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Thousands of Uber drivers are striking in Los Angeles

They want the company to reverse a 25 percent-per-mile pay cut.

Uber drivers protest the company’s recent fare cuts and go on strike in front of the car service’s New York offices on February 1, 2016 in New York City. The drivers say Uber continues to cut into their earnings without cutting into its own take from each
Uber drivers protest the company’s fare cuts and in front of the car service’s New York offices on February 1, 2016, in New York City.
Spencer Platt/Getty Images

Uber and Lyft drivers in Los Angeles are refusing to pick up customers today — part of a one-day strike to protest Uber’s recent decision to slash pay rates for drivers in the area.

Last week, Uber slashed its per-mile pay by 25 percent in Los Angeles County and parts of Orange County. That means drivers will earn 60 cents per mile instead of 80 cents. That decision has pushed drivers, who were already struggling to make ends meet, over the edge.

Hundreds of drivers swarmed the streets, chanting and picketing outside Uber’s office in suburban LA. They asked customers to use public transportation Monday instead of using the apps.

“Help us end this neo-indentured servitude,” Sinakhone Keodara, one of the drivers organizing the strike, tweeted.

The strike comes at a pivotal moment for the ride-hailing industry. Uber and Lyft are preparing to launch IPOs, which will convert them into publicly traded companies, creating a financial windfall for dozens of early investors who will turn into overnight millionaires. Meanwhile, drivers say they are scraping by on poverty wages.

As independent contractors, Uber and Lyft drivers don’t get benefits offered to company employees, they’re not eligible for overtime or even a minimum hourly wage, and they don’t have a right to unionize under federal law. Monday’s strike is the latest sign that Uber and Lyft drivers are willing to organize anyway to make their demands heard, and that they realize their leverage in the current US economy, where workers are increasingly hard to find.

LA drivers want Uber to scrap the pay cut. They also want a raise.

Even though drivers for both Uber and Lyft are on strike, they’re specifically protesting Uber’s recent pay cuts to drivers in the Los Angeles area.

Keodara and other strike organizers are part of Ride Share Drivers United, a nonprofit group helping drivers for ride-hailing apps organize all across the world. The group has been active in Los Angeles for a few years and has organized strikes before, but their impact was limited by the small group of members. That has recently changed.

Within the past two years, the group has gone from 300 drivers to about 3,000.

“We are an independent group of drivers, organizing ourselves, driver to driver, against the most powerful & wealthy tech companies in the world,” one Uber driver, Nicole Moore, tweeted last week, as she tried to spread word of the strike. “Tech companies who are cutting our wages in order to win the millions of investors, on the threshold of their IPOs.”

As part of their strike, drivers are demanding that Uber reverse the 25 percent rate cut and guarantee drivers a $28-per-hour minimum rate.

A spokesperson for Uber told me Monday that the company has revamped its pay formula so that drivers will earn about the same they did before the company increased rates in September. But Uber didn't respond to specific questions about whether it would consider drivers’ demand to reverse the pay cut and make sure they earn at least $28 an hour.

“Drivers told us that they value promotion opportunities, so we’re introducing a new Quest promotion feature, while also changing the per-minute, per-mile, and minimum fare rates,” an Uber spokesperson said in a statement to Vox. “These changes will make rates comparable to where they were in September, while giving drivers more control over how they earn by allowing them to build a model that fits their schedule best.”

Drivers striking in Los Angeles said they don’t want to earn the same amount they did six months ago.

It’s unclear whether the strike will get drivers what they are asking for, but they have every reason to believe it might. After all, drivers in New York City have proven that forming labor unions isn’t the only way for workers to secure better pay.

New York City drivers forced Uber and Lyft to pay them a living wage

The explosion of ride-hailing apps has been great for the startups’ investors — but not so great for actual drivers.

In New York City, the unrestricted growth of these companies put serious financial strain on the city’s taxi drivers, and has made it hard for all drivers to compete and earn a decent living.

Economists at the New School and the University of California Berkeley published a report in July with some limited pay data, and discovered something alarming: Driving for ride-hailing apps in New York City is not really a part-time gig for people who want to earn extra cash.

More than half of their drivers are ferrying around passengers on a full-time basis, and about half of all drivers are supporting families with children on that income. But their earnings are so low that 40 percent of drivers qualified for Medicaid, and about 18 percent qualified for food stamps.

The New School report showed that the median hourly wage for app-based drivers in New York is about $14 an hour. “The app companies could easily absorb an increase in driver pay with a minimal fare adjustment and little inconvenience to passengers,” they wrote.

The report helped drivers persuade city officials in December to pass the nation’s first minimum pay rate for drivers working with the four largest app-based firms: Uber, Lyft, Juno, and Via.

Starting in January, ride-hailing companies were required to start paying drivers around $17.22 per hour (after expenses) — about $5 more per hour than the previous average of $11.90 per hour, according to the Independent Drivers Guild, which represents about 70,000 Uber, Lyft, Juno, and Via drivers in the city. The new pay rate is calculated per ride, but the guild expects it to give full-time drivers an extra $9,600 a year. (Lyft and Juno are now suing the city, arguing that the calculated rate favors Uber, but said they are using a different formula to meet the minimum hourly pay rate.)

Because Uber and Lyft drivers are considered independent contractors and not employees, they are not subject to the city’s minimum hourly wage, which is now $15 per hour. But the new rules essentially get around that loophole and ensure that drivers are earning at least the minimum wage, with a few dollars extra to cover payroll taxes and some paid time off.

Uber and Lyft have pushed back against the pay increase, saying it would hurt competition and discourage drivers from taking riders out of Manhattan. The current lawsuits suggest that Lyft and Juno are not done fighting it (Uber is not part of the lawsuits).

But if there’s any moment for drivers to demand more, it’s now. Companies are having a harder and harder time finding workers to fill jobs, which means the competition for labor is getting fierce.

Workers are now realizing how much leverage they have

The US economy is currently experiencing a major labor shortage. There just aren’t enough workers to fill all the available jobs.

For nearly a year now, the number of open jobs each month has been higher than the number of people looking for work — the first time that’s happened since the Department of Labor began tracking job turnover two decades ago.

At the end of January, the US economy had 7.6 million unfilled jobs, but only 6.5 million people were looking for work, according to data released earlier this month by the US Department of Labor. This was the 11th straight month that the number of job openings was higher than the number of job seekers. And each month, the gap has grown.

Employers have been complaining about a shortage of skilled workers in recent years, particularly workers with advanced degrees in STEM (science, technology, engineering, and math) fields. Nearly every industry now has a labor shortage, but here’s the twist: Employers are having a harder time filling blue-collar positions than professional positions that require a college education.

The hardest-to-find workers are no longer computer engineers — instead, they are home health care aides, restaurant workers, and hotel staff. The shift is happening because more and more Americans are going to college and taking professional jobs, while working-class baby boomers are retiring en masse.

So, for once, low-skilled workers have the most leverage in the current labor market. Uber and Lyft drivers won’t have a hard time finding other jobs in today’s economy — which means there’s no better time for working-class Americans to demand better wages, benefits, schedules, and work conditions.