No, a Co-op Version of Uber or Lyft Isn’t Possible

I often see posts and efforts regarding platform co-op that want to co-operatize the “gig” economy. I understand the desire. The co-op community missed this change in our society in a big way. It happened very quickly and utilized an industry whose culture tends not to support collective action (either through labor unions or cooperatives). One of the regularly recurring concepts is to replace Lyft or Uber with a co-op version. I try to be an optimist, but not only don’t I think that it is possible, I think that the co-op community should be thinking about how to reinvent the use to technology in line with the cooperative identity.

Uber and Lyft are not new to the taxicab industry in terms of their model. The only difference between these companies and the traditional taxicab companies, is that they were able to operate in multiple cities and afford political influence at a level that most taxicab company owners could only dream about. The manner in which Uber and Lyft treats the drivers and passengers is part and parcel of the industry that it pretends to replace. It is predatory and extractive.

The primary reason that I don’t think that a co-op version of Uber/Lyft is possible comes from a simple aspect of their plan. These apps are available to provide services in thousands of communities. While it might be possible to create a co-op spanning a similar geography, it would be difficult to have a meaningful democratic control and economic participation through multiple languages, cultures, and nationalities. In addition, Uber and Lyft exist, in my view, more as research labs for their investors (Google among them), so even breaking even isn’t the priority that it would be for a driver-owned platform. It may be possible to simply serve a single area. However, drivers for Uber and Lyft don’t make any more than cab drivers even with millions in marketing support provided by these companies, I a skeptical that a one community company can breakthrough in a single market.

Secondly, a key part of the Uber/Lyft plan works on ignoring liability insurance. This falls on the individual drivers (although there are umbrella plans provided through these companies, the insurance only kicks in if the driver’s insurance is exhausted). However, as far as I know, most insurance companies will not cover pay-for-service transportation on individual plans, which means that the drivers and passengers are completely at risk. Uber and Lyft have a phalanx of lawyers, lobbyists, and a mountain of cash to change laws (as they did in Wisconsin and Virginia) and fight lawsuits.

As to why the platform co-op model shouldn’t re-create Uber, the first act of this company, and others like it, in most cities was to break local ordinances on public transportation (in many cities, such as Madison, taxicabs are considered a “public conveyance”). Most importantly, they effectively red line the ridership based on their ability to own a smartphone, access to either a credit or debit card, and physical abilities. This simple act eliminates a huge percentage of people who need curb to curb transportation. They pretended to have no control over the drivers, even though they do through the software, and this allows drivers to red line their service area for other reasons. These are not cooperative values or cooperative ways of conducting business. Whatever drivers do to collectively challenge the Uber model, they must not copy it.

Taxi cab companies serve their communities and are generally tied to the community. The platform driver model allows a driver with no ties to the community to swoop in and cherry pick rides during peak events. With no connection to the community, there is no responsibility to the community. Co-ops have the ethical values of social responsibility and caring for others. The 7th Principle of Cooperation is Concern for Communities.

Taxi co-ops tend to operate on the co-op values of self-help, self-responsibility, solidarity, and many others. I point out these three, because a connection exists between the drivers of a taxi co-op that enables drivers and staff of the co-op to protect each other, help each other, and provide the education, information, and training that is fundamental to cooperation and a democratic community. A few years ago, I had the opportunity to interview some of the members of Union Taxi in Denver. They pointed out that with the co-op, their lease dropped by $500/week ($26,000 a year). This meant having weekends to spend with their children. At the same time, they still made more than the Uber drivers, had the support of their peers, and access to material support (maintenance, group purchasing, etc.).

A platform transportation co-op that I could get behind would be a secondary or tertiary co-op that provides technical support for the 7-8 taxi co-ops in the country that would offer multi-city support for consumers, provide dispatch and management software for the taxi co-ops, and help start new taxi co-ops. The individual co-ops would be members of the app co-op, pay dues and service fees, help build the co-op community, and have a national narrative about licensed, trained, and safe drivers. They could message the co-op difference about creating safe working conditions, decent pay and benefits, and being a part of the communities that they serve. The could even encourage passengers to add to a co-op development fund as part of the fare (over the tip, of course).

About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-ops in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University.
This entry was posted in Human Relations, Platform Coops, Worker Rights and tagged . Bookmark the permalink.

3 Responses to No, a Co-op Version of Uber or Lyft Isn’t Possible

  1. Pingback: Tech Co-op’s Are on the Rise. . . | The Workers' Paradise

  2. Pasquale Freni says:

    In New York City co operative car services were the mainstay of corporative ground transportation from 1981 (when I bought into one at $60,000) until Uber came to the city in 2012 when I started driving with Uber. I did so because all of the coops had been corrupted. Favoritism regarding the more lucrative fares was rife. Vehicles and operating expenses were the owner/driver’s responsibility as independent contractors. There were no employee benefits. Mismanagement was built into the system because officers were elected from among the drivers with little or no business acumen and a further corrupting of the proxy system. Uber put the last nail in the coop coffin. Spare me the utopians and egalitarians. Juno, not a co op, was a worthy attempt at competing with Uber/Lyft in NYC but after four years they gave it up. Meanwhile U/L are providing ground transportation at reasonable rates to neighborhoods in NY that seldom if ever saw a yellow cab the medallion price for which has plummeted from over 1M to under 100,000. 50 percent of the 13,000 plus yellow cabs are idle because the driver pool has gone to U/L. What does that tell you?

  3. $60K is a lot for a worker co-op, but I am guessing it was more of a producer co-op. From what you say, it sounds like the co-op wasn’t grounded in co-op principles but more of a scheme to avoid labor laws. That is not the experience for most worker co-ops. What the uber/lyft tells me is that concentrated capital is more than willing to lose money hand over fist if it means creating a monopoly (and the medallion system was not a co-op system, but another attempt at monopoly. it doesn’t sound like Uber/lyft offer anything better and likely a lot worse:

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