Uber’s IPO Disclosures Leave One Big Unanswered Question
(Bloomberg) -- In one week, anyone will be able to buy stock in Uber Technologies Inc. The run-up to this long-awaited initial public offering has revealed a lot about its business that we did not know and some things we did know. (Getting charged with a crime is bad, for example.) But perhaps the most important remaining mystery—for the future of the company, others like it, the global economy and, frankly, society—is how this company is reshaping the concept of a job.
What we can work out from disclosures around the IPO is that this is a pretty substantial company. We know what Uber thinks it’s worth right now: as much as $84 billion, or maybe more. We know how Wall Street is valuing this cash-burning machine: The first analyst targets are $53 to $65 a share, well above the company’s current IPO range. We know how many Uber drivers there are: 3.9 million. And we have a similar picture of Lyft Inc., owner of the next-biggest ride-hailing app in the North America and a publicly traded entity as of a month ago.
Yet somehow, a decade after the Uber app first went online and rammed its way into nearly every major city on earth, economists still have no idea what it’s doing to the labor market. Developments over just the last year signal how stumped researchers still are.
The U.S. Bureau of Labor Statistics published in June its first deep inspection of nontraditional work since 2005. It found that about one in 10 American workers were employed in “alternative work arrangements,” a broadly defined group that includes Uber drivers, freelancers and temps. That was down slightly from 2005, which led many to conclude that “maybe the gig economy isn’t reshaping work after all.” Cracks in that new narrative began to form almost immediately. The government study overlooked people who worked in a gig or multiple gigs on top of their day jobs. It also phrased survey questions in a way that could have excluded people who get their work through an app. A Labor Department economist told Bloomberg at the time that the survey was “designed to replicate what we’ve done in the past.” Hmm.
Independent researchers shifted their focus over the next several months to parsing flaws in labor data and searching for blind spots. Why had the U.S. unemployment rate plunged to 3.9 percent in August, while the rate of multiple-job holders held firm around 5 percent? And why had pay gains stagnated when everyone was working so much? Attempts to improve reporting have been futile. One corporate-backed survey in October seemed to fortify the idea that the gig economy is something of a myth. Two weeks later, the Labor Department said whoops, turns out millions of gig workers were potentially misclassified as unemployed.
It’s been a long time since labor movements, unions and antitrust regulations were fashionable. (Sorry, Senator Warren.) As a result, America may have forgotten that a job is about more than an income. Businesses built around gig workers can only hope to be sustainable by continuing to not pay employment benefits. Despite a setback in California, companies are mostly winning. This week, Labor Department officials decided that workers at one unidentified company were contractors, not employees, which could set an industry-wide precedent. Meanwhile, there are parking lots full of Uber drivers sleeping in their cars who can’t afford to live in the cities they service.
An entire generation of unicorn companies exists on the premise that work is transient. Uber and China’s Didi Chuxing are two of the three most valuable technology startups in the world. No. 4 is WeWork Cos., which plans to go public by furnishing millions of wandering laborers with office space. Airbnb Inc. says it lets people scrape together enough income to cover their mortgages by renting their homes. Investors have valued those four companies at more than $200 billion collectively, and three of them are expected to sell stock to the public in the next year. The gig economy is here. What comes next is anybody’s guess.
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