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Uber drivers across U.S. strike ahead of ride-hail giant's IPO

Uber & Lyft drivers go on strike
  • With Uber's highly anticipated IPO just days away, thousands of ride-sharing app drivers went on strike Wednesday.
  • Drivers want a pay structure that gives them a bigger share of riders' fares.
  • "Passenger fares have gone up,  but drivers haven't seen any additional revenue," a union leader said.

Uber, Lyft and other ride-hailing app drivers went on strike in New York City during rush hour Wednesday morning, a day before shares of Uber are expected to be priced for the tech startup's big initial public offering Friday. Throngs of drivers -- the company's key asset -- organized by the New York Taxi Workers Alliance went offline between 7 a.m. and 9 a.m. to demand, among other things, a more equitable pay structure

In New York, the NYTWA estimates that roughly 10,000 of its members participated in the strike, causing driver shortages and forcing surge pricing in certain parts of the city. On the other hand, an Uber spokesperson said that the strike's impact was negligible. He said there were just 500 fewer drivers -- about one percent of drivers in New York -- on the road Wednesday morning compared to the same time a week earlier.

The labor action comes on the same day Uber and Lyft drivers plan to stop taking rides in 10 U.S. cities, including Boston, Chicago, Los Angeles, Minneapolis, Philadelphia, San Diego, San Francisco and Washington, to demand better pay and working conditions. Uber drivers in London also went on strike, according to Reuters.

"The idea that this strike has spread like wildfire across the globe within just a short number of days is something that really goes to show you the urgency of this fight and the depth of driver unity and visceral sense of rage that Uber, Lyft drivers are feeling across the globe," said NYTWA Executive Director Bhairavi Desai.

Uber drivers are now paid based on a per-minute and per-mile formula that doesn't rise in tandem with increased fares for riders, Desai said.

"Drivers no longer make their earnings from a cut of the fare -- they're paid by distance and time, and since Uber made this change in 2017, it has started to take the lion's share of the fare. Passenger fares have gone up,  but drivers haven't seen any additional revenue," she told CBS MoneyWatch.

Uber last month cut driver compensation in Los Angeles from 80 cents a mile to 60 cents. That city's drivers want Uber to reverse the 25 percent cut, as well for the company and Lyft to guarantee drivers a minimum rate of $28 an hour -- they say that amounts to $17 after gas, tolls and other expenses. A rule in New York City now guarantees drivers a minimum gross wage of $27.86 an hour,  or $17.22 after factoring in driver costs.

In a statement on Wednesday, Uber said it is working to improve working conditions for drivers: "Drivers are at the heart of our service — we can't succeed without them — and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road."

"Unjust firings"

Workers are also protesting what they say are unfair and unpredictable driver "deactivations" that block them from seeking work via the mobile platform. 

"These are unjust firings that show that fundamentally these businesses see drivers as expendable," Desai said. "When drivers are fired overnight, without an appeals process or notice, you not only lose income, you also have to pay for your vehicle expenses out-of-pocket -- a vehicle you likely had to purchase in order to have that job." 

Uber loses an average of 58 cents per ride

That's because drivers are classified as independent contractors rather than employees, so they're responsible for providing their own cars and maintaining them. Uber says drivers' status as contractors affords them flexibility, a perk for some drivers.

"What I love about this job is that I am the boss. I can work anytime. I can work two hours a day or 10 hours a day, it's not like working for a company," said Uber driver Mohamed Fouad, 23.

But it also means he's not entitled to the same benefits and protections as employees, such as health care coverage, paid time off and a retirement plan. The company acknowledges in its IPO filing that its "business would be adversely affected if drivers were classified as employees instead of independent contractors."

While Fouad takes issue with how much money Uber collects on each ride, he did not participate in the strike -- instead he stayed on the road to take advantage of any surge pricing caused by a scarcity of drivers during rush hour. "A lot of people are going to see surge prices and are going to work. I don't trust anyone. I don't know all the drivers," he said ahead of the official start of the strike at 7 a.m. Eastern time.

NYTWA's Desai also sounded off on Uber's model for growth -- including its investment in autonomous vehicles, which, if successful, would eliminate drivers' work. "They broke the empire by oversaturation, and now they're moving toward driverless cars in an effort to show their investors that they can turn a profit," Desai said. "They are beginning to shed the drivers."

Jeff Bezos will get even richer with Uber IPO

Uber's initial stock offering is expected to value the company at upwards of $90 billion, and executives and early investors, including Amazon founder Jeff Bezos, stand to make a hefty profit. Ousted founder and former CEO Travis Kalanick -- the company's single largest shareholder -- could make $9 billion. Some eligible Uber drivers will also be able to buy shares in the IPO, but the value of that perk is questionable, according to some experts.

While such investors get richer, Uber drivers are effectively reduced to "pauper status," said Susan Schurman, professor at the Rutgers School of Management and Labor Relations.  

"Both Uber and Lyft drivers are clearly realizing that they'll never be able to make a living under the current terms of their contracts," she said. "Their status as 'independent contractors' denies them coverage under most federal labor and employment laws. This leaves them with little recourse except to follow the path that workers have taken for centuries and engage in a public strike."

"I am a slave driver"

Inder Parmar, a driver for the company since 2013, likens the work to "slave labor." He said pay statements from Uber show he averaged $37 an hour in 2014 compared to around $9 to $12 an hour so far this year. Yet he's loathe to ditch the $70,000 investment he said he made in his vehicle, its insurance and registration to become an app driver to find another job. 

The company gave him a $500 bonus for his service, and he also was eligible to purchase Uber stock at the IPO price, but said he had no interest in investing in the company for which he works. 

"I am a slave driver and I do not support any company that does slave driving. I will not be a part of it. I only do it because I have no other choice," Parmar said.