Democrats think they’ve figured out how to turn the Uber wars to their advantage

A proposal by New York officials to rein in Uber, which ultimately failed, sparked protests. (AP Photo/Seth Wenig)
A proposal by New York officials to rein in Uber, which ultimately failed, sparked protests. (AP Photo/Seth Wenig)

By Brian Fung and Jacob Bogage

At a time when fast-growing companies like Uber are giving struggling American workers a fresh source of income — but not necessarily steady or reliable employment — liberals are fighting to reconcile the rise of a new “sharing” economy with their traditional focus on expanding the middle class and defending workers against mistreatment.

It’s a struggle that has split Democrats at every level of government even as Republicans seek to make inroads among Uber’s young, urban fan base. That demographic, long associated with liberal politics, is one the GOP desperately wants to peel away from Democrats — making the issue all the more vital for presidential candidates such as former secretary of state Hillary Clinton and Sen. Bernie Sanders (I-Vt.).

While Democrats agree that on-demand businesses could radically reshape the economy and workers’ positions in it, few agree on how to respond to its growth. But some liberal strategists now say they have the seeds of a winning blueprint, one they say won’t pit Democrats in Silicon Valley — an emerging, wealthy and powerful constituency that is driving the sharing economy forward — against the party’s more traditional base in organized labor, which has major concerns about how on-demand businesses treat their workers.

“The labor movement has 100 years of experience with the gig economy,” said Damon Silvers, policy director for the AFL-CIO. “From construction to entertainment, there’s nothing new about professions made up of short-term assignments with different clients.… If Uber wants to have a fight about whether or not employers have any responsibilities to their employees, bring it on.”

Instead of falling into a debate about the sharing economy, Democratic strategists say, liberals should force a broader conversation about the future of work in a 21st-century economy.

[Uber triumphs as New York City officials abandon plans to limit transportation company]

By proposing new protections for part-time workers and targeting companies that describe their workers as contractors to avoid paying taxes and benefits, Democrats hope to integrate the sharing economy into a wider workplace safety net that protects all Americans, not just those with traditional full-time jobs. This would allow liberals to avoid a direct fight over the merits of the digital economy itself — one they could ultimately lose, some Democratic operatives say.

Politicians are finding it hard to ignore firms such as Uber, which maintains a network of tens of thousands of drivers and has an estimated value of $50 billion. The company has grown into a popular transportation and logistics behemoth. It has hired a stable of more than 160 outside lobbyists and has fiercely attacked rules that restrict its growth. In states where its policy campaigns have stalled, Uber has withdrawn — or ignored the regulations altogether.

Uber declined to comment for this report.

Uber’s anti-regulatory philosophy has helped attract conservative fans. Last month, Jeb Bush hopped in an Uber on his way to a campaign appearance. Ted Cruz wrote to the Federal Trade Commission to urge caution in regulating the industry.

Even if those efforts fail to produce a lasting alliance between Republicans and the tech sector, said Larry Sabato, a political scientist at the University of Virginia, it has put Democrats on the defensive.

Republican presidential candidate Jeb Bush got into an Uber car last month on his way to a campaign appearance in San Francisco. (Eric Risberg/AP)
Republican presidential candidate Jeb Bush got into an Uber car last month on his way to a campaign appearance in San Francisco. (Eric Risberg/AP)

“If there’s one thing I’ve learned over the years, politicians smell fear faster than anything,” Sabato said. “When their opponents are afraid of something, they’re going to go all in. And that’s why Republicans have been seizing on Uber and some of the other issues that divide Democrats from labor. It’s an opportunity to divide the opposition.”

Aware of the potential minefield, some Democratic strategists are wary of competing with the GOP over which party is more pro-innovation.

“If the political debate is solely, ‘Do you think the taxi industry before Uber had problems?’ — if that’s the debate, Democrats are going to have to be squishy because yes,” it did, said one Democratic political strategist who spoke on the condition of anonymity to discuss party strategy. “That’s why Democrats have to shift the debate.”

A chief concern among Democrats is the sharing economy’s practice of classifying workers as independent contractors, not employees. But, liberals say, that tactic is not unique to the sharing economy: FedEx does it, too. And some taxi drivers who have battled Uber, such as in New York and Washington, also are considered contractors.

[Uber driver is an employee, not a contractor, California regulators say]

The practice allows firms to avoid paying payroll taxes or offering employer benefits, such as a minimum wage or health insurance. And it can make life harder for workers who already may be struggling to make ends meet, said Lawrence Mishel, president of the left-leaning Economic Policy Institute.

Fighting misclassification, and the billions in lost potential tax revenue, should be a key pillar in the Democratic blueprint, liberal strategists say. And that fits into a broader narrative Democrats are trying to build.

“Republicans want to gain political ground with these companies,” said Holly Shulman, national press secretary for the Democratic National Committee, “but the reality is Republicans actually oppose policies that help develop Silicon Valley’s workforce.”

Democrats argue they supported many of the policies that make the sharing economy possible. The Affordable Care Act, President Obama’s signature health care law, was “huge” for would-be Uber drivers looking to leave their day jobs, Uber CEO Travis Kalanick has said.

Still, some Democrats might prefer to regulate the sharing economy more directly.

Sen. Mark Warner says Congress should expand the safety net for contract workers. The Virginia Democrat and Nextel co-founder has floated a proposal to create an “hour bank” for sharing-economy workers that would allow people to accrue benefits such as health insurance on an hourly basis, then redeem them when work is harder to come by. Customers also could be asked to contribute to a benefits fund for sharing-economy service workers.

Above all, however, Warner says he wants to avoid hurting sharing-economy firms and the people who work for them.

“Those who want to demonize these innovations do so at their own peril,” Warner said of on-demand businesses. “People [who work in the sharing economy] like this freedom and flexibility. … If you’re progressive, how can you be against that?”

But there still appears to be a split within the party about how to address the sharing economy. Sanders hasn’t weighed in on the tactics used by such companies but has argued for bolstering traditional labor unions. He took an uncompromising position in an interview with Vox last month, criticizing Democrats for being too far removed from the working class and vowing “absolutely” to strengthen union membership.

Clinton, meanwhile, has sought to walk a fine line on the issue. In a policy speech last month, the White House hopeful praised the sharing economy for “unleashing innovation.”

But, she said, the business model endorsed by Uber and like-minded companies is “raising hard questions about workplace protections and what a good job will look like in the future.”

[Clinton calls for ‘growth and fairness economy,’ vows Wall Street crackdown]

The divisions among Democrats reveal a simmering tension within the party that may be best articulated with one simple question: How should Democrats go about protecting the middle class when more of it may soon rely on unconventional jobs that fall outside the traditional labor system?

Taking the side of labor unions could alienate Silicon Valley liberals who believe their innovations are changing the world for the better. But becoming too cozy with these tech entrepreneurs could be viewed with suspicion by a core liberal constituency. And establishing a safety net for digital economy workers could quickly become an expensive endeavor for taxpayers.

These divergent approaches to the economy of the future lead to very different policy conclusions, and they highlight an unresolved debate within the party that hasn’t been a factor for conservatives.

Still, Democrats appear intent on moving the economic debate onto more familiar ground, where the lexicon becomes less about markets and regulation and more about inequality.

“If you look at economic theory and history, technology does not impoverish people,” said Silvers from the AFL-CIO. “Unjust social and political arrangements impoverish people.”


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