Ride-Sharing and Neoliberalism: Uber’s Exploitation of Immigrant Taxi Drivers

For much of the twentieth century, driving a taxi was one of the few means through which struggling immigrants could gain an economic foothold in their new home. While not the most glamorous  job, it paid the bills and put food on the table. If coming from a dire situation in your home country, you could hardly ask for more —you got whatever work you could, whenever you could. It was not until the Silicon-Valley-led advent of the gig economy, with its neoliberal emphasis on self-sufficiency, that the merit of the once sought-after position of taxi driver was questioned. While boasting it provides unprecedented independence for its workers, Uber has specifically targeted vulnerable immigrant communities.  For Uber and similar companies, the worker is free to do what they like, but at the expense of any state protection. Working at Uber also requires exposure to the risks of merciless competition with other drivers inherent to the company. The company’s methods are not only indicative of a decline in workers’ treatment, but also the growth of neoliberalism in recent decades.

In New York, a city whose functioning is predicated on the labor of millions of immigrants, the medallion system to license cab drivers has been a means through which many could achieve financial stability. This reliability was not just a matter of market development, but a result of specific state action to regulate the taxi market. In the infancy of the taxi industry, there was a complete disregard for the taxi driver facing constant competition. Multiple companies vied for market space, and drivers competed with one another, all without any state protection such as insurance requirements or minimum wage. In addition to the numerous companies driving down fares–and thus drivers’ wages–there were also unlicensed taxis operating in the unregulated space of the taxi market. These market actions, however, were not accepted passively. Due to drivers’ protests over their poverty, the 1937 Hass Act allowed the city to artificially restrict the number of cabs allowed to operate at one time through the medallion licensing system. Currently, according to the New York Taxi and Limousine Commission, there are around 13,000 cabs in operation and around 50,000 people licensed to drive them. While driving a taxi can only help so many, the few that did receive a medallion were given an entry point into the life they had originally sought in the United States.

Immigrant drivers had a certain amount of job security as a result of government control over the taxi market. By restricting the number of cabs operating at the same time, the state changed the nature of the taxi market, how consumers interact with it, and how its workers are treated and protected. The market was limited in size as a consequence of the Hass Act, providing stability for the drivers, as well as a regular customer base due to false scarcity. Customers, however, were not able to find a taxi in every situation as they would have prior to the 1937 regulations or with modern ride-sharing platforms—they were forced to rely upon the artificially limited number of taxis. Furthermore, through government planning of the market, taxi drivers enjoyed unambiguous status as employees and receive the corresponding protections like health insurance, fair treatment, and minimum wage.

As technology progressed, the New York taxi fell behind the rapid and pervasive growth of Silicon Valley. In the last decade, the gig economy, a form of business in which the company acts as an intermediary between worker and customer, has grown rapidly out of these technological advancements. Much like the drivers in the unregulated taxi market, workers for a gig company are more accurately described as contractors than employees. Without the designation as an employee, they are providing a service that is sold through the company’s platform; examples of this include Uber and Airbnb. They are, in a sense, self-employed, but the platform takes a commission and defines the terms of operation. In lieu of paying the operating costs of the services, which they provide at face value, companies give individuals the ability to lease out their services on the market within the infrastructure of their platforms, usually in the form of an app or website.  

Uber was founded in 2009, seeking to provide a better service than the traditional taxi. In some sense, it does. There is no artificial limit imposed on the number of cars, licensing requirements are much more lenient, and most people looking for work are eligible to drive. If a potential driver were to have a fully functional car, the desire to drive, and a license, they could work for Uber. On the other end, if one has a smartphone, the ability to pay, and lives in a city that Uber has successfully lobbied itself into, one can order a car at any time to take them wherever they would like to go, at a price that is often less than that of a traditional taxi. This practice broadens accessibility to car service. Previous barriers, however, were instituted for a purpose: protecting the drivers and ensuring they can garner a living wage from an already difficult job.

Uber is a symptom not only of a hole in the transportation market, but also of the broader neoliberal transformation of nearly every part of modern American life, specifically in the decades since the Reagan administration. It supports a form of exchange that places the onus to survive on the worker. Gone are state protections and the curbing of the market’s many harms. This adoration for the ostensible freedom provided by the market comes with a stripping of past efforts made to protect those affected by economic fluctuations.  If business is bad, then workers suffer. Similarly, if a company acts irresponsibly, there is much less of an infrastructure for accountability. Companies are able to operate in ways they never would have been able to before. They often provide health insurance, define wages, and, essentially, are the barrier between the worker and their subsistence. Even if a company were to provide a healthy work environment and plentiful wages and benefits, the benevolence of the company is a symptom of a broader, more harmful power dynamic. The underlying shift, which is a product of the neoliberal transformation, is the market’s further separation from the state. If workers only have access to sufficient benefits in a high-ranking position, then they are incentivized to compete with each other. While this increases company profits, it comes at the expense of workers’ rights, allowing the companies to have immense power over their lives. Within the gig economy, this lack of protection is taken to an extreme; companies can expect the worker to act as a tool for company profit without any of the legal obligation to provide them with subsistence.

Companies like Uber and Airbnb outsource their operating costs and initial investment to the worker instead of taking responsibility for them as a traditional corporation would. The company provides a platform for people to act as contractors providing a specific service: for Uber, it is driving; for Airbnb, it is temporary housing. They do not have employees, as a car service or a hotel would, but allow people to contract themselves out on their platforms, as long as they meet the company requirements and are able to provide the service. This means that the operating costs are the responsibility of the contractor: Uber drivers must pay for gas, maintenance, and insurance, and Airbnb workers must pay for the operation costs of owning property, like maintenance and utilities. This transition was not, however, a new innovation in marketing, but a strategic choice to take advantage of a shifting legal landscape. The gig economy is able to profit off of the vulnerability of its workers by delegating the costs of operation to them and making them work extensive hours just to make ends meet. Uber drivers are overworked not because they want to be, but because the company is set up in such a way that, while it benefits from a workforce that effectively creates itself,  individual workers have to compete against numerous other drivers for their own subsistence. If Uber were to pay their contractors wages comparable to their more traditional competitors, then they would be no different—their entire business model would fall apart.

Due to the exploitation of contractors working through Uber, it would seem unlikely that a driver would want to make the explicit choice to work for them over the much more stable and protected position of a traditional taxi driver. But with close to 65,000 vehicles associated with Uber, the dominance of the company and the effectiveness of their incentives is clear when compared to the 13,000 traditional cabs. Setting aside the freedom Uber advertises and the exorbitant salary one could purportedly make, Uber does not have a limit on the number of drivers it can employ. In fact, the more drivers—and thus potential rides—employed, the better the company does. This is because they are able to profit off of the transaction of the driver and their passenger, while simultaneously avoiding costs like the car’s upkeep or paying the driver a living wage.

While this may be profitable for the company, the same cannot be said for the drivers. Uber profits off of its aggressive growth strategies that lower the total wait time for a ride. If a customer orders a ride, they will get it within minutes. However, the intense competition that this strategy generates amongst drivers can be detrimental to their livelihoods. Coinciding with the neoliberal rationale for stripping protections in return for theoretical benefits over other workers, each driver has to compete against others to get as many rides as they can if they hope to collect any income. Rides translate into wages, but the proportion of drivers to rides given, as compared to taxi companies, shows that Uber is structured to benefit when there are a large number of drivers making extremely low wages. Uber does not have to pay for operation costs or the wages of actual employees, so they can simply garner the profit from the commission.  

There is, however, a problem that comes with requiring that the contractor has the means to drive people: recruitment is limited to those who have access to a functional car and the ability to maintain it. In order to expand the possible number of drivers and continue its trend of aggressive growth, Uber created a leasing program, Xchange Leasing, giving subprime car loans to potential drivers. When a driver signs up, they are given a lease for a car, even if their credit score is too low for a standard lease. In order to make the car payments on time, drivers have to work more than they would have otherwise. Moreover, by allowing cars to be leased to those with poor credit, Uber has been able to coerce vulnerable, working class people into driving for them. By giving low-income drivers the responsibility of paying a loan they could not afford, Uber hoped to reduce their total losses and increase profits. If one were to give up and stop driving, they would have to face the debt of a lease they could not afford in the first place. Drivers end up having to work even more than they would have if they owned a car of their own.

The exploitation inherent to Uber’s business practices has a particularly harmful effect on immigrant drivers. According to the New York Taxi and Limousine Commission, under 5% of medallion drivers, the small minority of people who were lucky to have bought a medallion before the rise of ride-sharing apps, in New York are American-born. Now, however, Uber has removed the barriers of entry into the taxi market. It has paved a way for struggling immigrants who have historically been unable to get medallions, or for those who already have medallions but have been losing money on them because of the competition from ride-sharing companies. There are simply more cars affiliated with Uber than its traditional counterpart. While there are significantly more opportunities to become an Uber driver, they are in exchange for the stability and benefits of official employment.

Although the taxi has been on the decline, there is still some hope for regulation of the ride-sharing market. The outcry from trade unions and advocacy groups, and multiple driver suicides have built a new urgency in the push for reform, reflecting the unrest between a traditional market and the unregulated neoliberal offensive. As of this August, New York Mayor Bill de Blasio signed a bill that would cap the total number of Uber drivers on the road and allow the city to institute a pay floor for drivers. New York is the first city in the country to institute such a cap. However, there is still a question of what the future of the taxi is, and how drivers are going to fare in the everchanging transportation market.

Even if additional regulations were imposed on the ride-sharing market, it would not change the fact that there have been significant shifts in the transportation sector and the relationship of workers to their employers. Much of the ease of use and reliability of Uber and similar ride-sharing platforms comes from their lack of regulation and exploitation of desperate drivers. The vicious fights between Uber and major cities beg the question of whether or not it will be the same service after the contemporary trend of legislative resistance and, if not, whether it will even be able to function.