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Gig workers sound off on the Uber-Postmates deal: ‘It’s like an embezzler buying a bank’

July 7, 2020, 8:00 PM UTC

As investors cheered on Uber’s agreement to buy Postmates for $2.65 billion on Monday, another crowd reacted differently: the gig workers who underpin the ride-hailing and food-delivery business.

Edan Alva, a driver who opted for Lyft over Uber during the latter’s years of scandal, called the deal “unethical” and “immoral” because, he said, it will amplify Uber’s ability to suppress worker pay. Drivers and food couriers receive a share of the ride and meal-order fees charged by the app-based companies, which also take a hefty cut.

“It’s like if a large-scale embezzler were allowed to buy a bank,” said Alva, who is also an organizer for Gig Workers Rising, a labor advocacy group.

Alva said he makes roughly $20 to $22 hourly on average ferrying passengers around the Bay Area. But after expenses like gas and unexpected car maintenance costs—he had five flat tires in the past year alone—his take is “definitely well below $15 per hour,” and “possibly closer to the $10 point,” he estimates.

Alva criticized ride-hailing firms’ “predatory tactics” that he said are designed to minimize people’s compensation, including by recognizing their most essential workers, drivers and couriers, as contractors rather than as full-time employees with benefits. Uber and fellow gig-economy companies are currently fighting a law in California that could force them to reclassify their workers as full-time employees.

The companies are shelling out tens of millions of dollars to promote an alternate state ballot initiative that would exempt them from the rule change.

Fighting atop the food pyramid

Ride-hailing and food-delivery businesses are locked in a fierce battle for market share even as the lockdown measures imposed by authorities to combat the global coronavirus pandemic cause their core operations to flounder.

Luis Vasquez, a DoorDash courier who used to pick up passengers for Uber and Lyft before switching to meal delivery amid the onset of COVID-19, said he is concerned about the industry consolidation. “I don’t think it’s gonna be fair or good for the drivers,” he said of the Uber-Postmates deal. “Uber is doing this because they want to take over.”

A combined Uber-Postmates would claim 37% of food delivery market share in the U.S., according to payments-tracker Edison Trends. That would make it the runner-up to the current leader, DoorDash, which has a 44% market share.

Competition continues to heighten, despite the pandemic. DoorDash just last month raised $400 million at a nearly $16 billion valuation. Grubhub, which last month agreed to sell to Netherlands’ Just Eat Takeaway shortly after a rumored deal with Uber fell through, has 17% of the market.

Margins have slimmed as a narrowing band of rivals compete to offer the cheapest, most convenient service.

Vasquez, a single parent, lamented the continual reduction in pay his assignments provide. “When I started it was really good,” he said of his early earnings five years ago.

“Now it’s crap,” Vasquez said.

Robbing Peter to feed Paul

Some drivers blasted Uber for spending billions on Postmates while paying workers a pittance.

Nicole Moore, a part-time driver for Lyft, described Uber’s actions as hypocritical. “They don’t have the money to pay people basic labor standards, but they have the money to buy a whole new company?” she said.

“To me, this is a slap in the face,” said Moore, who is also an organizer for Rideshare Drivers United, another worker advocacy group that is agitating to unionize ride-hailing drivers.

Peter Young, a courier for Postmates, said he sees no upside to the Uber-Postmates deal. “I don’t really see anything getting better for workers after this. I don’t expect pay to rise, or job security to improve, or anything,” he wrote in an email.

Further, Young said, he fears the deal could affect people’s employment status, including his own. After two years transporting riders for Uber, the company “deactivated” him, effectively booting him from its platform, after he got into a “fender-bender” accident last year, he said.

Young said he worries that Postmates could ban him, too, as it gets absorbed by Uber. Though Postmates has assured couriers the acquisition won’t have an immediate effect on their ability to work, that promise, he said, is “only as strong as their word.”

“And their word generally means nothing these days,” Young added.

Ride sharing is caring

Some people looked more optimistically on the deal.

Michael Gumora, a former Uber and Lyft driver who now runs Rideshare Report, a blog about the ride-sharing business, gave an opposing view. He said he thinks the consolidation will be “good for drivers actually” in the long term, because it will force more workers together, making it easier for them “to get together for the purposes of collective bargaining.”

But, Gumora noted, Uber is “not doing [the deal] for the benefit of the drivers at all.”

Uber contends its acquisition of Postmates will offer advantages to their gig workers. A spokesperson wrote to Fortune in an email that with the combined network of restaurants, orders, and opportunities for delivery fulfillment, “we’ll be able to offer even stronger and more predictable earning opportunities to delivery people across meals, grocery, and more.”

Most people Fortune interviewed were skeptical of any possible benefits for gig workers, however. Paul Oh, a Postmates courier who is the administrator of an unofficial Facebook group for his peers, said he sees only “a very slim chance it is a positive thing for couriers.”

“Hopefully, Uber approaches this like Coca-Cola,” Oh said, meaning that Uber ends up offering so many options to consumers—on-demand apps versus soft drinks, in this case—that it basically competes against itself.

Being a courier is like participating in an uncertain economic “game,” Oh said. Fewer potential employers means fewer ways “to play your city,” which means less potential reward.

Losing an appetite, winning the war

If Uber grants Postmates some level of separation and autonomy, allowing drivers, merchants, and customers to switch between apps based on their preferences, it could allow for more choice and flexibility. But the logic for the deal no doubt derives from savings presented by consolidation and economies of scale.

In statement announcing the deal, Uber said it “intends to keep the consumer-facing Postmates app running separately” even after the transaction closes, slated for the first quarter of next year. The company said it also plans to combine back-end operations and cut $200 million in overhead costs.

Wilfred Chan, a freelance writer who supplements his income by delivering meals for on-demand apps like Postmates, summed up his gig-worker peers’ anxieties. The move puts gig workers increasingly at the mercy of a few ultrapowerful players.

“The problem is that it means less choice for workers. It means that these platforms are growing bigger and harder to fight,” Chan said. “As Uber’s hegemony grows, they’re going to have even more leverage against workers and be able to exploit us even more harshly.”