By Nicholas Parsons
Nicholas Parsons is a sophomore at the University of Pennsylvania studying Politics, Philosophy, and Economics.
Many businesses intentionally utilize tactics of psychological manipulation on their consumers. However, in recent years some companies have experimented with using these same tactics to incentivize their employees where monetary incentives are lacking. With the growing popularity of what is sometimes termed the “gig economy,” in which workers are contracted as freelance employees for a short period of time, companies must get creative in order to compel their workers to work in certain locations, in order to maximize profits. [1]
Uber, like many blossoming companies in our modern economy, can be considered a part of this growing “gig economy.” [2] As such, they are not subject to the same employee regulations. Uber in particular has been criticized for taking advantage of this freedom, utilizing numerous tactics of psychological manipulation and exploitation to motivate drivers while being legally allowed to pay less than minimum wage. With the rise in the popularity of employers which capitalize on the gig economy, we must ask ourselves - should these companies be subject to the same regulations as traditional businesses?
Nicholas Parsons is a sophomore at the University of Pennsylvania studying Politics, Philosophy, and Economics.
Many businesses intentionally utilize tactics of psychological manipulation on their consumers. However, in recent years some companies have experimented with using these same tactics to incentivize their employees where monetary incentives are lacking. With the growing popularity of what is sometimes termed the “gig economy,” in which workers are contracted as freelance employees for a short period of time, companies must get creative in order to compel their workers to work in certain locations, in order to maximize profits. [1]
Uber, like many blossoming companies in our modern economy, can be considered a part of this growing “gig economy.” [2] As such, they are not subject to the same employee regulations. Uber in particular has been criticized for taking advantage of this freedom, utilizing numerous tactics of psychological manipulation and exploitation to motivate drivers while being legally allowed to pay less than minimum wage. With the rise in the popularity of employers which capitalize on the gig economy, we must ask ourselves - should these companies be subject to the same regulations as traditional businesses?
According to Eric A. Posner, a professor at University of Chicago Law School, any company that manipulates a consumer at that consumer’s expense can be deemed exploitative in their actions. [3] The same could be said for a company which manipulates its employees in the similar manner. Although this may not be deemed “fraudulent” per se, the practice is clearly taking advantage of employees’ ignorance. As an example, Uber’s app for its drivers automatically queues another ride before the driver’s current ride is finished, one of several psychological measures included in the app with the intention of coercing drivers to maximize the amount of rides they partake in during their “shift”. In fact, when this measure was first put into place, there was no way for drivers to stop the queue, making them unable to stop for bathroom breaks or to fill up on gas. By convincing the drivers to tacitly agree to more rides than they would like to drive, this practice partially removes the agency from these employees in making their decision as to how many rides they wish to take. [2]
Some may argue that this practice is “paternalistic” in nature. [3] After all, these psychological tactics are framed to benefit both parties. However, because companies like Uber are not required by law to pay their drivers minimum wage, this practice tends to disproportionately affect the business. Take, for instance, drivers like Scott Weber who utilize Lyft and Uber as a full time job. Despite working nearly forty hours per week, Mr. Weber was unable to exceed $20,000 in his income, even when excluding inevitably large expenses for gas and car repairs. [2] To make matters worse, because these drivers are technically contractors as opposed to workers, Uber doesn’t need to offer them employee benefits. [4] This clearly shows that although attempts to persuade drivers are mutually beneficial when these drivers are made keenly aware of their low wages and benefits, this is certainly not the case when all drivers are considered in the aggregate.
This begs the question: Should companies like Uber and Lyft be allowed to compel their workers to work extra, when the practice is only minimally beneficial for the employees themselves? It seems as though they should be held liable. After all, if workers cannot support themselves on the earnings of their work, perhaps that fact should be made clear to those employees; or, alternatively, the employers should be forced to pay their drivers the equivalent to minimum wage, as well as the benefits any other worker would be entitled to.
There are two possible ways to force the issue here. For one, a law could be enacted to prevent psychological manipulation of employees by employers. In essence, such a law could force companies like Uber and Lyft which take advantage of the “gig economy” to be clear and honest as to the intent of their business practices, as well as the inability of workers to make a minimum wage. Such a law is unlikely to be passed, due to its specificity and potential to be interpreted as overly complex or as government overreach.
A second, and far more feasible option, is to force Uber and similar companies to recognize their workers as regular employees, rather than as contractors of the company. This is a simple solution, and in fact it has been done before. In the state of California, one Uber driver was recognized as an employee of the company by the California Labor Commission. Uber argued against the ruling, stating ironically that the benefit of recognizing drivers as contractors was that it increased their autonomy. According to Uber, “they have complete flexibility and control” as a result of their contractor role. [5] Considering the psychological coercion which Uber utilizes under the current system, these drivers may be entitled to even more autonomy if they were designated as “employees” under the law.
There is a third solution, of course. With competitors in the economic arena like Lyft, each competing business has an incentive to be more ethical towards its drivers than the others. In the future, as the rise of these organizations which employ freelance workers reaches its peak, economic competition may compel these businesses to act in the drivers’ interests, to prevent drivers from leaving and working for competitors. Hopefully, through one of the above solutions, Uber’s drivers are able to gain many of the benefits that employees legally have, whether that be naturally through market competition, or through government intervention.
[1] "Working in a Gig Economy : Career Outlook." U.S. Bureau of Labor Statistics. Accessed April 19, 2017. https://www.bls.gov/careeroutlook/2016/article/what-is-the-gig-economy.htm.
[2] Scheiber, Noam. "How Uber Uses Psychological Tricks to Push Its Drivers’ Buttons." The New York Times. April 02, 2017. Accessed April 19, 2017. https://www.nytimes.com/interactive/2017/04/02/technology/uber-drivers-psychological-tricks.html?smid=fb-nytimes&smtyp=cur&_r=1.
[3] "The Law, Economics, and Psychology of Manipulation" (Coase-Sandor Working Paper Series in Law and Economics No. 726, 2015). Accessed April 19, 2017
http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2420&context=law_and_economics
[4] "Will Uber Have To Provide Health Insurance To Its Drivers?" HCW - Employee Benefit Services and Employee Benefits Consultants. December 16, 2015. Accessed April 19, 2017. https://www.hcwbenefits.com/will-uber-have-to-provide-health-insurance-to-its-drivers/.
[5] McBride, Sarah, and Dan Levine. "In California, Uber Driver Is Employee, Not Contractor." Reuters. June 17, 2015. Accessed April 19, 2017. http://www.reuters.com/article/us-uber-california-idUSKBN0OX1TE20150617.
The opinions and views expressed through this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.
Some may argue that this practice is “paternalistic” in nature. [3] After all, these psychological tactics are framed to benefit both parties. However, because companies like Uber are not required by law to pay their drivers minimum wage, this practice tends to disproportionately affect the business. Take, for instance, drivers like Scott Weber who utilize Lyft and Uber as a full time job. Despite working nearly forty hours per week, Mr. Weber was unable to exceed $20,000 in his income, even when excluding inevitably large expenses for gas and car repairs. [2] To make matters worse, because these drivers are technically contractors as opposed to workers, Uber doesn’t need to offer them employee benefits. [4] This clearly shows that although attempts to persuade drivers are mutually beneficial when these drivers are made keenly aware of their low wages and benefits, this is certainly not the case when all drivers are considered in the aggregate.
This begs the question: Should companies like Uber and Lyft be allowed to compel their workers to work extra, when the practice is only minimally beneficial for the employees themselves? It seems as though they should be held liable. After all, if workers cannot support themselves on the earnings of their work, perhaps that fact should be made clear to those employees; or, alternatively, the employers should be forced to pay their drivers the equivalent to minimum wage, as well as the benefits any other worker would be entitled to.
There are two possible ways to force the issue here. For one, a law could be enacted to prevent psychological manipulation of employees by employers. In essence, such a law could force companies like Uber and Lyft which take advantage of the “gig economy” to be clear and honest as to the intent of their business practices, as well as the inability of workers to make a minimum wage. Such a law is unlikely to be passed, due to its specificity and potential to be interpreted as overly complex or as government overreach.
A second, and far more feasible option, is to force Uber and similar companies to recognize their workers as regular employees, rather than as contractors of the company. This is a simple solution, and in fact it has been done before. In the state of California, one Uber driver was recognized as an employee of the company by the California Labor Commission. Uber argued against the ruling, stating ironically that the benefit of recognizing drivers as contractors was that it increased their autonomy. According to Uber, “they have complete flexibility and control” as a result of their contractor role. [5] Considering the psychological coercion which Uber utilizes under the current system, these drivers may be entitled to even more autonomy if they were designated as “employees” under the law.
There is a third solution, of course. With competitors in the economic arena like Lyft, each competing business has an incentive to be more ethical towards its drivers than the others. In the future, as the rise of these organizations which employ freelance workers reaches its peak, economic competition may compel these businesses to act in the drivers’ interests, to prevent drivers from leaving and working for competitors. Hopefully, through one of the above solutions, Uber’s drivers are able to gain many of the benefits that employees legally have, whether that be naturally through market competition, or through government intervention.
[1] "Working in a Gig Economy : Career Outlook." U.S. Bureau of Labor Statistics. Accessed April 19, 2017. https://www.bls.gov/careeroutlook/2016/article/what-is-the-gig-economy.htm.
[2] Scheiber, Noam. "How Uber Uses Psychological Tricks to Push Its Drivers’ Buttons." The New York Times. April 02, 2017. Accessed April 19, 2017. https://www.nytimes.com/interactive/2017/04/02/technology/uber-drivers-psychological-tricks.html?smid=fb-nytimes&smtyp=cur&_r=1.
[3] "The Law, Economics, and Psychology of Manipulation" (Coase-Sandor Working Paper Series in Law and Economics No. 726, 2015). Accessed April 19, 2017
http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2420&context=law_and_economics
[4] "Will Uber Have To Provide Health Insurance To Its Drivers?" HCW - Employee Benefit Services and Employee Benefits Consultants. December 16, 2015. Accessed April 19, 2017. https://www.hcwbenefits.com/will-uber-have-to-provide-health-insurance-to-its-drivers/.
[5] McBride, Sarah, and Dan Levine. "In California, Uber Driver Is Employee, Not Contractor." Reuters. June 17, 2015. Accessed April 19, 2017. http://www.reuters.com/article/us-uber-california-idUSKBN0OX1TE20150617.
The opinions and views expressed through this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.
