The Future for Uber Drivers in a Gig Economy

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This five-part article on the use of behavioral techniques by Uber to stimulate a higher performance from its drivers, which appeared in The New York Times, reaches its conclusion with some prognostication on what this could lead to in the future for gig economy workers in the tech world.

By NOAM SCHEIBER, April 2, 2017, for The New York Times

There are aspects of the platforms that genuinely do increase drivers’ control over their work lives, as Uber frequently points out. Unlike most workers, an Uber driver can put in a few hours each day between dropping children off at school and picking them up in the afternoon.

Uber is even in the process of developing a feature that allows drivers to tell the app in advance that they need to arrive at a given location at a given time. “If you need to pick up your kids at soccer practice at 6 p.m.,” said Nundu Janakiram, the Uber official in charge of products that improve drivers’ experiences, “it will start to give you trips to take you in the general direction to get to a specific place in time.”

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There is also the possibility that as the online gig economy matures, companies like Uber may adopt a set of norms that limit their ability to manipulate workers through cleverly designed apps.

Kelly Peters, chief executive of BEworks, a management consulting firm specializing in behavioral science, argued that the same data that makes it easier for Uber to nudge drivers into working an additional 30 or 60 minutes also makes it hard to escape the obligation to look after them.

For example, the company has access to a variety of metrics, like braking and acceleration speed, that indicate whether someone is driving erratically and may need to rest. “The next step may be individualized targeting and nudging in the moment,” Ms. Peters said. “‘Hey, you just got three passengers in a row who said they felt unsafe. Go home.’” Uber has already rolled out efforts in this vein in numerous cities.

That moment of maturity does not appear to have arrived yet, however. Consider a prompt that Uber rolled out this year, inviting drivers to press a large box if they want the app to navigate them to an area where they have a “higher chance” of finding passengers. The accompanying graphic resembles the one that indicates that an area’s fares are “surging,” except in this case fares are not necessarily higher.

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Some drivers believe that the intent is to trick them into driving where Uber wants them to go, rather than where driving would be most profitable, by implying that they will find a surge there. “They’re trying to move people where they want them,” said Mr. Weber, the Tampa-area driver. “But you get there and it’s nothing. It happens all the time.” Mr. Weber noted that the design of the graphic makes the prompt much easier to accept than decline, which requires pressing a small rectangle in the top left corner.

Uber said that the feature was an experiment intended primarily to help new drivers who frequently say they do not know where to find passengers, and that it could be changed if drivers were dissatisfied.

Individual features aside, the broader question of how much Uber seeks to influence drivers through behavioral science may come down to how much its business model requires it.

While the company has made no secret of its investment in self-driving cars, it could be a decade or more before they completely replace human drivers. In the meantime, as long as Uber continues to set growth and passenger volume as critical goals, it will have an incentive to make wringing more hours out of drivers a higher priority than the drivers’ bottom line whenever it faces a close call between the two.

It will also have an incentive to obtain these hours as cheaply as possible. And there is simply no cheaper way than hiring contractors and nudging them to drive when and where they are needed. Industry insiders estimate that relying on independent contractors rather than employees can lower direct costs by roughly 25 percent.

Moreover, the contractor model itself provides a strong impetus for companies like Uber to grow. Many companies in the gig economy simply do not have enough workers, or rich enough data about their workers’ behavior, to navigate busy periods using nudges and the like. To avoid chronic understaffing, they have switched to an employee model that allows them to compel workers to log in when the companies most need them.

Once companies achieve a certain scale, on the other hand, they enter a virtuous cycle: The risk of understaffing drops with a big enough pool of workers, and the cost savings of using contractors begins to outweigh the inefficiencies. This in turn frees up money to enter new markets and acquire new customers, which makes the contractor model still more efficient, and throws off still more savings.

It is, as a result, not too hard to imagine a future in which massive digital platforms like Uber have an appetite for tens of millions of workers — not only for ferrying people, but also for delivering food and retail goods. Nor is it hard to imagine workers’ obliging them, perhaps because their skills do not match the needs of more traditional employers, or because they need to supplement their wages.

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In such an economy, experts say, using big data and algorithms to manage workers will not simply be a niche phenomenon. It may become one of the most common ways of managing the American labor force.

“You have all these players entering into this space, and the assumption is they’ll do it through vast armies of underemployed people looking for extra hours, and we can control every nuance about what they do but not have to pay them,” said David Weil, the top wage-and-hour official under President Barack Obama.

When you stop to consider the enormous cost advantages, Mr. Weil said, “it says to me this is an area that will grow fast.”

This concludes the five-part article on Uber and its drivers

The Health Care Industry has Become a Major Employer in America Today

Our recent published blog inadvertently left out the name of the author. Here it is:

By CHAD TERHUNE, April 23, 2017, for The New York Times

Chad Terhune is a senior correspondent for Kaiser Health News and California Healthline, an editorially independent service of the California Health Care Foundation.

The Health Care Industry has Become a Major Employer in America Today

In this article, condensed from The Sunday New York Times, we learn that administrators essential to the proper dispensation of health care today have more than doubled hospital staffs, that these new employees are well paid and account for much of the skyrocketing increases in medical costs. Consequently it will be difficult to pare down the costs of health care without throwing lots of people out of work.

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By CHAD TERHUNE, April 23, 2017, for The New York Times

. . . But the country has grown increasingly dependent on the health sector to power the economy, and it will be a tough habit to break. Thirty-five percent of the nation’s job growth has come from health care since the recession hit in late 2007, the single biggest sector for job creation.

Hiring rose even more as coverage expanded in 2014 under the health care law and new federal dollars flowed in. The law gave hospitals, universities and companies even more reason to invest in new facilities and staff. Training programs sprang up to fill the growing job pool. Cities welcomed the development — and the revenue. Simply put, rising health spending has been good for some economically distressed parts of the country, many of which voted for Mr. Trump last year.

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The West Virginia University health system, for example, recently opened a 10-story medical tower in Morgantown and hired more than 2,000 employees last year. In Danville, Pa., the Geisinger Health System has added some 2,200 workers since July, and it’s trying to fill 2,000 more jobs across its 12 hospital campuses and insurance company. Out west, UCHealth in Colorado expanded its Fort Collins hospital and is building three new hospitals in the state.

In cities such as Pittsburgh, Cleveland and St. Louis, health care has replaced dying industries like coal mining and heavy manufacturing as a primary source of jobs.“The industry accounts for a lot of good middle-class jobs and, in many communities, it’s the single-largest employer,” said Sam Glick, a partner in the San Francisco office of Oliver Wyman, a consulting firm. “One of the hardest decisions for the new Trump administration is how far do they push on health care costs at the expense of jobs in health care.”

House Republicans, with backing from Mr. Trump, took the first swipe. Their American Health Care Act sought to roll back the current health law’s Medicaid expansion and cut federal subsidies for private health insurance. The plan faltered in the House, but Republican lawmakers and the Trump administration say they are again trying to draft a replacement for Obamacare.

Neither the Affordable Care Act nor the latest Republican bill tackles what some industry experts and economists see as a serious underlying reason for high health care costs: a system bloated by redundancy, inefficiency and a growing number of jobs far removed from patient care.

Labor accounts for more than half of the $3.4 trillion spent on American health care, and medical professionals like health aides and nurse practitioners are in high demand. But the sheer complexity of the system has also spawned jobs for legions of data-entry clerks, revenue-cycle analysts and medical billing coders who must decipher arcane rules to mine money from human ills.

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For every doctor, there are 16 other health care workers. And half of those 16 are in administrative and other nonclinical roles, according to Bob Kocher, a former Obama administration official who worked on the Affordable Care Act and is now a partner in the venture capital firm Venrock. “I find super-expensive drugs annoying, and hospital market power is a big problem,” Mr. Kocher said. “But what’s driving our health insurance premiums is that we are paying the wages of a whole bunch of people who aren’t involved in the delivery of care. Hospitals keep raising their rates to pay for all of this labor.”

Take medical coders. Membership in the American Academy of Professional Coders has swelled to more than 165,000, up 10,000 in the past year alone. The average salary has risen to nearly $50,000, offering a path to the American dream.

“The coding profession is a great opportunity for individuals seeking their first job, and it’s attractive to a lot of medical professionals burned out on patient care,” said Raemarie Jimenez, a vice president at the medical coding group. “There is a lot of opportunity once you’ve got a foot in the door.”

Some of these back-office workers wage battle every day in clinics and hospitals against an army of claims administrators filling up cubicles inside insurance companies. Overseeing it all are hundreds of corporate vice presidents drawing six-figure salaries.

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Administrative costs for the American health care system are the highest in the developed world, according to a January report from the Organization for Economic Cooperation and Development. More than 8 percent of domestic health spending is tied up in administration, while the average globally is about 3 percent. America spent $631 for every man, woman and child on health insurance administration for 2012, compared with $54 in Japan.

America’s huge investment in health care and related jobs hasn’t always led to better results for patients, data show. But it has provided good-paying jobs, which is why the talk of deep cuts in federal health spending has many people concerned.

Chad Terhune is a senior correspondent for Kaiser Health News and California Healthline, an editorially independent service of the California Health Care Foundation.

The American Middle Class Is at Risk.

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Read these words carefully:

“The number one threat to American constitutional government today is the collapse of the middle class. Not the rise of presidential power. Not the growing national security state. Not the gridlock in Washington. Not the polarization of the two political parties. . . .

“The problem today is that the basic foundation upon which our middle-class constitution was built—the prerequisite of relative economic equality—is crumbling. More than eight years after the financial crash, disparities in economic power are at the forefront of popular debate. There is widespread concern about rising inequality and increasing share of wealth going to the top 1 percent and 0.1 percent of people. In the past generation, the average worker hasn’t seen his income rise; adjusted for inflation, it’s been stagnant. People are working harder and harder, with gains in productivity and rising GDP but without increase in wealth or economic security. Economic inequality is also turning into political inequality. Political leaders increasingly express a growing popular sentiment that “the system is rigged” to work for wealthy and corporate interests, who have the means to buy influence through campaign funding and then sustain their influence with “armies of lobbyists” in Washington. This outrage also isn’t partisan: it comes from both the populist right and the progressive left.

“Worse yet, these populist concerns aren’t imagined. In a battery of studies over the last decade, political scientists have demonstrated that economic elites dominate the American political system. The wealthy participate more at every stage of the political process—from meeting candidates, to donating, to voting. Moneyed interests get greater access to elected officials and their staffs. Elite economic interest groups (business and industry) make up the majority of interest groups and spend the most money on lobbying. Political scientists have even shown that the majority’s views have effectively no impact on American public policy; the strongest predictor is the views of wealthy elites. These findings operate across all areas of policy, and they provide systematic evidence that politics is bent in favor of the wealthiest members of American society. They also raise a disturbing question: Can our constitutional system survive the collapse of the middle class?”

We could have written the above. It summarizes excellently the whole purpose for which we established this blog—to state clearly what we see as the greatest threat to our democracy, to warn people against it, and to start figuring out what we can do about it.

What you read above are quotations from a new book entitled The Crisis of the Middle-Class Constitution: Why Economic Inequality Threatens Our Republic by Ganesh Sitaraman, an associate professor at Vanderbilt Law School. We strongly recommend it to our readers and are adding it to our bibliography.

 Angus Deaton, a Nobel Prize winner in economic science,  reviewed  this book for The New York Times, and he had this to say about it:

“In this fine book, both a history and a call to arms, Ganesh Sitaraman argues that the contemporary explosion of inequality will destroy the American Constitution, which is and was premised on the existence of a large and thriving middle-class. . . .

“The founders worried a good deal about people getting too rich. Jefferson was proud of his achievement in abolishing the entail and primogeniture in Virginia, writing the laws that ‘laid the ax to the threat of Pseudoaristocracy.’ He called for progressive taxation and, like the other founders, feared that the inheritance of wealth would lead to the establishment of an aristocracy. . . .”

The founding fathers creating the American Constitution

Further along in his review, Deaton lists some of the author’s suggested corrections to our current excessive inequality:

“Yet it is clear that we in the United States face the looming threat of a takeover of government by those who would wish to use it to enrich themselves together with a continuing disenfranchisement of large segments of the population.

Sitaraman reviews many possible correctives, including redistribution to reduce inequality; better enforcement of antitrust laws; campaign finance reform to break the dependence of legislators on deep pockets; compulsory voting; and restrictions on lobbying, including the possibility of “public defender” lobbyists to act on behalf of the people.

I would add the creation of a single-payer health system, not because I am in favor of a socialized medicine but because the artificially inflated costs of health care are powering up inequality by producing large fortunes for a few while holding down wages; the pharmaceutical industry alone had 1,400 lobbyists in Washington in 2014. American health care does a poor job of delivering health, but is exquisitely designed as an inequality machine, commanding an ever-larger share of GDP and funneling resources to the top of the income distribution.”

If you care as much as we do about the disparity of wealth in this country at present  and the destructive effect it is having on our democracy, get this book and read it.

How Uber Keeps its Drivers Constantly Busy

The continuation of a five-part series from The New York Times on how tech companies, in particular Uber, the hire/ride company, make use of behavioral techniques, some gleaned from the game industry, to induce their drivers to exceed normal driver-for-hire performance.

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By NOAM SCHEIBER, April 2, 2017, for The New York Times

When asked whether Uber’s product managers and data scientists were akin to developers at a social gaming company like Zynga, Jonathan Hall, Uber’s head of economic and policy research, accepted the analogy but rejected the implication.

“I think there’s something to that, but ultimately Zynga should worry mostly about how fun its games are rather than trying to get you to play a little bit more by some trick,” he said. He argued that exploiting people’s psychological tics was unlikely to have more than a marginal effect on how long they played Zynga’s games or drove for Uber. It is “icing on the cake,” he said.

Mr. Hall is clearly right about the effects of certain techniques, like those pitched at drivers’ tendency to set income targets or to focus more on losses than gains. On the other hand, even features that produce relatively small changes in driving patterns can become quite important to a company like Uber.

According to Mr. Parker, the former Uber manager in Dallas, increasing the number of drivers on the road by 20 percent at certain hours of the day, or in a busy part of town, can rein in a large fare surge.

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More important, some of   the psychological levers that Uber pulls to increase the supply of drivers have quite powerful effects.

Consider an algorithm called forward dispatch — Lyft has a similar one — that dispatches a new ride to a driver before the current one ends. Forward dispatch shortens waiting times for passengers, who may no longer have to wait for a driver 10 minutes away when a second driver is dropping off a passenger two minutes away.

Perhaps no less important, forward dispatch causes drivers to stay on the road substantially longer during busy periods — a key goal for both companies.

Uber and Lyft explain this in essentially the same way. “Drivers keep telling us the worst thing is when they’re idle for a long time,” said Kevin Fan, the director of product at Lyft. “If it’s slow, they’re going to go sign off. We want to make sure they’re constantly busy.”

While this is unquestionably true, there is another way to think of the logic of forward dispatch: It overrides self-control.

Perhaps the most prominent example is that such automatic queuing appears to have fostered the rise of binge-watching on Netflix. “When one program is nearing the end of its running time, Netflix will automatically cue up the next episode in that series for you,” wrote the scholars Matthew Pittman and Kim Sheehan in a 2015 study of the phenomenon. “It requires very little effort to binge on Netflix; in fact, it takes more effort to stop than to keep going.”

As with viewers and binge-watching, many drivers appear to enjoy the forward-dispatch feature, which can increase earnings by keeping them busier. But it can also work against their interests by increasing the number of drivers on the road and defusing fare surges. And whether they enjoy it is separate from the question of agency — whether they have it, or whether the company does.

Uber officials say the feature initially produced so many rides at times that drivers began to experience a chronic Netflix ailment — the inability to stop for a bathroom break. Amid the uproar, Uber introduced a pause button.

“Drivers were saying: ‘I can never go offline. I’m on just continuous trips. This is a problem.’ So we redesigned it,” said Maya Choksi, a senior Uber official in charge of building products that help drivers. “In the middle of the trip, you can say, ‘Stop giving me requests.’ So you can have more control over when you want to stop driving.”

It is true that drivers can pause the services’ automatic queuing feature if they need to refill their tanks, or empty them, as the case may be. Yet once they log back in and accept their next ride, the feature kicks in again. To disable it, they would have to pause it every time they picked up a new passenger. By contrast, even Netflix allows users to permanently turn off its automatic queuing feature, known as Post-Play.

This pre-emptive hard-wiring can have a huge influence on behavior, said David Laibson, the chairman of the economics department at Harvard and a leading behavioral economist. Perhaps most notably, as Ms. Rosenblat and Luke Stark observed in an influential paper on these practices, Uber’s app does not let drivers see where a passenger is going before accepting the ride, making it hard to judge how profitable a trip will be.

Sometimes all that is necessary is the mere setting of a so-called default. Because humans tend to be governed by inertia, automatically enrolling them in retirement savings plans and then allowing them to opt out results in far higher participation than letting them opt in. Making Post-Play the default can have the same effect.

“If done right, these things can be socially beneficial,” Mr. Laibson said. “But you can think of all sorts of choice architecture that are quite contrary to human well-being.”

Even Mr. Hall, the Uber research director who downplayed the importance of behavioral economics to the company, did make at least one concession. “The optimal default we set is that we want you to do as much work as there is to do,” he said of the company’s app. “You’re not required to by any means. But that’s the default.”

To be concluded

 

Main Street, USA

A review by Christopher Hawthorne in The Los Angeles Times of a recent documentary film about the controversy ages ago between Jane Jacobs, author of The Death and Life of American Cities, and Robert Moses, the planning “czar” of New York City—a David-and-Goliath struggle between two opposing points-of-view in which Jane (playing the “David” role) ultimately emerged victorious—echoes the issues involved in a more recent planning controversy of the same nature. This was triggered by an April 9 article in the Sunday Review by Louis Hyman entitled “The Myth of Main Street.”

  We will not attempt to reproduce Mr. Hyman’s long article here (there is a link to it below, in the first letter), but will simply summarize it. His argument is that America’s typical Main Street (see photos below) had,  by the end of the twentieth century, failed as the social and commercial nexus of our towns, its stores largely boarded up or in disrepair—replaced by far more efficient commercial venues such as Walmart, selling at far cheaper prices. Hyman’s perspective seems to have stirred up a hornet’s nest among his readers, who feel that cheap goods are not necessarily what Americans desire most. This caught our attention because we too have felt for some time that America is paying too dearly for cheap sneakers from China, in a loss to our traditional cultural values. This feeling is clearly reflected in the numerous letters to the editor, three of which we reproduce here.       

 Plaino, Georgia

Typical Texas small-town 

 Bedford, Ohio

  Mount Airy, North Carolina

Charleston, South Carolina

Annapolis, Maryland

Hudson, Ohio

Telluride, Colorado

Deadwood City, South Dakota

Our Nostalgia for Main Street 

Reproduced from The New York Times, Sunday, April 16, 2017

To the Editor:

The Myth of Main Street,” by Louis Hyman (Sunday Review, April 9), itself perpetuates myths that deserve deconstruction. I have been studying Main Streets since 2008, and in visits to 135 Main Streets in the United States and overseas, I find that there is a great range of vitality that cannot be attributed solely to the wealth of the neighborhood. Poor neighborhoods with powerful Main Streets enjoy not only the benefits of targeted commercial opportunities, but also the other “goods” of Main Street: its civic and cultural offerings, its contribution to society building and its fun.

I have also observed, in my visits to those Main Streets, that there is a tenacity of industry everywhere. Small factories hum with productivity, support local workers and contribute to the nation’s gross national product. There is no reason, in a nation of more than 300 million people, that these remarkable assets cannot be rebuilt into a network of decent jobs and quality goods. This is a much better option for the nation’s health than revisiting piecework, however gussied up by being on an online platform.

MINDY THOMPSON FULLILOVE, New York

The writer is a professor of urban policy and health at the Milano School for International Affairs, Management and Urban Policy at the New School.

 

To the Editor:

Louis Hyman seems O.K. that many town centers are now composed of nail salons, karate studios and boarded-up windows, while “thriving” cities have turned their centers over to luxury condos and stores.

Mr. Hyman dismisses small businesses as “inefficient.” He values lower prices as the greatest good. My father-in-law drove autos from the town’s Studebaker dealership. When the dealer changed to Dodge, he drove Dodges. Small business used to help bind communities. Now, such community support is quaint.

Even considering its new hires, opening a Walmart Supercenter leads to up to 14 locally owned businesses and 150 retail jobs disappearing, property crime and obesity rising, and tax revenue dropping.

Modern consumers rarely consider how their obsession with paying rock-bottom prices is driving labor sources abroad. Business’s primary value has shifted from serving as a community’s backbone to enabling fire-sale prices.

JOHN PETERS, Wayland, MA.

 

To the Editor:

The wealth that built Main Street gave us a distinct physical legacy that should not be allowed to die. There are thousands upon thousands of late-19th-century brick and stone Main Street post offices, firehouses, libraries, theaters, churches, mixed-use buildings and town halls, all set close to the sidewalk within walking distance of each other and the surrounding houses. Main Street was not just a place for making a living; it was the civic heart of town, formed to enable gathering and learning as well as commerce.

Chain stores may change economics, but they need not change the essential form of these walkable places. Woolworth’s and Kress contributed handsome urban buildings that still stand, many reoccupied by newer chains like CVS and Dollar Tree, or independent businesses. Some, of course, are derelict. A Works Progress Administration-style federal program could put locals to work repairing their Main Streets and renovating adjacent downtown factories for, say, clean energy jobs and training. But that would require a different president and Congress entirely.

SANDY SORLIEN, Philadelphia

The writer is a photographer and urban planner working on a book about main streets.

Is This the Acceptable Alternative to Main Street?

 

Uber’s Use of Strategies Based on Video Games

Part Three of a five-part series from The New York Times about how tech companies are using strategies learned from video game practices to entice their employees into exceeding normal performance.

April 2, 2017 for The New York Times, By NOAM SCHEIBER

As he tried to log off at 7:13 a.m. on New Year’s Day last year, Josh Streeter, then an Uber driver in the Tampa, Fla., area, received a message on the company’s driver app with the headline “Make it to $330.” The text then explained: “You’re $10 away from making $330 in net earnings. Are you sure you want to go offline?” Below were two prompts: “Go offline” and “Keep driving.” The latter was already highlighted.

“I’ve got screen shots with dozens of these messages,” said Mr. Streeter, who began driving full time for Lyft and then Uber in 2014 but quit last year to invest in real estate.

Mr. Streeter was not alone. For months, when drivers tried to log out, the app would frequently tell them they were only a certain amount away from making a seemingly arbitrary sum for the day, or from matching their earnings from that point one week earlier.

The messages were intended to exploit another relatively widespread behavioral tic — people’s preoccupation with goals — to nudge them into driving longer.

Over the past 20 years, behavioral economists have found evidence for a phenomenon known as income targeting, in which workers who can decide how long to work each day, like cabdrivers, do so with a goal in mind — say, $100 — much the way marathon runners try to get their time below four hours or three hours.

  

While there is debate among economists as to how widespread the practice is and how strictly cabdrivers follow such targets, top officials at Uber and Lyft have certainly concluded that many of their drivers set income goals. “Others are motivated by an income target for sure,” said Brian Hsu, the Lyft vice president in charge of supply. “You hear stories about people who want to buy that next thing.” He added, “We’ve started to allow drivers to set up those goals as well in the app.”

Uber even published a study last year, using its vast pile of data on drivers’ rides and hours, finding that a “substantial, although not most, fraction of partners” practice an extreme form of income targeting when they start on the platform, though they abandon it as they gain more experience. Strict income targeting is highly inefficient because it leads drivers to work long hours on days when business is slow and their hourly take is low, and to knock off early on days when business is brisk.

The beauty of the messages that Uber sent Mr. Streeter and his fellow drivers is that the drivers need not have even had a specific income goal in mind in order for the messages to work. Some of the most addictive games ever made, like the 1980s and ’90s hit Tetris, rely on a feeling of progress toward a goal that is always just beyond the player’s grasp. As the psychologist Adam Alter writes in his book “Irresistible,” this mental state has a name: the “ludic loop.” (The term was coined by the anthropologist and slot machine expert Natasha Schüll.)

Uber, for its part, appears to be aware of the ludic loop. In its messages to drivers, it included a graphic of an engine gauge with a needle that came tantalizingly close to, but was still short of, a dollar sign.

And the ludic loop is far from the only video game feature that Uber has adapted as a way of keeping drivers on the road.

At any moment, the app shows drivers how many trips they have taken in the current week, how much money they have made, how much time they have spent logged on and what their overall rating from passengers is. All of these metrics can stimulate the competitive juices that drive compulsive game-playing.

 “The whole thing is like a video game,” said Eli Solomon, a veteran Uber and Lyft driver in the Chicago area, who said he sometimes had to fight the urge to work more after glancing at his data.

Sometimes the so-called gamification is quite literal. Like players on video game platforms such as Xbox, PlayStation and Pogo, Uber drivers can earn badges for achievements like Above and Beyond (denoted on the app by a cartoon of a rocket blasting off), Excellent Service (marked by a picture of a sparkling diamond) and Entertaining Drive (a pair of Groucho Marx glasses with nose and eyebrows).

Of course, managers have been borrowing from the logic of games for generations, as when they set up contests and competition among workers. More overt forms of gamification have proliferated during the past decade. For example, Microsoft has used the approach to entice workers to perform the otherwise sleep-inducing task of software debugging.

But Uber can go much further. Because it mediates its drivers’ entire work experience through an app, there are few limits to the elements it can gamify. Uber collects staggering amounts of data that allow it to discard game features that do not work and refine those that do. And because its workers are contractors, the gamification strategies are not hemmed in by employment law.

Kevin Werbach, a business professor who has written extensively on the subject, said that while gamification could be a force for good in the gig economy — for example, by creating bonds among workers who do not share a physical space — there was a danger of abuse. “If what you’re doing is basically saying, ‘We’ve found a cheap way to get you to do work without paying you for it, we’ll pay you in badges that don’t cost anything,’ that’s a manipulative way to go about it,” he said.

For some drivers, that is precisely the effect. Scott Weber said he drove full time most weeks last year, picking up passengers in the Tampa area for both Uber and Lyft, yet made less than $20,000 before expenses like gas and maintenance. “I was a business that had a loss,” said Mr. Weber, who is looking for another job. “I’m using payday loans.”

Still, when asked about the badges he earns while driving for Uber, Mr. Weber practically gushed. “I’ve got currently 12 excellent-service and nine great-conversation badges,” he said in an interview in early March. “It tells me where I’m at.”

 

Uber: An Empathy Question

This is the second part of a five-part series on how the new tech companies are making use of motivational techniques from the behavioral sciences to exploit their workers.

The original article appeared in The New York Times

  

April 2, 2017 for The New York Times, 

In early 2016, a group of roughly 100 Uber employees responsible for signing up drivers and getting them to drive more voted to change its name — from “supply growth” to “driver growth.”

The vote was not unprompted. For much of the previous year, Uber executives had agonized over how to lower the rate at which drivers were deserting the platform.

Alongside Uber’s already daunting targets for expanding its pool of drivers to meet mounting demand, the high turnover threatened to cap the company’s growth and throw it into crisis.

Uber conducted interviews and focus groups while executives peppered employees with questions like, “What are we doing to have more empathy for the driver side of the equation?”

Underlying the tension was the fact that Uber’s interests and those of drivers are at odds on some level. Drivers, who typically keep what’s left of their gross fare after Uber takes a roughly 25 percent commission, prefer some scarcity in their ranks to keep them busier and push up earnings. For its part, Uber is desperate to avoid shortages, seeking instead to serve every customer quickly, ideally in five minutes or less.

This is particularly true of shortages so pronounced as to create a “surge” — that is, a higher fare than normal. While surges do mitigate shortages, they do so in part by repelling passengers, something directly at odds with Uber’s long-term goal of dominating the industry. “For us, it’s better not to surge,” said Daniel Graf, Uber’s vice president of product. “If we don’t surge, we can produce more rides.”

As a result, much of Uber’s communication with drivers over the years has aimed at combating shortages by advising drivers to move to areas where they exist, or where they might arise. Uber encouraged its local managers to experiment with ways of achieving this.

“It was all day long, every day — texts, emails, pop-ups: ‘Hey, the morning rush has started. Get to this area, that’s where demand is biggest,’” said Ed Frantzen, a veteran Uber driver in the Chicago area. “It was always, constantly, trying to get you into a certain direction.”

Some local managers who were men went so far as to adopt a female persona for texting drivers, having found that the uptake was higher when they did.

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“‘Laura’ would tell drivers: ‘Hey, the concert’s about to let out. You should head over there,’” said John P. Parker, a manager in Uber’s Dallas office in 2014 and 2015, referring to one of the personas. “We have an overwhelmingly male driver population.”

Uber acknowledged that it had experimented with female personas to increase engagement with drivers.

The friction over meeting demand was compounded by complaints about arrangements like aggressive car leases that required many drivers to work upward of 50 or 60 hours each week to eke out a profit. Uber officials began to worry that a driver backlash was putting them at a strategic disadvantage in their competition with Lyft, which had cultivated a reputation for being more driver-friendly.

Uber had long been a reflection of Mr. Kalanick, its charismatic and hard-charging chief, who has often involved himself in corporate minutiae. According to an article in The Information, Mr. Kalanick had complained to subordinates that he was not informed sooner about a glitch with the company’s push notifications and had personally weighed in on the time at which employees could receive free dinner.

Now Uber began a process of, in effect, becoming a little less like Mr. Kalanick, and a little more like Lyft.

It rethought a lease program, softened the hectoring tone of its messages and limited their volume. At times it became positively cheery.

During roughly the same period, Uber was increasingly concerned that many new drivers were leaving the platform before completing the 25 rides that would earn them a signing bonus. To stem that tide, Uber officials in some cities began experimenting with simple encouragement: You’re almost halfway there, congratulations!

While the experiment seemed warm and innocuous, it had in fact been exquisitely calibrated. The company’s data scientists had previously discovered that once drivers reached the 25-ride threshold, their rate of attrition fell sharply.

And psychologists and video game designers have long known that encouragement toward a concrete goal can motivate people to complete a task.

“It’s getting you to internalize the company’s goals,” said Chelsea Howe, a prominent video game designer who has spoken out against coercive psychological techniques deployed in games. “Internalized motivation is the most powerful kind.”

Mr. Amodeo, the Uber spokesman, defended the practice. “We try to make the early experience as good as possible, but also as realistic as possible,” he said. “We want people to decide for themselves if driving is right for them.”

That making drivers feel good could be compatible with treating them as lab subjects was no surprise. None other than Lyft itself had shown as much several years earlier.

In 2013, the company hired a consulting firm to figure out how to encourage more driving during the platform’s busiest hours.

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At the time, Lyft drivers could voluntarily sign up in advance for shifts. The consultants devised an experiment in which the company showed one group of inexperienced drivers how much more they would make by moving from a slow period like Tuesday morning to a busy time like Friday night — about $15 more per hour.

For another group, Lyft reversed the calculation, displaying how much drivers were losing by sticking with Tuesdays.

The latter had a more significant effect on increasing the hours drivers scheduled during busy periods.

Kristen Berman, one of the consultants, explained at a presentation in 2014 that the experiment had roots in the field of behavioral economics, which studies the cognitive hang-ups that frequently skew decision-making. Its central finding derived from a concept known as loss aversion, which holds that people “dislike losing more than they like gaining,” Ms. Berman said.

Still, Ms. Berman disclosed in an interview, Lyft eventually decided against using the loss-aversion approach, suggesting that the company has drawn brighter lines when it comes to potential manipulation.

To be continued

How Uber Manages the Gig Economy

A Brief History of Servitude 1. In Roman times slaves, the principal source of labor, were usually acquired through warfare. Often well educated, particularly the Greek slaves, they occupied important positions in literature and the arts and crafts. 2. The medieval serf was bound to his lord’s land, which he tilled in return for protection  and a modicum of land for his own provision. 3. With the coming of the Industrial Revolution, it was the ownership of sophisticated machinery that allowed industrialists to employ thousands of young men and women, mostly raised on farms, to operate it. 4. Following the Second World War, the American economy was the strongest in the world. Many workers, dedicated to their jobs, stayed with the same company throughout their careers. Strong unions protected them.

Today none of this holds true, and new, less socially constrained  forces have risen to hold men and women to their jobs. Let us examine them in  this extraordinary five-part piece from The New York Times about Uber, the car&driver-hire concern.

April 2, 2017 for The New York Times, By 

The secretive ride-hailing giant Uber rarely discusses internal matters in public. But in March, facing crises on multiple fronts, top officials convened a call for reporters to insist that Uber was changing its culture and would no longer tolerate “brilliant jerks.”

Notably, the company also announced that it would fix its troubled relationship with drivers, who have complained for years about falling pay and arbitrary treatment.

“We’ve underinvested in the driver experience,” a senior official said. “We are now re-examining everything we do in order to rebuild that love.”

And yet even as Uber talks up its determination to treat drivers more humanely, it is engaged in an extraordinary behind-the-scenes experiment in behavioral science to manipulate them in the service of its corporate growth — an effort whose dimensions became evident in interviews with several dozen current and former Uber officials, drivers and social scientists, as well as a review of behavioral research.

Uber’s innovations reflect the changing ways companies are managing workers amid the rise of the freelance-based “gig economy.” Its drivers are officially independent business owners rather than traditional employees with set schedules. This allows Uber to minimize labor costs, but means it cannot compel drivers to show up at a specific place and time. And this lack of control can wreak havoc on a service whose goal is to seamlessly transport passengers whenever and wherever they want.

Uber helps solve this fundamental problem by using psychological inducements and other techniques unearthed by social science to influence when, where and how long drivers work. It’s a quest for a perfectly efficient system: a balance between rider demand and driver supply at the lowest cost to passengers and the company.

Employing hundreds of social scientists and data scientists, Uber has experimented with video game techniques, graphics and noncash rewards of little value that can prod drivers into working longer and harder — and sometimes at hours and locations that are less lucrative for them.

To keep drivers on the road, the company has exploited some people’s tendency to set earnings goals — alerting them that they are ever so close to hitting a precious target when they try to log off. It has even concocted an algorithm similar to a Netflix feature that automatically loads the next program, which many experts believe encourages binge-watching. In Uber’s case, this means sending drivers their next fare opportunity before their current ride is even over.

And most of this happens without giving off a whiff of coercion.

“We show drivers areas of high demand or incentivize them to drive more,” said Michael Amodeo, an Uber spokesman. “But any driver can stop work literally at the tap of a button — the decision whether or not to drive is 100 percent theirs.”

Uber’s recent emphasis on drivers is no accident. As problems have mounted at the company, from an allegation of sexual harassment in its offices to revelations that it created a tool to deliberately evade regulatory scrutiny, Uber has made softening its posture toward drivers a litmus test of its ability to become a better corporate citizen. The tension was particularly evident after its chief executive, Travis Kalanick, engaged in a heated argument with a driver that was captured in a viral video obtained by Bloomberg and that prompted an abject apology.

Travis Kalanick, the chief executive of Uber, apologized for getting in a heated argument with a driver over fare reductions.  Photo: Julie Glassberg for The New York Times

But an examination by The New York Times found that Uber is continuing apace in its struggle to wield the upper hand with drivers. And as so-called platform-mediated work like driving for Uber increasingly becomes the way people make a living, the company’s example illustrates that pulling psychological levers may eventually become the reigning approach to managing the American worker.

While Uber is arguably the biggest and most sophisticated player in inducing workers to serve its corporate goals, other “gig economy” platforms are also involved. Uber’s main competitor, Lyft, and popular delivery services like Postmates rely on similar approaches. So do companies and individuals posting assignments on crowdsourcing sites like Amazon Mechanical Turk, where hundreds of thousands of workers earn piece-rate wages by completing discrete tasks.

Of course, many companies try to nudge consumers into buying their products and services using psychological tricks. But extending these efforts to the work force is potentially transformative.

Though employers have long borrowed insights from social science to get more out of their workers — tech companies like Google have calculated that employees interact more with unfamiliar colleagues when they can graze together at snack bars — they are constrained in doing so. A large body of law and custom in the United States holds that because employers have far more power over their employees than businesses do over their customers, they must provide them with far greater protections — not least, a minimum wage and overtime pay.

Uber exists in a kind of legal and ethical purgatory, however. Because its drivers are independent contractors, they lack most of the protections associated with employment. By mastering their workers’ mental circuitry, Uber and the like may be taking the economy back toward a pre-New Deal era when businesses had enormous power over workers and few checks on their ability to exploit it.

“We’re talking about this kind of manipulation that literally affects people’s income,” said Ryan Calo, a law professor at the University of Washington who with Alex Rosenblat has written a paper on the way companies use data and algorithms to exploit psychological weaknesses. Uber officials, he said, are “using what they know about drivers, their control over the interface and the terms of transaction to channel the behavior of the driver in the direction they want it to go.”

To be continued

Video games: Who Makes Them?

With this posting we are continuing a series of blogs which investigate the nature of hiring and employment today in industry. Outsourcing seems to have become the preferred form. The lifetime job with all of its security, loyalty to the firm and clear path to advancement that was so much part of the employment world in the years following the Second World War has become a thing of the past.

Earlier we looked at outsourcing from abroad, notably India. Today we look at the world of video gaming. This will be followed by a series on the gig economy culture of Uber.

By LAUREN WEBER, Tuesday, April 11,  for The Wall Street Journal

SAN DIEGO—The hit videogame “Rocket League” pits jet-powered racecars against one another in an antic soccer match. The big winner is creator Psyonix Inc., which has just 81 employees yet has amassed more than 29 million players in less than two years.

Employees at the San Diego company dream up new themes and car designs, program software, troubleshoot technical issues and watch over a network of contractors scattered around the world. The outside workers test “Rocket League” for bugs, translate it into foreign languages, transfer the software to new types of consoles and handle customer service.

Dave Hagewood, CEO of Psyonix Inc.

“The smaller we can be, the better,” says Chief Executive Dave Hagewood, even though relying on contractors means less control over the speed and quality of the work needed to keep “Rocket League” humming.

Overall, 40 or 50 of the 120 people who work on “Rocket League” are contractors, he estimates. It had $110 million in revenue in its first year alone.

As outsourcing sweeps through almost every industry in the U.S., the videogame business looks a lot like the workplace of the future. A lean core of in-house employees focuses on the most important jobs, with the rest hired out to layers of contractors and subcontractors. Outside workers come and go based on project cycles.

Consulting firm Accenture PLC, one of the world’s largest outsourced labor providers, calls it the “liquid workforce,” which can be turned on and off like a faucet.

More than 300 of the roughly 2,000 people who built Activision Blizzard Inc.’s “Call of Duty: Advanced Warfare,” one of the best-selling games of 2014 in the U.S., worked for outside companies or were independent contractors, according to credits listed on the videogame database MobyGames. About 70 contracting firms are in the credits of “Final Fantasy XV,” released in November by Square Enix Co.

Art-team employees at Psyonix’s headquarters in San Diego.  Photo: Ariana Drehsler for The Wall Street Journal

The videogame industry’s contractor-heavy model resembles Hollywood studios, which hire temporary workers ranging from directors to actors to publicists to make a film and have few long-term obligations after its release.

The difference between games and movies is that longtime work practices and unions in Hollywood provide a safety net for many actors and writers, whether on the job or between projects. People who make videogames are often hired quickly through Craigslist and gaming website Gamasutra or by word of mouth—and then are let go just as fast.

At the end of some subcontracting chains are 16- and 17-year-olds working from their bedrooms or school libraries. Ryan Morrison, a New York lawyer who represents game companies and developers, says he has drafted about 500 contracts in the past three years that required parental consent.

Companies say the result is just-in-time production fueled with human capital. By outsourcing low-value work or renting high-value expertise needed for a short time, game makers like Psyonix can focus on what they do best.

Outsourcing means studios “can in fact make very large games while still staying small,” Anton Wiegert, the head of outsourcing at Guerrilla Games, owned by PlayStation console maker Sony Corp. , wrote in an essay in 2014.

Revenue from videogames hit $75 billion last year, double the world-wide sales from movie tickets, according to PricewaterhouseCoopers LLP, the auditing and consulting firm.

The videogame business is emblematic of a wider shift toward project-based work. Casey O’Donnell, a game developer and game-studies professor at Michigan State University, says the industry “is a decade ahead of where a lot of other industries are going.”