Uber drivers as employees, competing with robotaxis


With a new California law threatening to classify Uber drivers as employees, I examine if a law like that could really work or Uber can get around it, and also what happens if this makes drivers cost more -- and leads them to a tougher battle against their real competitor, the robotaxi.

Read more in my Forbes.com article If Uber drivers become employees, can uber escape that, plus how they compete with robotaxis


I don't have any firsthand knowledge of Uber/Lyft, but it sounds like the drivers are promised a payment based on a flat pickup fee + a time component + a mileage component. That formula is known by the driver in advance. The riders pay Uber/Lyft a different amount based on formulas perhaps only known to Uber/Lyft. I don't understand how Uber/Lyft drivers are "cheated" if they receive the payment promised by the Uber/Lyft. Even if that number is a lot lower than the rider's total charge. The payment made by the rider is calculated completely separately by the payment made to the driver.

Keep in mind that investors have been subsidizing riders and/or drivers and/or Uber employees for years as the company has accumulated what, around $20 billion in cumulative operating losses?

(FYI, this article seems to have double-posted to your web page. It shows up twice.)

Is that they are told that Uber/Lyft take a 25% commission.

Assuming the drivers are "promised" 75% of the total fare sounds too simplistic. Unless that's the contractual agreement. Drivers may be able to keep 75% on the last marginal mile, I don't know, but there's a fixed booking fee that Uber/Lyft keeps. That probably means that the shorter the trip, the higher % Uber/Lyft keeps. Drivers need to read the fine print and understand the payout formula, as I'm sure they do. If they get to keep less than 75% that doesn't mean they're getting cheated. They get the payment formula they've agreed to. As far as I know, Uber is going to charge the riders as much as the market will bear, and this may not be tied to driver pay. Maybe someday they'll be able to figure out how to run this business and actually make a profit.

This bears on the important question of what Uber is. Uber certainly looks like a transportation service that sells rides to passengers, and hires drivers to provide the service. Uber says that it is a passenger finding service that connects drivers to passengers. In the latter case the drivers are not employees, in fact if they structure it right, it is uber that is the contractor, hired by the driver. Which would be a paperwork nightmare but Uber could provide a service to handle that.

You write, "In these early days, each town will have only one robotaxi company, so there will not be head to head competition on pricing." I predict this will be a permanent rather than temporary situation. In a repeat of telephone and cable monopolies, companies will argue they *need* a monopoly to provide good service (and reliable tax revenue) so governments will grant exclusive franchises and severely restrict competition. Monopolies will then focus on maximizing profits rather than service. Thus I believe your economic projections of robotaxi pricing are far too optimistic.

Robotaxis will likely eliminate non-employee human taxi drivers very quickly. There might still be room for human-driven taxi services, as some people will be willing to pay significantly more for this, but those same people are not going to want to be driven by gig workers. Uber/Lyft will likely keep around a premium service for this, but demand will be low and it can easily be staffed by full-time employees. Good customer service will be key, and hiring gig workers isn't conducive to that.

One opportunity that robotaxis might create for gig workers is cleaning services. Robotaxis are going to need to be cleaned often, and it's a pretty simple job that can probably be done adequately by gig workers.

But ultimately, that too will be replaced by AI, as will most of the "race to the bottom" jobs of today. Gig workers shouldn't be thinking about how to fight a battle against AI. They should be thinking about how to develop skills in industries where quality human-to-human interaction is key. That or get ready to live on whatever government handouts are given to all the displaced workers we're going to have in a few decades.

That is, if things go well. If things go poorly there might be plenty of work as an infantryman. Maybe. Those bots seem to learn how to win at hide and seek fairly quickly.

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