Uber bet on 2019 for success, however this might become the worst ever for the driving app. A few days after its disappointing IPO in Wall Street, Uber’s drivers decided to take the streets condemning the working situation and bringing in light salary gaps.
According to Bloomberg, drivers across the United States from Boston to Los Angeles, via New York, San Francisco and other cities have gathered in groups and asked Uber for a change on their benefits.
As Uber drivers are barely paid the minimum wage, the National Labor Relations Board decision was a new low on May 14th as it decided that despite their request to become employees, they would have to remain contractors.
Drivers won’t become employees
While Uber launched its IPO, Uber drivers wanted to highlight the scarcity of their jobs. As British leader Jeremy Corbyn posted on Twitter, “Uber cannot be allowed to get away with huge payouts for their CEOs while refusing to pay drivers a decent wage and respect their rights at work”.
Uber and Lyft drivers are struggling as they work for billion-dollar companies. These drivers are not “independent contractors”—they are employees who deserve rights and benefits. I stand in solidarity with them as they strike today for a dignified life. https://t.co/Cl6Srk0qD2
— Bernie Sanders (@SenSanders) May 8, 2019
As a matter of fact, it has been a few years that working conditions for Uber drivers was the talk of the town. Not only drivers would speak about it publicly, but working unions and even demonstrations happened repeatedly over the past months.
However, Uber IPO was the last straw for them, as some top executives earn more than $140 million a year. In the United States, former U.S President candidate Bernie Sanders harshly criticized the decision of the NLRB for not offering Uber drivers to be full time employees.
The organization concluded in its memo that “significant entrepreneurial opportunity by virtue of their near complete control of their cars and work schedules, together with freedom to choose log-in locations and to work for competitors of Uber”. As a result, Uber drivers are incompatible with the status of employees.
$70,000 of investment per driver
However, a recent investigation published by CBS showed that a day in a life of a driver was accumulating the cons of being an employee and an entrepreneur. According to CBS, a driver invests on average $70,000 when starting to work for Uber as a driver.
Inder Parmar, a 54 year-old driver, shared with the TV channel many issues he has been facing – including screen addiction in order to find the next ride.
“We have to hold the phone in front of us to see when a job is coming,” he said. “We do not have any authority to refuse the job. If we refuse too many jobs, we can be fired. They call it ‘de-activation,’ we call it getting fired.”
Uber is not a poor company. It paid its top five executives $143 million in compensation last year, including $45 million to its CEO.
So why are Uber drivers struggling to put food on the table?
I stand with striking Uber and Lyft drivers today. The greed has got to end. pic.twitter.com/4esvwHApjX
— Bernie Sanders (@BernieSanders) May 8, 2019
According to him, there is no flexibility on the job and no entrepreneurship; drivers are just executing orders, just like any employee in a company. On top of that he has invested $70,000 to buy a new car, just like he would do in a business.
“If Uber tells me to get out, I have a liability of that much, and Uber has a liability of zero dollars,” he said. “That’s why I am stuck, and the same is true for all of Uber’s 3 million drivers. Same goes for drivers who lease their cars — they have to make enough money to pay for the lease.”
“What Uber is paying us, that is below a poverty wage,” Inder Parmar, an Uber driver since 2013, said. “Anybody who buys [into Uber’s] IPO, they are basically supporting exploitation.” https://t.co/yaPShgeZjG
— Vox (@voxdotcom) May 9, 2019
His TV interview was largely shared across social media. It brought to light the growing frustration and anger of drivers, who, ironically, are generating Uber’s revenue. At the moment, Uber drivers in the United States are paid less than $7 an hour after tax on average.
Uber IPO seen as ‘a disaster’
While the in-house situation might be tense, the external outlook is also alarming. Uber’s IPO, which happened last week, has been seen by specialists as a historical failure.
.@Uber is the worst performing IPO ever in terms of total dollars lost on day 1 by investors that bought. 180m shares * -$3.43 = $617m loss. Number 2 was Verizon spin-off Genuity in 2000, $277m loss. [Source: Jay Ritter, UF]
— Rolfe Winkler (@RolfeWinkler) May 10, 2019
Analysts have expressed their negative feelings towards the company that has faced for many years trials in several countries, for breaching basic codes of ethics.
Uber stock was decimated this morning. Down 11%. Now valuing the company at about half of what bankers thought they could get out of the market just a few months ago. Good luck to all those employees who swallowed their ethics to work for Uber on the promise of ? IPO ?
— DHH (@dhh) May 13, 2019
Mark Cuban who is a market specialist and has invested $1 million both in Uber and Lyft, gave an interview to CNBC, arguing that this had to be a “wake-up call” for all the investors in the Silicon Valley.
“Silicon Valley’s venture capital investors are not very good at valuing companies.”, he said, adding that Uber was “not a growing company”.
He also pointed out the fact that Uber’s market capitalization was low – $67 billion against $200 billion promised a few years ago. The stock opened at 45 dollars and was, on Tuesday, May 14th, worth 39 dollars.
However, Cuban called startups and series-A tech companies to contemplate Uber’s case and think about it as a lesson of entrepreneurship and staff management. As other economists reported, Uber’s failed IPO will have consequences for its staff, as there might be a major lay-off unfolding in the upcoming quarter.
Take The Next Step with Alvexo Leave your details and we’ll reach out shortly.