Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers

Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers

by Steven Hill

ISBN: 9781250071583

Publisher St. Martin's Press

Published in Business & Money/Human Resources

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Sample Chapter


It's a warmish yet wet April Fools' Day 2014 in San Francisco. I'm standing at the corner of 24th and Valencia, in the longtime Latino but increasingly gentrified Mission District, watching an unusual cast of acrobats. There are half a dozen of them, dressed in bright yellow and blue-striped silken leotards, with big goggle eyes like frogs, moving gracefully across the damp pavement of the early morning street. Something about their elongated movements reminds me of Picasso's Family of Saltimbanques.

But these "saltimbanques" are not here to juggle. Instead, along with a crowd of another 25 people, they are blocking traffic. Specifically, they are blocking what is known as a "Google bus," which is a privately chartered, cushy luxury liner hired by Google to transport its San Francisco–residing employees the 40 miles south to the Googleplex campus in Mountain View, at the heart of Silicon Valley. Facebook, Apple, Genentech and other Silicon Valley companies also charter their own private shuttles for their employees. Much has been written about these "pirate shuttles" — the fact that they sit like sultans at hundreds of city bus stops waiting for their 14,000 daily passengers, arrogantly blocking city buses and everyday San Franciscans trying to get to work; the fact that a University of California, Berkeley study found that rents around the tech shuttle stops have increased by 20 percent, as has displacement of long-term tenants, forced out by greedy landlords who have jacked up rents to a level affordable only to the highly paid tech workers; the fact that, for this privilege of everyday disruption, Google, Facebook and others pay the city of San Francisco the princely sum of one dollar — yes, that's $1 — per bus stop per day (private autos that block public bus stops incur a $271 fine, but the shuttles receive mostly a free pass from tech-enamored city officials).

The sheer arrogance of avarice exhibited by the Lords of Silicon Valley has inspired dozens of protests, as well as several (unsuccessful) legislative attempts to regulate and charge higher fees for the hogging of city bus stops. (Finally, after much outcry, Google agreed to donate $6.8 million to the cash-strapped local bus and transit agency.) Rebecca Solnit, a San Francisco–based writer, struck a chord when she called the buses "the spaceships on which our alien overlords have landed to rule us."

The Google buses and protests attracted beaucoup media attention, both locally and across the country, as a sign of something gone badly wrong in the city of St. Francis. (Ironically St. Francis, one of the most venerated of Catholic religious figures and the namesake of current Pope Francis I, took an oath of poverty and made his ministry out of serving the poor.) But on the morning of the acrobat protest at the corner of 24th and Valencia, there was one person caught in the middle that no one seemed to care much about: the driver of the Google bus. He was an African American male, dressed more like the crowd of protesters than the young tech scions he was transporting. The protesters, caught up in their passion, got in his face and generally gave him a rough time, practically accusing him of being a Judas. He reacted with anger, and I suspect a fair amount of fear, toward the mostly white protesters.

But not necessarily out of any great allegiance to his job or employer. It turns out that the drivers of these pirate shuttles are themselves victims of the Silicon Valley two-tier way of doing business, and his own job security is fragile. Few of the drivers work for the tech giants themselves, but instead are employed by outside contractors. The disparities in pay, benefits and working conditions between the regular tech company employees and the service workers who pamper them, including not only the shuttle drivers but also security guards, janitors and landscapers, are substantial. The drivers and other service workers are part of the invisible labor force that literally makes Silicon Valley run, yet as we will see, receive less than livable wages and work under conditions that are semi-feudal.

Meet Jimmy Maerina, a bus driver who shuttles Facebook employees the 37 miles from San Francisco, where they live, to the company's Menlo Park, California, headquarters. Jimmy's passengers work exclusively for Facebook, but Jimmy and the other 90 or so Facebook bus drivers actually work for an independent contractor, called Loop Transportation. Besides not being paid high enough wages by Loop to support their families and afford to live decently in the high-priced Bay Area, Jimmy and his fellow drivers also work a punishing schedule. They start their day at 5:30 a.m., arriving at the main bus depot near Facebook's campus, and finish their hellishly long day at 8:45 p.m. That's over a 15-hour day, which clearly stretches the labor laws, so Loop Transportation (aptly named) found a loophole — it forces the drivers to take five to six unpaid hours off in the middle of the day. Not only that, Jimmy and the other drivers are prohibited from finding other employment during the period between their split shifts. And unfortunately, many of them live too far away from the lot to commute all the way home and return for their second work shift, so instead they must hang around and wait.

Loop Transportation responds to charges of unfair labor practices by saying that it generously provides a rest trailer — which is true. But it only has four beds and one bathroom for dozens of drivers, plus it lacks heat or air conditioning. Consequently most of the drivers are forced to rest or sleep in their cars between shifts. Silicon Valley is a sunny area so there's not much shade, necessitating that the drivers hang blankets in their car windows to keep the sun out and run the air conditioning or the heat, depending on the season. "You are basically being held hostage in that parking lot," says Jimmy. "And you are not being paid."

Given these Dickensian-length hours, Jimmy complains that he barely sees his family. "When I leave the house at 5:30 each morning for my morning route, my kids are asleep. And by the time I make it home around 9, they are getting ready to turn in for the night. I miss family dinners, helping with homework — all the little things that a family is supposed to do together."

Driven by his increasing sense of unfairness and fury, Jimmy launched a unionizing drive among his fellow workers. That led to intimidation of drivers by Loop and threats to fire Jimmy, while Facebook conveniently looked the other way. Tearing a page from a tried and true anti-union playbook, Loop sent representatives to Facebook's campus to "inform" the drivers that a union actually would hurt their own self-interest. When Jimmy took his and his fellow drivers' grievances to the public in a story published by USA Today, Facebook was embarrassed. Teamsters representative Rome Aloise wrote a public letter to Facebook CEO Mark Zuckerberg, saying, "It is reminiscent of a time when noblemen were driven around in their coaches by their servants. Frankly, little has changed; except the noblemen are your employees, and the servants are the bus drivers who carry them back and forth each day."

Finally the tech giant — which has a market capitalization of $206 billion — told Loop to give the drivers a raise: a whopping $0.75 per hour. If that generosity was supposed to persuade the drivers that they did not need a union, it didn't work. On November 19, 2014, the 87 drivers voted in favor of representation by the Teamsters.

This is just one tale out of many that reveals how two-tiered Silicon Valley treats the invisible workforce that toils in the shadows of its mansions, Maseratis and Moët & Chandon.

In 2005, when the first tech buses were making runs up Van Ness Avenue and Valencia Street in San Francisco, approximately 23,300 households in the city reported annual income above $200,000, according to the U.S. Census' American Community Survey. By 2012, the number of "200k households" in San Francisco had nearly doubled, to 46,200. The gap between Silicon Valley's high and low earners has widened dramatically, to the point where a region that lays claim to some of the world's wealthiest companies has hit a 10-year high in food stamp participation and a 20 percent increase in homelessness, according to Joint Venture Silicon Valley, a business-friendly consultancy that publishes an annual report card on the region. Moreover, even as average per-capita incomes have zoomed due to escalating salaries for the high-tech workers, the median household incomes have fallen several years in a row. That kind of statistical anomaly indicates one thing — a huge overall rise in inequality. The Bay Area has become a region dominated by HNWIs and UHNWIs — high net worth individuals and ultra-high net worth individuals — not only in the sheer numbers of wealthier households but also in the political and free-market gunpower they are amassing to shape the region's future.

Desperate times call for desperate measures, and so one driver filed a class-action lawsuit against Google's shuttle contractor, WeDriveU, claiming it too had failed to compensate drivers for downtime between split shifts, provide legally required rest breaks, and other alleged violations. But the billionaire titans that control America's best-name companies are happy to let the private contractors do the exploiting, whether in China where contractors like Foxconn build the iPhone, iPad, Xbox, Kindle and other tech gadgets (and where 150 Foxconn employees threatened to commit mass suicide in protest over the horrible working conditions) or right in their own backyards.


But Silicon Valley is not the only place that resorts to such tactics in the United States. In fact, as the freelance society takes deeper root, outsourcing to "1099 contractors" increasingly has become the way businesses cut costs in their never-ending pursuit of greater profits. Manufacturing companies in particular have increasingly relied on private contractors to hire temps, freelancers and other categories of 1099 employees, switching them on and off as needed.

Meet Chris Young, an assembly-line worker at Nissan's manufacturing plant in Smyrna, Tennessee. Chris works alongside dozens of other employees, everybody doing more or less the same job. But Chris doesn't get to wear the coveted Nissan jersey that many of his fellow workers wear — because he doesn't work for Nissan.

Instead, he is what is known as a "perma-temp." He works for Yates Services, a private contractor who now provides a majority of Nissan's workers. Chris says, "I build the same Infiniti SUV" as the Nissan workers, but he and other Yates employees receive half the salary (Yates pays between $10 and $18 an hour), less job security and way fewer safety-net benefits. Like Silicon Valley, auto manufacturers increasingly rely on a two-tiered system, and being in the lower tier means Chris can't say no to overtime, can't take a sick day and doesn't receive long-term disability, nor does he enjoy the privilege of leasing a company vehicle. With wages so low, he can't afford a new car (his own car is a 2001 Cavalier with 200,000 miles on it), get a mortgage or save for retirement, and he can barely make ends meet for his family of four children.

Sometimes he has to work seven days a week, with 10-hour shifts on Saturdays and Sundays — despite experiencing severe wrist pain from the repetitive nature of the work (exacerbated by a motorcycle accident that occurred long ago). "No one's really worried about the fact that you're so exhausted from working seven days a week, you're dependent on some drug to stay awake, or dependent on some drug to go asleep, or for pain," he says. "Everybody I work with has some type of pain, whether it's hands, fingers, back, feet, something. ... If you don't want to do it, you clean out your locker and go somewhere else."

The Washington Post reports that Nissan, one of several foreign automakers to establish operations in Tennessee, has blazed a path in the corporate business world. Companies from Dell to Amazon have outsourced significant parts of their operations, including call centers and warehouses, to hundreds of staffing agencies that have set up shop in the "right-to-work" region. Tennessee has one of the lowest levels of unionized workers in the nation, only 6 percent (compared to a national average of 11 percent). According to the Bureau of Labor Statistics, Tennessee saw a dramatic 56 percent increase in temporary workers, from 51,867 temps in 2009 to 80,990 in 2012, even as median wages stayed flat. That temp worker explosion was responsible for almost all of Tennessee's job growth since the Great Recession, resulting in temp jobs comprising over 3 percent of all jobs in the state, one of the highest percentages in the nation.

After Nissan's brush with bankruptcy in 2001, it started introducing temps into front-office positions at its plants, and by 2008 had reduced its permanent workforce by about a third. Following the Great Recession, as consumer demand returned for automobiles, Nissan began to fill production jobs with employees hired by outside private contractors. The company refuses to say how many of its 7,000-person workforce have been placed by staffing agencies, but many current and former employees say it's easily a majority, according to the Post.

Nationwide, the U.S. Department of Labor reports that the nation has more temp workers than ever before, approximately 2.8 million, representing 2 percent of total jobs. And factoring in the high rate of worker turnover among temps, the American Staffing Association (the temp industry's trade group) reports that more than 12 million people worked at a temp agency for a period of time in 2013. It's now called "domestic outsourcing" — instead of outsourcing jobs overseas we are outsourcing them domestically, from permanent full- and part-time positions to temporary 1099 employees. Overall, the temp sector has provided nearly a fifth of the total job growth since the recession ended, according to federal data. But the American Staffing Association says the number is even greater. With the economy continuing to drag along unevenly, temp work has galloped back 10 times faster than private-sector employment — a pace "exceeding even the dramatic run-up of the early 1990s."

And the industry is no longer just supplying office assistants — the vast majority of that growth has come in blue-collar positions in warehouses and factories, with more than 1 in 20 blue-collar workers in 2012 being a temp. Auto and other manufacturing jobs used to be part of the backbone of the American economy, offering high wages, job security and a ticket to the American Dream. The middle class was built upon such jobs, as was the comfortable consumer society that became the envy of the world. Now an increasing number of autoworkers toil away as temps in downwardly mobile McJobs that can barely provide a living wage.

While temp work has become one of the fastest-growing sectors of the economy, an investigation by ProPublica has documented an array of problems. Increasingly the temps aren't very temporary. Some workers originally hired as "temps" have been employed at the same company for as long as 11 years, never getting moved into a full-time position — hence the new term "perma-temp," an oxymoron if ever there was one. And the pay is low; the median wages of temps are a whopping 22 percent below that of all workers, regardless of industry. Making matters worse, companies assign temps to the most dangerous jobs; nationwide, temps are far more likely to find jobs in dangerous blue-collar occupations like manufacturing and warehousing. In several states, temps suffer triple the number of amputations on the job, compared to regular workers. And even some of the nation's largest and most successful companies have used the services of immigrant labor brokers and fly-by-night temp agencies that have defrauded workers of their wages.

Temps, perma-temps, perma-lancers — these are a few of the new categories of workers that are becoming enduring fixtures in the labor force. Treated like just another resource to be fed into the industrial machine, they join another exploited category known as "independent contractors," or "indies."

Take the case of Fritz Elienberg, who worked for five years as a full-time employee installing cable and Internet service for RCN Corporation in Boston. According to the New York Times, on six mornings a week, shortly after 6:30 a.m., he and a dozen other employees arrived at the RCN office where they received their schedule for the day's installations. On a frequent basis, Elienberg worked long days — 10 to 14 hours — yet he never received the overtime rate of time-and-a-half. Then when a ladder fell on his foot and seriously injured it, workers' compensation would not cover his medical bills. Why? Because it turns out he was hired as an independent contractor, meaning RCN did not consider him to be one of its regular employees. For all intents and purposes, according to RCN, Elienberg was his own boss, his own CEO, in business for himself — and not employed by RCN.


Excerpted from "Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers" by Steven Hill. Copyright © 2013 by Steven Hill. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
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