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

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