Imagine darting down a warren of streets that lay like noodles on a plate of spaghetti. Space in this city of 5 million is at a premium. Long straight boulevards are rare in London. Instead, special powers are needed to navigate variables of modern city life: cars, debris, rain, street vendors, pedestrians, pets, boxes, the din of hollering, metal clanging and the unpredictable winds through the open spaces and the compression of humanity drawn from every corner of the world.
Now, go as fast as you can. On an empty stomach. Through crowds where everyone is vying for that opening. Now do it, knowing that for risking your life, you’ll barely be able to pay your rent, afford something decent to eat or fix your bike.
Mags Dewhurst is a cycle courier in London. The cycle courier business has existed worldwide for almost 55 years in more than 100 cities. It doesn’t exist because people like Mags love riding their bikes for a living The cycle courier has existed because they are the fastest way to convey packages across cities in a personal way.
Cycle couriers have long been classified as independent contractors. This has been an exploitive system since its inception. Now in 2017, this gross commercial malfeasance has transcended the cab and courier industries and been adopted in a wide variety of professions. No longer is it just couriers fighting for a living wage and employee rights, now it’s airline pilots, healthcare workers, lawyers, Uber-type drivers and many, many more.
In 2017 this is the “Gig Economy” or “Uberization.” Friends of the “Gig Economy” call it economic collaboration. Detractors call it economic terrorism. The Gig Economy is a way for large companies to grow market share with shaky business models. From a profit and loss perspective, it is not a sustainable way of doing business.
Ms. Dewhurst couldn’t understand that while she worked harder and harder, her checks kept getting smaller and smaller. She took stock of her situation and found some oddities in the management of her courier company (City Sprint), and the industry on a whole. Then she acted.
By 2015, City Sprint, and the industry in general, hadn’t had a rate hike in some 15 years. While supposedly competition kept the rates unnaturally low. Despite that the boss of City Sprint was still able to give himself a 55% raise. The couriers felt the pain on payday. A typical London courier in 2016 earned about 50£-80£ per day ($60-$70 USD). At the high end, 80£ or $70. This isn’t $70 really. In USD, after self-employment tax it is closer to $56. Still, that doesn’t cover any bicycle maintenance, fuel for the tank (food, when you burn upwards of 4,000 calories a day), unemployment insurance, worker’s compensation, rent, phone and any other bills. Annual salary works out to around $14,000 a year, before ANY expenses. All this and bike couriers typically live in the most expensive cities in the world. To say that couriers are impoverished is an understatement. As Mags puts it, “You pay the companies to work there. You are entrapped in poverty and then you’re blamed for it.” The industry effectively functions more like a loan shark, extracting a percentage of delivery price from the courier for access to a market through technology.
She also started to consider that she had no worker’s protections including no sick days, no overtime, no paid leave. For no worker protections, she was treated like an employee, wearing a uniform, going where her bosses told her to go, when they told her to go there. There were punishments for not complying rules, yet there was no management transparency. There was no way of knowing if anyone was being favored on the crew, no protection against the company over hiring and thus limiting a courier’s ability to make money because there were too many couriers chasing too little work.
The understood, unspoken threat: act up and you’ll be out of a job. You don’t like the way Uber does things, go drive at Lyft. You don’t like how low the rates are, well start your own company. You make us raise the rates, we’ll be out of business and we’ll all be out of a job.
Essentially, based on an illegal structuring of the delivery platform market, including ride share, providing workers with living wages, not evading taxes would bankrupt all these companies. The burdens of doing business, in accounting the term is: Cost of goods sold. This cost, in the delivery platform business is passed off to the operator to maintain sub-market rate prices. Consequently, no one in the platform delivery business can afford to raise rates. That would mean they would now be on equal competitive footing with cab and traditional delivery companies.
An immutable fact of dispatching systems is that there needs to be a certain critical mass of operators to cover a city. If operators are making a living wage, that means the cost per operator will multiply exponentially. If there is no official requirement that your workers make a living wage, then you are free to “hire” as many operators as you need, even more than you need, just in case. This means, Mags and her friends in downtown London must ride harder and harder and make less and less money. If Mags gets paid 2.75£ per delivery and each delivery is an average of 3 miles and a living wage is 120£per day, then she would need to do 44 deliveries per day, 130 miles per day. To give you an idea what that means, if an Olympic level cyclist who averages 25 miles per hour, never stops at lights, never slows down, never goes into buildings and doesn’t take lunch or any breaks, it would take him 6.4 hours to ride the distance needed to make a living wage.
The truth is, it would take the average courier, with all the traffic impediments some 13 hours a day to earn a living wage under those circumstances. Working 13 hours a day is not conducive to good health or safety. After a certain point, even young bodies must rest. The fact that these delivery platform systems pay so low, on average around $20/hour before taxes which works out to be more like $13/hour, necessitates that the operator be working well into a heavily fatigued state. Per Shelly Camden of Chicago’s Northwest University, fatigued driving/riding is the same as driving under the influence of alcohol.
Mags filed her complaint with barristers who were happy to do the pro-bono work championing the common man. It helped that in the UK there is no “federal system” per se with an independent tax authority. The chance of your suit being heard by an actual minister of parliament is quite good. She also had some unexpected allies. Mags’s best asset though, was her moxy. City Sprint, like we’ve heard here in the U.S., specifically in San Francisco during the 90’s, made the argument that if they were to raise rates, other companies would stay at a low rate and undercut them, taking their business, putting them out of business. “Then you’ll all be out of work.” It takes a lot of balls to face down the Goliath and dare him to take the next step.
There was precedent for this kind of fight. A few years prior, in a scandal involving immigrant shellfish collectors who were working on contract, drowned in what turned out to be a dark labor case. Totally unprotected, the result was that gang masters were punished and put under a licensing authority.
Then there was the case of Bates von Winklehoff vs Clyde and Co Consultants in 2014. What originated as a whistle-blower case, veered into a fraud case which ended up cementing a third category in employment case law. The determination that though Winklehoff was self-employed, she was an integral part of the company she was working for and thus entitled to regular worker protections in so far as unfair dismissals were concerned.
Mags won her argument that since she was an integral part of the City Sprint company, she was entitled to things such as back pay on unpaid vacation time as is proscribed in employment law, falling under the third classification of employment which lies somewhere between being fully employed and being entirely self-employed.
Though this is a small win for one little lady in England which may as well be a world away from the U.S., it is a foothold for justice for workers in the future. By setting down this law, making the precedent, the fight has grown, making a leap across the English Channel to France. It has also emboldened workers from other industries and struck up a national conversation in platform delivery services, most notably for Uber. Uber is currently fighting independent contracting designations in countries around the world, and it is the independent contracting fight that has provided a basis for the argument against economic disruption. Economic disruption is good if it yields more efficient allocation of resources. Proponents of delivery platforms like Uber, Lyft, Grub Hub, Skip the Dishes and many more would have the public believe that their type of economic disruption has brought innovation to the economy making it more efficient. In following segments, I’ll go through the reasons why these services in fact, are impeding the efficient allocation of resources.