Interesting Point

At the core of the various ride share and delivery companies is the fiction that their employees are independent contractors, and so not entitled to any of the normal protections that we grant workers in our society.

This also means that these companies are engaging in illegal monopolistic behavior if you accept their position:

For years now, labor unions and their allies have accurately identified the so-called gig economy as an existential threat to whatever shred of worker power and labor standards remains in the US economy. Where gig workers lack the legal status of employees, they exist beyond the reach of labor and employment protections. The unprotected status of this segment of the workforce can then be used to threaten, intimidate, and ultimately replace workers who enjoy legal protections. The underlying principle isn’t new, nor are the contours of the legal and political battle around it: who counts as a worker is in part determined by who counts as an employer, and many, many employers have realized they can escape an employer’s responsibilities under the law by controlling and directing their workforce at an apparent distance, hiding behind franchisees, contractors, and staffing agencies as employers of record, or, as in the case of the gig economy, claiming there simply is no legal employer.

While the stakes in the fight over regulating the gig economy are fairly obvious, unions, workers, and their allies have, to date, only fought half the battle: they have tried to defend the definition of employment against technology-enabled erosion so as to encompass more workers within the bounds of labor regulation and federal protections for collective action and union representation. For the most part, they’ve lost. Prop 22 and similar gig company-sponsored initiatives have gutted (or are in the process of gutting) more inclusive tests for employment status. Meanwhile, the gig business model is being extended into other industries, like healthcare. And the primary messaging from the platform companies continues to resonate with both policymakers and workers: gig work represents an improvement in labor standards above what would be available were they classified as employees, because it means work hours are flexible.

The dire state of labor standards for workers who are classified as employees doesn’t help matters. What many gig workers want is what platforms promise, but don’t deliver: genuine independence and control over their own work. It’s hard to convince them that they should seek those things through the protection of employment and labor law when those protections do not, in fact, reverse the dehumanization and exploitation that is still the reality of market labor. Forming a stable union in a nonunionized workplace remains near-impossible, especially where turnover is high, and very few existing union contracts meaningfully grant employees anything like the control and genuine independence workers seek. Indeed, four decades of neoliberal policies have so undermined regulatory protections that the benefits of government protection are difficult to identify for many workers.

That’s where antitrust comes in. Antitrust has a long tradition of securing the independence of the self-employed, by means of enforcement against what are known as ‘vertical restraints’ binding subordinate entities to dominant ones. Prohibitions on vertical restraints — such as dictating the prices that subordinates charge to customers and requiring that subordinates be exclusive to a single dominant firm — are what once made the gig economy illegal, since they prevent the exercise of control by a non-employer. They thus act as a necessary complement to labor standards: if a dominant firm wants to exercise control, then the robust antitrust regulation of vertical restraints and labor regulation together entail that the firm must thereby assume certain responsibilities (to pay at least minimum wage and overtime, to include employees in company benefits, to abide by civil rights and workplace safety laws, and so on). They must also not infringe on their workers’ right to bargain collectively and to undertake collective action. If employers do not want to assume these responsibilities, then they are obliged not to exercise control. Without this latter prohibition, enforced by antitrust law, employers will always seek to escape the legal construct of the employment relationship. The purpose of bringing antitrust liability to bear on gig economy firms is to force them back into it: taking away their ability to exercise control in the absence of an employment relationship is a necessary condition for the success of any effort to curtail the gig economy and the threat it poses to worker power and to workers’ welfare.

The remainder of this piece elaborates on the legal strategy that could, in fact, accomplish that end: reconceiving the gig economy business model as reliant on vertical restraints to inhibit competition between platforms in service of higher profits for platform businesses. It thus outlines an antitrust theory of harm that should be put to use by workers and their advocates as one crucial prong in the effort to address the threat posed by gig work to employees, to unions, and to workers who desire genuine independence and autonomy.
Vertical Price Restraints in the Gig Economy


Antitrust scholars have pointed out that so-called “Most-Favored Nation” clauses (“MFNs”) — requiring vendors on a given platform not to offer their services at a lower price on other platforms — impair platform competition by inhibiting steering, which serves to increase prices across the board. If vendors offer a lower price on one platform, the MFN means they would have to match that price elsewhere, substantially preventing any steering through price competition that might reduce platform take rates. The resale price maintenance that gig economy platforms practice is a super-charged version of an MFN, since the platforms are directly setting the prices instead of restricting the autonomy with which vendors do so. In combination with an oligopolistic market structure in which all platforms use RPM, the result is, if anything, more anti-competitive than the typical platform MFN.

Rideshare platforms would be particularly vulnerable were price competition to break out, because they practice price discrimination among their customers, which relies on customers who are charged a high price having nowhere else to go. (A particularly egregious example of this is highlighted in the recent DOJ case against Uber for violating the Americans with Disabilities Act by charging customers higher fees if it takes them longer to get in the car.) Rideshare customers charged a high price would be sensitive to lower-priced offers on an alternative, higher-paying platform favored by drivers, but they don’t have that option because drivers are restrained from setting prices at all.
Vertical Non-price Restraints in the Gig Economy


This gets to the heart of the lie that independent work is “flexible.” Workers may be able to decide for which hours they activate, but once they do so, virtually every economically-significant aspect of the job is controlled and decided for them, and frequently against their interest. Moreover, platform control functions to prevent platform competition from arising, and along with it, the possibility that competing platforms might increase consumer surplus by charging lower fares and attracting drivers with higher pay to serve their customers promptly. By means of vertical restraints on drivers and the tight duopoly in rideshare and tightening oligopoly in food delivery, all three sets of counterparties — workers, customers, and restaurants — lose out.

This is a remarkable turn about in the thinking in antitrust. As the author notes, as late as 2017, antitrust authorities were suggesting that unionization of gig workers were actually an illegal anti-competitive action.

The gig companies break the law, either employee classification or antitrust law.

This is central to their business models, and an aggressive law enforcement response would be a very good thing.



Husband, father, pinko, slave to cats

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