Uber and Lyft seem to redefine the paths they take every time their engine is challenged by external compliances, all in the wrong way. Their most recent manifestation of this strategy was to threaten closure when a two year due California rules compliance directed them to change the status of their drivers to “employees” ceasing the policy of hiring drivers as independent contractors, effectively escaping liability for multitudes of driver-related incidents and also at the same time avoiding putting money into unemployment insurance schemes, two birds with one stone. They were awarded a temporary retrieve under the Government’s policy of a “business-friendly” environment. Maybe we need to rethink when “business-friendly” becomes “worker unfriendly.”
The business models of companies like Uber, Lyft, and Ola (to name a few) rely heavily on baiting the unemployed with the unique attraction of working on their own schedule together with heavy investments on the uncertainty of future tech, resulting in the companies positively bleeding cash especially with the onset of the pandemic and a major decrease in demand.
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The Problem
Surely, the pressure seems to be getting into these companies as they are looking into new plans of how to function in a way similar to their old ways, just newly concealed under a prime layer of legal verbosity. A franchise model under which the companies can license their brand names and technology to owners of traditional taxi companies is bringing us back to phase 1.
This is because the companies would still avoid the employment costs and accelerate the process of building a workspace, where the executive and the consumer are the only significant players. The franchise model would involve more costs for the already cash strapped companies and force them to either raise fares or reduce wages, which nicely tops off the system of companies extending wide control while incurring less and lesser responsibility.
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Source: The Wall Street Journal
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