Rideshare giants Uber and Lyft were so baffled by a law in California that their contract workers would make employees pay better and profit that they threatened to stop operations in the state if it was not repeated. That tactic, known as a “capital strike”, is an undemocratic means for private corporations to undermine the whims of democratically elected lawmakers and voters – and that may be why it would have been illegal in many other countries with stronger unions and regulations.
On Thursday, an appeal court in California ruled that Lyft and Uber could continue to classify their drivers as employees within that state, issuing a temporary stay on a provisional order that would force the ride-haul companies to immediately reclassify their drivers as employees. The court has filed arguments before Oct. 13, but it is unlikely a final verdict will be issued for the next Nov. 3 election.
At that point, voters will decide whether to pass Proposition 22 – an astroturfing measure funded by the rideshare companies that would reverse a 2019 state law that requires most workers to be considered employees unless a company can prove they are independent contractors. are. (There was also a landmark 2018 Supreme Court ruling that found that companies that wanted to classify workers as independent contractors had to prove that they ran their own businesses, doing work that was “outside the ordinary course of business of the hiring entity is “and are free from control of the company in its routine duties. The 2019 law amended the California Code of Labor to reflect this ruling.)
The ruling would have enormous consequences for ridershare executives. If the higher appeal had not made that decision, Lyft and Uber would be forced to treat their workers as employees, and as such provide them with the improved income and benefits that go with that status.
For ordinary citizens, laws are not something that can be prevented by throwing a tantrum. But Uber and Lyft pulled it off with a strategy that can best be described as a major strike.
So what exactly is a main strike? You might pick up that from the words of Uber CEO Dara Khosrowshahi, who told MSNBC on Wednesday that “if the court does not reconsider, then in California, it’s hard to believe we can completely change our model -time employment soon. “Or you could look at the words of Lyft President John Zimmer, who said during a call announcing the company in the second quarter of 2020 that” if our efforts here are not successful, it would forcing us to stop operations in California. “
Perhaps the most famous strike was in France in the early 1980s, after the Socialist Francois Mitterrand was first elected president in 1981. Mitterrand introduced progressive economic reforms of the same significance, such as raising the minimum wage , shorten the working week, increase their equivalent of payments for social security and the issuance of a solidarity tax on wealth. The threat of higher taxes has led many investors to flee. As the New York Times wrote in a 1986 story on the subject:
The power of strike action is well illustrated by the reaction to the 1981 election victory of Francois Mitterrand’s Socialist Party in France. U.S. direct investment in France, which grew at an annual rate of 11 percent between 1965 and 1981, has fallen every year since the victory of Mitterrand, and has fallen at an average rate of 9 percent per year.
Jacobin provides a concise description in a 2017 story about what a major strike usually entails:
Capitalists regularly levy taxes on governments by withholding the resources – jobs, credit, goods and services – on which society depends. The “main strike” can take the form of dismissal, offshoring of jobs and money, refusing loans, or simply a credible threat to do these things, along with a promise to trust if the government delivers the desired policy changes.
For all intents and purposes, this is essentially what happened in California with Lyft and Uber. The duly elected representatives have passed a law requiring companies in that state to recognize the basic economic rights of their workers, one that was strengthened earlier this month when a California judge ruled that the two companies should stop immediately refer to their employees as contractors and provide them with the same benefits that would go to employees. The top executives at Uber and Lyft seem to realize that this would cut into their profits. Therefore, they threaten to use their economic power to deceive Californians economically, both those who work for them and those who rely on their services … and the court stopped and gave them what they wanted.
Now the next step for the two companies is to throw enough weight behind Proposition 22 to pass it on. If they can pull that off, they will have reached their financial goal, avoiding benefits, payroll taxes or other taxes many of their workers have to pay.
In many other countries, Lyft and Uber would not be allowed to go away with their main strike.
“What you have in some other countries, depending on how their legal systems work, are all kinds of arrangements that make it harder for companies to do things that the local people do not want, like in the United States. , “Richard D. Wolff, professor emeritus of economics at the University of Massachusetts Amherst, told Salon. “The law applies here in such a way that it is not illegal for companies to do all sorts of things that, in many European countries – that is what I know best, companies can not do, also because they face a legal challenge by the courts and all that, either they would face a political challenge from the local authorities, or they would face a trade union and mobilizations of political parties. “
He turned to France as one example, explaining that if companies in France were trying to do what Lyft and Uber were doing in California today, “if the union at the Socialist Party and the Communist Party were on all of this, they would combine to be effective. put pressure, whether on local politicians who include members on their own parties or get their own people in the street or do both, and in principle make it impossible for the action to continue. “In other words, a combination of legal action and strikes may successfully undermine a main strike.
In the United States, by contrast, companies have to worry about poor optics to do something their employees do – and they’m ready to go.
“Companies in this part of the world like Uber and Lyft no longer have to worry about it,” Wolff explained. “They have to worry about the fight for public relations and they usually have enough money to make it so complicated or diffuse that you do not get the kind of mobilization that is difficult here anyway. And the unions do not have a tradition here. “
Wolff pointed to Germany as another example of a country where companies are held more responsibly.
“In Germany, for example, there are laws on the books that state that a company that proposes to close a company, shake it up and say that it is moving to China or whatever the hell they might want to do, they must take steps to to do that, “Wolff told Salon. He contrasted that with the United States, where it is often “perfectly legal” to fire or fire someone on the same day that the employer tells them to. “You can’t do that in a number of European countries,” he added. “You must give notice. The notice must be X months before you have to formally inform the local political authorities, and they in turn have all sorts of powers to delay your move, to demand compensation.”
Yet, as Wolff and other economists have pointed out, similar progressive reforms are often thwarted in the United States. Indeed, there is a long history of capital attacks succeeding in curbing or even curtailing progressive policy changes. While President Barack Obama, for example, could implement some moderate progressive reforms in his administration, scientists Kevin A. Young of the University of Massachusetts Amherst, Tarun Banerjee of the University of Pittsburgh, and Michael Schwartz of Stony Brook University in 2018 claimed that Obama was limited by the threat of capital attacks.
“After the 2008 crisis [the economic crash]”Business capital attacks and strike threats combined with more well-known instruments of influence, mostly on campaign contributions, which helped ensure the appointment of pro-business staff and guarantee the access of lobbyists to policymakers,” they write. The financial industry could threaten to shift their investments, and limit reforms effectively, they say. “Banks’ responses to financial reform efforts highlight the mutually reinforcing nature of those strategies. Wall Street’s continued investment in the economy, coupled with the presence of bank – friendly staff in government, increased the state’s response to Wall Street demands. ”
As those authors explain, several large corporations threatened disinvestment as the Obama administration passed reforms that were too strict for their liking. Even after the administration signed off on rescue loans taken out by Wall Street companies that had caused the recession, “business leaders and even their investment intensified. The levy that arose spontaneously from the market-driven disinvestment had become a self-consciously applied strategy to pressure on government policies in an area of government – a general strike. “
She added that this enables business leaders to influence policies, ranging from financial regulation to health care.
“Politicians often treat business warnings of diminished confidence as evidence of anticipation of dismissal, and use the warnings to justify preemptive action in favor of business. This calculation helps companies negotiate government policies in exchange for promising changed mainstream policies. future, “authors explained.
Salon reached out to Lyft and Uber for comment on this story. Lyft referred Salon to a copy of her submission from the court, which explained why they claimed they could not comply with the dismissal on Thursday night and had to stop operations. Uber did not respond to a request for comment.
