Raising the Floor of the Platform Economy: Co-ops, Unions, and the Struggle to Transform Technology

Photo by Frederik Trovatten.com on Unsplash

If you need a ride to the airport, wish to order a pizza, plan a vacation, or search for a job, there is a good chance that you will use an app to get it. We live in a platform world, where technological apps connect consumers directly with goods and services. Electronic transaction platforms like Amazon, Uber, Grubhub, and Airbnb have perhaps permanently changed the way that we live and work. Platform apps seem to offer convenience at low cost and with little effort. But their impact on workers and economies is far from positive.

Seven of the 10 largest American companies are platform companies. In 2021, the five largest platform companies in the world—Google, Amazon, Facebook, Apple and Microsoft—accounted for 19 percent of all US market capitalization, valued at a whopping sum of $10.2 trillion. The booming platform economy includes well-known online marketing businesses such as Amazon, eBay, and Etsy; transportation network companies such as Uber and Lyft; food delivery services such as Instacart and Grubhub; and freelancing contractor apps such as Taskrabbit and Upwork. These platform companies have not only grown their economic power, they also enjoy near-monopoly control over their industries. For instance, Uber has transformed the taxi industry in the decade following its inception in 2009,and now dominates 69 percent of the ride-sharing market.

Even as these companies rake in massive profits and outperform their more traditional competitors, the life of the platform worker is not getting better. And the workforce is steadily growing: in the United States, the number of platform workers increased by 34 percent in 2021, one out of three workers has become defined as a temporary or freelance worker, and so-called “independent contractors” are expected to be the majority of the workforce in the near future. Yet, because of their designation as independent contractors—that is, because they are not defined as full-time employees of a company—platform workers have very few protections or benefits. This contractor status makes it easy for companies to exploit platform workers by forcing them to pay high premiums for affiliation with the platform or even refusing to pay them for jobs. Uber workers, for instance, are required to pay extortionary commission fees to the company that amount to 25 percent or more of all ride fees. As corporate algorithms minutely track each driver’s labor, workers are vulnerable to dismissal without recourse in response to customer dissatisfaction.

Though some jurisdictions like California have recently proposed to classify drivers and delivery persons as company employees with worker benefits, platform companies have worked hard to overturn these efforts. In 2020, multiple platform companies, including Uber, Lyft, Instacart, and Postmates, spent over $205 million to pass Proposition 22 in California, a law that classifies platform workers as independent contractors, not employees. For these companies, defining workers as outside of the scope of traditional employment is an important strategy that allows them to slash labor costs by avoiding such rules as minimum wages, overtime pay, and workplace safety regulations.

To slash labor costs even further, some of these companies are heavily investing in automation technology that replaces human workers with robots. Uber even thought of removing all labor costs of drivers by investing heavily in self-driving automobiles. Although Uber terminated this plan in 2020, selling off its self-driving technology, many platform companies are on the way to developing technology that works to replace their human employees. In the face of this drive to make them obsolete, workers are organizing to resist platform hegemony and create new forms of cooperation.

 

Workers Respond: The Rise of Platform Cooperatives

Collective action has historically been the most successful way to address injustice in the workplace. The labor movement has usually consisted of workers negotiating with companies over wages and working conditions or pushing for social change. In the United States, labor unions developed in the wake of the Industrial Revolution in the 1800s and gave rise to legal protections enshrined in federal law in the early twentieth century, such as the 1935 National Labor Relations Act which provides workers the right to unionize, or the 1938 Fair Labor Standards Act, which created the 40-hour work week, the minimum wage, and the right to “time-and-a-half” pay for overtime work.

Similarly, there has been a global rise of worker-managed platform cooperatives in response to the rise of platform companies. These platform cooperatives use the same technology as platform companies but operate as cooperatives owned by the workers themselves—not by a small number of investors and executives that steer companies like Uber or Airbnb. These platform cooperatives seek to deliver a higher portion of company revenues back to workers in the form of higher wages and more benefits. Platform cooperatives also have democratic decision-making processes, so that members of the cooperative have power over the way that the business is run.

These organizations have emerged out of the everyday experience of platform economy workers who want to put a stop to their exploitation. For instance, the Drivers Cooperative in New York started in an educational classroom among Uber and Lyft drivers, after workers became tired of paying high commission fees to these platform companies while also being required to pay for their own job expenses such as insurance and repairs. Drivers talked about their dream to somehow run their own app as an alternative to Uber. After one year of planning, New York’s Drivers Cooperative was born in May of 2021, with a goal to launch an on-demand app owned by workers themselves which customers can use as an alternative to Uber and Lyft for hailing rides. The development of a fully functioning on-demand app is expected to bring more visibility to the cooperative rideshare community in the coming year. To support this vision, the Drivers Cooperative has been successful in raising more than $1.4 million through its ongoing crowdfunding campaign. Today, it has over 5,000 members.

Following these successful developments in New York, the Drivers Cooperative has an ambitious plan to expand to other cities in the future, so that drivers and customers will be able to use the same worker-managed rideshare in communities across the United States. The organizers at the Drivers Cooperative have been talking with possible international community partners as well. To achieve these goals, the Drivers Cooperative faces substantial challenges. How to raise capital to develop a sophisticated app that is able to compete with Uber? How to build significant partnerships in order to boost prominence and achieve a growing customer base?

 

Can Labor Unions Support Platform Cooperatives? 

As some of the most powerful civic institutions that exist in this country, labor unions have long played a critical role in improving the wages and living conditions of workers. Since the mid-1990s, labor unions have revitalized themselves to focus on the direct organizing of workers, building broader partnerships with various community organizations and expanding their scope into sectors or industries where workers don’t already have union protections. But unions have had difficulty organizing platform economy employees because of their classification as independent contractors, which excludes them from protections under the National Labor Relations Act. Organizing and achieving collective action among platform workers is often difficult because workers are decentralized, lacking a common workplace and a means to communicate with each other.

In response to these new and often challenging conditions, labor unions have tried to embrace new forms of organizing fit for a decentralized workforce. For instance, union leaders such as Larry Williams Jr. founded UnionBase—an online organizing platform—in 2015 to promote digital social networking among union members. SEIU supported Coworker.org, a digital political advocacy organization that lobbies for policy change and helped create the Workers’ Lab. These promising innovations show how labor unions have tried to stand in solidarity with platform workers by embracing new strategies that serve worker needs, pursue policy changes, and pioneer campaigns among platform workers.

The global financial crisis in 2008 also led labor unions to re-imagine new partnerships with various worker cooperatives, both in and out of the platform economy. The largest worker cooperative in the US, Cooperative Home Care Associates (CHCA), is a union co-op, whose homecare worker-owners has been affiliated with SEIU 1199 since 2003. Recently, SEIU United Healthcare Workers West (SEIU- UHW West) in Oakland California also helped launch AlliedUP, a cooperative staffing firm owned by allied professional healthcare workers, by investing in startup costs. For the past five years, SEIU- UHW West has explored union-coops as a solution to the crisis of healthcare staffing shortages and other problems relating to poor pay and poor working environment. In January 2016, SEIU-UHW West organized licensed Vocational Nurses (IVNs) to create a union-co-op, Nursing and Caregivers Cooperative, Inc.—although this cooperative fizzled due to the lack of a contract with hospitals for workers. As co-op owners, workers receive $35 an hour on average, which is $3 to $5 more than what other healthcare workers receive. AlliedUP workers even receive worker benefits and patronage dividends at the end of a fiscal year.

Connections between labor unions and industries especially impacted by the platform economy have helped cooperatives come into being. These connections are often fostered between union workers who learn about platform worker exploitation. For example, local CWA 7777 president Duncan Harrington opened his office in 2004 to immigrant taxi drivers so that they could talk about creating a different kind of business that is less exploitative. The result of this solidarity was the formation of two union cooperatives: Union Taxi in 2009 and Green Taxi Cooperative in 2016. Although there are still only a few labor unions supporting platform cooperatives, there are emergent connections between Communication Workers of America (CWA) 7777 and the platform drivers cooperative.

Even though these first two union cooperatives left the CWA 7777 some years later, it was not the end of the union’s efforts. Now, the union is showing support for rideshare drivers by organizing the Colorado Independent Drivers Union (CIDU) in Denver, supported by CWA District 7. It has also welcomed the concept of a platform drivers cooperative, entering into a partnership with the Drivers Cooperative in New York. A growing collaboration between these two organizations is genuine, as both organizations seek to address the mounting challenge of platform exploitation of workers in their communities.

 

Another Platform Economy Is Possible

How can unions overcome powerful platform corporations? For now, a large part of their efforts is in the political arena: In 2020, labor spent $5.28 million on political lobbying, and another $1.8 billion on the presidential election. While lobbying and elections are important ways for unions to deploy their political power in the service of worker empowerment, established unions could also pursue the promising strategy of supporting platform cooperatives, so that these grassroots organizations can have the organizing infrastructure and financial support they need to develop technology platforms that can compete with powerful multinational companies like Uber and Airbnb.

It may seem idealistic to imagine a world where different communities organize platform cooperatives in partnership with labor unions, so that local people begin using platforms that their own community groups are invested in, but as Rebecca Lurie has written for NPQ, these collaborative strategies are exactly what is needed to advance worker empowerment and transform the economy. Instead of people simply using Uber by default, driver cooperatives could be organized in cities in the US and around the world, all using direct-to-consumer apps designed with union support and owned by the workers themselves rather than by platform economy corporations. Instead of using the Grubhub app, local restaurants could organize their own collective platform and band together to localize delivery efforts, keeping money and power in local communities.

These efforts are quickly becoming a reality, as the movement to organize platform workers has already started to make change in a growing number of communities. In helping platform workers see these organizing efforts through to completion, labor unions are one of the best natural allies to stand side-by-side with platform cooperatives. In the digital and platform era, intentional alliances between labor unions and platform cooperatives are necessary to create a stronger labor movement. It all begins with working-class solidarity between labor unions and the growing worker cooperative movement.