cab, why not?

Here is a timely piece on America's resurgence, resurgence of grifting: https://www.nytimes.com/2019/09/12/t-magazine/the-distinctly-american-ethos-of-the-grifter.html The article explains the circumstances, including today's circumstances, that promote grifting. He even cites Alexis de Tocqueville for authority on the American grift. My observation is that grifting is so common in America today that one is either in on the grift or a victim of the grift.

Which one are you?

He's a rich lawyer. So clearly, "in on the grift".

I think the opposite is more likely to be true. Limiting workers to 32 hours lets you avoid most of the obligations. Doing that and insisting on unihoming will result in no drivers, so I don't expect unihoming.

I think the point is that Uber and Lyft have sufficient monopsony power in the relevant labour market that they can do whatever they like. Big Business FTW!

The problem wouldn't be overall exclusivity. Neither company would care if a driver worked for Uber on weekends and Lyft during the week. But the current practice of drivers being open to accept rides from both services at the same time probably won't be possible under an employee model.

Some other thoughts -- it is possible for businesses (like bars and restaurants) to call in employees when busy and send them home when not and pay them only when they're working. So it seems like the existing model might even keep working with drivers as employess....except for the fact that California has special rules for reporting time pay.

Also, we can't assume that this would favor traditional taxi services over Uber/Lyft, since the same independent contractor vs employee controversy applies there too.

When it comes down to it, I'm having a hard time seeing a winner here. Will the drivers be better off? No. Uber/Lyft shareholders? No. Riders? No. Taxi-drivers? No, not them either. How about California taxpayers -- will this bring in additional revenue? Looks like it would be the opposite, since I'd expect the number of rides and overall revenues to decline. Maybe the politicians who pushed this through will benefit (at least before the effects of the law are clear), but otherwise it looks like a whole lot of deadweight loss.

I think you're right about all this. Certainly, there's no advantage to anyone for a driver to work for one company during the week and the other on the weekend. The politicians will pat themselves on the back for having gotten benefits for the drivers, while turning a blind eye to the effect on employment. More broadly, though, California -- and by extension the Democrats -- now owns whatever happens to Uber and Lyft. Their demise (or even just a stiff jump in prices), will tick off a lot of people, and it will fit perfectly into Republican campaign ads about the destructive effect of over-regulation.

It's not about anyone benefitting, it's about control.

I love this concept of mood affiliation, as far as I understand it. Every usage seems vague though. Some of the examples are illustrative. Can you provide a more rigourous definition?

How do you define mood?
What is affiliation in that context?

How does it differ from confirmation bias?

Just group it with "virtue signaling" as filler when you want to criticize someone but have no solid criticism to offer

Both amount to mind-reading.

At this point, it's basically just a running gag on this blog.

"mood affiliation"

As far as I understand it, mood affiliation is identical to partisanship without the political overtones.

So, for example a group of urbanites might have a mood affiliation in favor of mass transits and a group of suburbanites might have a mood affiliation in favor of personal vehicles.

It's not partisanship, because it doesn't have anything to do with Politics. And indeed, there will be cases where it will be along group lines that aren't partisan at all.

MA has a definition, but I agree with others, that in the world of this blog it is used as a half-joking general slap-down: "If you don't agree with me, it is probably not on the merits, but because of your mood affiliation." It is a term I find annoying, because at its extreme it is unarguable: "You just don't see the truth because of MA."

+1, I don't know why Tyler added it to this title, it just ensures that anyone with a strong mood affiliation will dig in their hills. It's counter-productive.

I wasn't aware Tyler had a sense of humor. :)

Yeah, I get that it is often used loosely and jokingly. But I think in its first instance he had some well developed thoughts on the matter. Some of the examples were pretty good, but that's like defining "fruit" by describing apples, oranges, blueberries, and tomatoes. Then what about seedless watermelons?

'George Mason will not let me take a part- or full-time job teaching at another university'

You left out a couple of points -

a. Without permission - though a cite otherwise from the Faculty Handbook would be more than adequate

b. You are an employee of the Commonwealth of Virginia

I don't mean to be snide or naive, but is Cowen not paid for all of those lectures he gives around the world? It's none of my business, but I have assumed that he is paid, at least for many of them. If he is paid, is he required to remit to GMU? I represent many physician groups, and the standard employment agreement requires the physician to remit to the practice whatever teaching or writing fees she is paid. This provision is sometimes negotiable, but it's the default.

Prof. Cowen specifically referred to teaching, not speaking. However, of course he can make all sorts of income while a state employee - his books or columns, for example. And if another institution (not just a university) wishes to have him appear, of course he is free to accept a fee, travel expenses, etc.

He is also free to accept an invitation to be a guest professor at another university - though undoubtedly he would require permission, or possibly taking something along the lines of a sabbatical during that period. One assumes that everyone here is aware that professors can be paid to take time off to do research or other academic activities.

And reading here shows that Prof. Cowen is being less than accurate about not being allowed to teach at another institution - 'Any time spent on leave of absence, leave without pay, or time worked at another agency or institution may count towards the 6 years, but only if authorized by the dean of your college/school.

An applicant may apply in year 6 for a study leave in year 7 (with year 1 being the first year back from the completed study leave).' https://provost.gmu.edu/faculty-matters/professional-development/study-leave

Or possibly he was just unaware it is called 'study leave,' or that work at another institution requires permission first.

How does it work currently? The driver gets a credit to their bank account or credit card when they deliver a ride? Does uber issue that subcontractor form, the 1099? I suppose the driver goes to a busy location and signals availability, then gets rides as they come. Are they told to go to a certain place?

I'm not sure what California labor laws entail. Minimum call out hours? The standard payroll deductions. Are there any provision in California law on charging for use of your property or tools for a job? Do they then expense their vehicle expenses at so much a mile? Shift start and end would need to be scheduled. Overtime pay if that is in the law, maximum work hours. Injury at work coverage, as well as work safety regulations, which entail training and monitoring and personal liability for the employer.

I have two reactions. Welcome to the real world. Much of this is administrative work that is now done by the individuals and government at much expense. Tax collection probably is a net loss for the state.

What uber will likely find is that if they are forced to follow the customary employment rules that their whole business model falls apart. They will move to Vietnam where they don't have to worry about them. It will provide a data point on how the expensive and heavy structure of regulation in the us is why innovation and productivity gains are flat across much of the economy.

These are service companies. What are they going to do in Vietnam? Fight over a smallish market against indigenous competition and possibly Didi Chuxing? Pivot their business plans and build a factory?

Back in April, it was revealed that 24% of Uber's bookings occur in just five cities: New York, Los Angeles, San Francisco, London, and São Paulo. California saw two of their cities in that list and a light bulb went off, and here we are.

Even leaving aside the mood affiliations and overall welfare arguments, Uber and Lyft drivers are unambiguously employees by previous case law*. The traditional IRS tests are "behavioral control," "financial control," and "relationship." Uber and Lyft do not set driver hours; contractors (drivers) are responsible for their own cars and maintenance; there's no expectation of an indefinite relationship, and both sides understand the business relationship can be indefinitely terminated.

If you think it makes sense for contractors to exist, period (which, trivially, it does) then I think it's hard to create a set of standards by which Uber and Lyft drivers aren't contractors.

I'll make one final nonrigorous argument: compared to the average low-wage employee I interact with, Lyft and Uber drivers seem happier and more relaxed. Being able to set your own hours and work largely without oversight is a *huge* perk.

*: federally, at least; I don't know about California's specifics.

Sorry, unambiguously *not* employees; "relationship can be unilaterally terminated."

The Canadian tax authority looks at percentage of revenues as well. If you are 100% from one company they might look askance.

Check your mood affiliation at the door.

Almost as bad Hanson for delusions of rationality.

Really, how are they going to find out about your other job unless you tell them? Just keep it on the down low and you should be safe.

Yeah, Liberty University is in that area.

They like Jews.

Imagine yourself as Uber/Lyft and accepting that this law applies-- your gig-workers are employees.

First, you want to be able to treat gig-workers different from your regular workers regarding benefits, but without running up against anti-discrimination laws. You'd likely respond by limiting all gig-workers to less than 30 hours a week, so then you can offer different benefits to part-time and full-time employees, which is totally legal.

Next, you've gotta deal with driver pay. You probably have to change your driver payments to include expenses in some way-- probably with different reimbursement rates based on vehicle class (less for UberX than for UberSUV). Then you'd add a minimal hourly wage (probably exactly minimum wage) on top of that. Note that the expense reimbursement is untaxed, so workers are excited about this aspect of things. But you don't want to get killed by this change, so you also have to add more limits on drivers, so they aren't working when it isn't profitable for you, and also some monitoring to make sure drivers aren't racking up unprofitable miles (that you have to pay for).

You also may start putting more barriers in place to becoming a driver, as your liability for these drivers increases.

In the end, what we get is:
* driving for Uber/Lyft becomes less desirable to the more motivated drivers, as they're now supervised more closely, their income is constrained (because hours are limited and pay is time-based instead of productivity-based)
* driving for Uber/Lyft becomes more desirable for the less capable drivers, as they now have a guaranteed income when working and have more protections
* it becomes harder to get started driving for Uber/Lyft
* Uber/Lyft passengers pay a bit more
* Uber/Lyft passenger experience declines, as more-capable drivers are replaced with less-capable drivers and supply of drivers is less reactive to demand

Who have we made better off?

Perhaps a driver’s union (Teamsters?) if/when the drivers are unionized, and any political party anticipating a steady flow of funds from said union.

Only the taxi drivers, who now have less competition again.

"check your mood affiliation at the door"

I must have none, because I really don't care. These are minor details in a decades long transition to new kinds of work. It will end up on some aggregate consensus of what "work" in the 21st should be.

Suppose a "multi-homed" driver in France takes a sex break between two rides. Which company has to pay up for tragic outcomes?

Except for Marginal Revolution University! ;)

Mood affiliation: one never knows from which direction (left, right, middle) Cowen is coming. I accept at face value his admonition about mood affiliation: open the mind and be free to learn something new. I have learned much from Cowen's admonition.

George Mason may not allow you to take teaching jobs at other institutions, Tyler, but that is not a universal practice. When I was in the PhD program at UCLA, a number of the undergrad econ courses were regularly taught by instructors who were also full-time faculty at other local universities and colleges, including Pepperdine, Loyola Marymount, and Cal State Northridge.

I hope those poor guys scheduled alternate days. CSUN to/from UCLA against traffic? Torture.

I don't see a problem.
Uber and Lyft will just continue to lose money like they have been.

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