A National Rideshare Cooperative Takes Aim At Uber and Lyft

By Robert Davis
December 24, 2024
Source: Jacobin

Image Stock Catalog, Creative Commons 2.0



After seven years of driving for Uber, Phred Riggs had enough.

Riggs said the company deactivated his account five times over the last five years for no reason. He also didn’t like how Uber would sometimes stack rides together, which sometimes made him take up to four different rides simultaneously. It started to feel like his 2016 Ford Fusion was turning into a bus, he said.

Then his earnings began to drop even though he accepted the same number of rides. For instance, he used to earn $35 for a roughly twenty-three-mile one-way trip from Downtown Denver to Denver International Airport. When Riggs quit, he was earning $19 for the same trip. It was unlike anything he had seen in his more than four-decade career as a driver.

“Last time I checked, they didn’t move the airport any closer,” Riggs quipped.

So Riggs decided to join the Drivers Cooperative, a national coalition offering rideshare drivers better pay and working conditions than Uber and Lyft. The Colorado branch of the cooperative launched in September 2024 and already represents more than four thousand drivers, and it has a customer base of about 14,000 riders, according to Isaac Chinyoka, the co-op’s general manager.

Similar cooperatives have been organized in Minnesota and New York. Minsun Ji, the co-op’s executive director, said she is engaging lawyers in cities like Las Vegas, San Francisco, Boston, Chicago, and Miami to create more local cooperatives. Ji said the goal is to create a federation of rideshare drivers to consolidate their power and increase their resources to compete with corporate behemoths like Uber and Lyft. She also expects the cooperatives to represent as many drivers and riders as the Colorado branch once they are launched.

“I think it’s a really important time for us to think about a way to set up the cooperative so that all workers can claim higher wages for themselves and give them more voice,” Ji told Jacobin.

Uber and Lyft did not immediately respond to requests for comment on this story.

Ridesharing emerged at the turn of the 2010s as a “disruptive” competitor to the traditional taxi industry. Companies like Uber and Lyft lured taxi drivers with promises of big pay and better working conditions and attacked the yellow cab business by undercutting their prices. However, over the last decade, workers around the globe have realized that many of Uber and Lyft’s promises were empty.

Although Uber and Lyft account for billions of rides annually, drivers often take home low pay. Uber and Lyft can take between 30 percent and 50 percent of the cost of a ride after accounting for fees and insurance costs. Many drivers earn between $20 and $23 per hour, which is roughly equivalent to a maintenance technician’s salary at McDonald’s.

Massachusetts attorney general Andrea Campbell secured a $175 million settlement in June 2024 from both Uber and Lyft to resolve claims that the companies violated the state’s hour and wage laws by effectively paying drivers less than the state minimum wage. The settlement also requires the companies to pay drivers at least $32.50 per hour, including a stipend to buy state medical insurance coverage and paid sick leave.

On top of the low pay, Uber and Lyft drivers have been subject to significant workplace hazards. According to a survey of over nine hundred drivers by the Strategic Organizing Center, Uber and Lyft drivers are regularly threatened, harassed, robbed, and physically assaulted. Uber and Lyft’s insurance policies often do not cover the full cost of damages, medical treatments, and other expenses arising from accidents, according to Independent Insurance Associates. This insurance gap can leave drivers on the hook for these costs even in cases where they are not at fault.

Ridesharing has also significantly impacted the value of taxi medallions — permits that taxi drivers must acquire before they can operate a ride-hailing business. These medallions, once seen as lucrative investments drivers could sell when exiting the business, have plummeted in worth. For instance, medallions in New York City were valued at roughly $1.3 million in 2014. Today that same medallion is worth about $200,000. The declining value of medallions has been cited as a catalyst that caused several rideshare drivers to commit suicide. An Australian court also required Uber to pay a settlement of more than $287 million in March 2024 to local taxi drivers because of the company’s impact on medallion values.

Chinyoka explained that the Drivers Cooperative directly addresses many of these issues. Cooperative drivers can buy an equity stake in the organization for as little as $200, giving them ownership in the co-op. The cooperative also guarantees drivers 80 percent of each ride’s fare, retaining the remaining 20 percent for administrative and overhead expenses. Transparency is prioritized, with riders receiving detailed receipts and drivers knowing exactly what they earn per fare.

Cooperative drivers are also covered under the organization’s commercial insurance, which can help close the coverage gap created by personal insurance policies. Chinyoka noted that the co-op does not take any money from the fare to reimburse insurance costs.

“The biggest difference is that our drivers are happy, and that doesn’t happen on the other side,” he said.

Ji said scaling the cooperative has proven challenging. The Colorado branch launched with about $500,000 donated from local foundations. However, Ji explained that growing that war chest requires carefully seeking out socially responsible investors. She said that if a bank like Wells Fargo approached them and asked to invest, the cooperative would likely reject the offer because the bank is not aligned with its social mission.

Ji added that the cooperative’s education of the public about its benefits has also been slow, which has impacted the organization’s fundraising. The cooperative recently launched a $30,000 fundraising initiative to cover the essential tech costs for new drivers. However, that campaign has raised just under $7,000 so far. But those struggles have not dampened the cooperative’s dreams of changing how rideshare workers are treated globally.