It’s Time for Democrats to Confront How Badly Big Tech Hates Workers
Abandoning the Fight for $15 just weeks after embracing it was an insult to American workers. But Joe Biden’s stealth appointment of Prop 22 creator Seth Harris may be even worse.
Twenty years ago a law professor went out to eat at a New Jersey diner with his wife and 15-month-old son. The toddler threw a tantrum and all his food on the floor; the waitress expertly defused the tensions and mopped up the mess; and the official, Seth Harris, made some polite small talk with the woman who, as it turned out, was a single mother of three.
Having been on the tantrum-defusing, chucked food removing end of this transaction literally hundreds of times — I’ve also been the fool who took a small screaming barbarian to a nice restaurant, but you kind of give up eating out once the second kid comes along — I am very intimate with the brand of guilt Seth Harris was feeling in that moment. Guilt is an extremely valuable emotion for a waitress, especially during the slow hours people with toddlers generally arrive, worth at least 25% if it’s an expensive restaurant and closer to 50% at a place with a low check average like pretty much every New Jersey diner that exists. And to his credit, Seth Harris says he left a “generous” tip; a good night, then, was had by all.
But Seth Harris wasn’t just any affluent guilty liberal. He was a high-ranking Clinton labor department official freshly liberated to the private sector, and he was also, as it happened, feeling guilty about a Faustian bargain his administration had struck with the National Restaurant Association a few years earlier, to raise the minimum wage 90 cents in exchange for agreeing to leave the minimum wage for tipped employees like his waitress at $2.13 — “a few dimes an hour more than a garment worker in the Dominican Republic earns,” he noted later. The bargain had backfired: the percentage of political donations the NRA political action committee appropriated to Democrats had plunged from 29.5% in the 1994 cycle to 12.2% in 2000 campaign cycle, all so the waitress picking up after his kid could get screwed even worse.
So in a presumably very West Wing moment, with the election just a month away, Harris wrote a syndicated op-ed column in the Washington Post about how Republicans were funneling corporate welfare to the likes of such behemoths as “Domino’s, Denny’s and Bob’s Big Boy” all to deprive their workers of “a firmer hold on the American dream,” challenging readers to consider the plight of their waiters and waitresses and oppose then House speaker Dennis Hastert’s dirty plan to “freeze” their wages:
They may be students struggling to gain the skills they need to succeed in a knowledge-based economy. They may be new immigrants toiling to find a foothold in the middle class. Or, like the waitress who took such good care of my family last Sunday, they may be single mothers paying $13 for a package of diapers, scrambling to pay rent and trying to find affordable health insurance.
“Why,” he wondered, “should restaurants have a special provision in the law that guarantees them a subsidy they don’t use or need?”
On the face of it, this was a reasonable question. I’d also argue it was fundamentally clueless, possibly a little bit bad-faith, and in any case indicative of a stubborn broader cluelessness about the nature of work and pay within the party that purports to actually care about workers and what they are paid, but I’ll get to that.
The important part to know is that Seth Harris’s absolutist feelings about the minimum wage would evolve. By his next stint in the private sector a decade and a half later, he would not only have made peace with the idea that waitress jobs might not be worthy of minimum wage protections — his law firm had taken on a Louisville Restaurant Association as a client in a battle to strike down a law that would have ended the tip credit — he would be lobbying to expand the concept of sub-minimum wage work throughout vast swaths of the economy, in the name of innovation, efficiency, and nurturing his cherished knowledge-based economy.
In the landmark 2015 white paper “Modernizing Labor Laws for 21st Century Work”, Harris and a fellow veteran of the Obama Administration, the late Princeton economist Alan Krueger, argued that companies like Uber and Lyft had revealed labor law to be fundamentally obsolete, because in the gig economy, there was simply no way of distinguishing when a worker was or wasn’t working. The problem, however, was that the law failed to recognize this new ambiguous class of pseudo-work, and the gig app companies were plagued by “uncertainty” over whether they would eventually be forced to acknowledge their workers as “employees”, and this uncertainty might potentially be stifling that all-important “innovation.” The solution, Harris and Krueger wrote, was for Congress and state legislatures to enact legislation that would codify a the new concept called the “independent worker,” employees liberated from most of the labor protections afforded to traditional employees but maybe entitled to receive a few of them.
The paper was hazy on many of the details of the new “social compact” — this phrase is used 29 times — it was proposing. In theory the author wrote that independent workers would be free to organize and pool resources to buy insurance; in legal practice, they wrote, the Sherman Antitrust Act presented a formidable legal obstacle to enabling workers organize.
But on all matters directly pertaining to money the paper was emphatic and repetitive:
[Independent] workers would not qualify for hours-based benefits, including overtime or minimum wage requirements. Further, because independent workers would rarely, if ever, qualify for unemployment insurance benefits given the discretion they have to choose whether to work through an intermediary, they would not be covered by the program or be required to contribute taxes to fund that program.
Harris and Krueger justified this position on the basis that is was “impossible” — this word is used six times — to determine when an “independent” worker was or wasn’t working, because workers sometimes logged into multiple apps simultaneously and also, because sometimes workers did other things while they were logged on to the apps waiting for gigs.
A worker in the online gig economy could be primarily engaged in personal tasks while one or more intermediaries’ apps are turned on. It would stretch any reasonable definition of ‘work’ to count this time as work hours, as the example in box 1 illustrates. Determining whether and for whom an independent worker is “working” is impossible or deeply problematic in too many circumstances for the concept of work hours to translate into these emerging relationships.
The logic here is total pinche basura, as we say in the sub-minimum wage professions. The average desk worker and sometimes even the average busser have infinitely more possibilities than the average rideshare driver for pursuing personal tasks while on the clock, starting with “going to the bathroom.” (Unless you’re working in Seth Harris’s labor department, more on which in a moment.) And on the topic of double-apping, any driver can tell you that it’s fairly “impossible” to double-app simultaneously with the rideshare apps when there’s any demand whatsoever, and more trouble than it’s worth to double-app with the food delivery apps, though more tempting in those cases because the wages are so heinously low.
Perhaps most relevantly, unengaged clocked-in drivers serve as perhaps the single most invaluable marketing tool for enticing consumers to use a rideshare service: Lord knows the presence of one “3 minutes away” lured me away from my usual walk to the subway station after many nights waiting tables.
But the paper’s structural flimsiness was not a problem for Uber and Lyft. “It was a really big deal,” remembers a former tech lobbyist I know. “He was this guy who had just been the secretary of labor” — Harris was merely the Acting Secretary until Tom Perez was confirmed, but still — “and he was putting that seal of approval on everything we wanted.”
Six years later, as Seth Harris has been quietly named the president’s top advisor on labor issues, his vision of a minimum wage free 21st century workplace is rapidly becoming reality. As the CARES Act funneled hundreds of millions of dollars in unemployment checks to their “independent contractors,” the gig app companies spent $203 million passing a California ballot initiative striking down that state’s formidable efforts to get them to acknowledge their workers as employees. Buoyed by their victory, the gig apps have brought the movement national; astroturf groups opposing measures to force apps to observe labor laws and/or promoting Prop 22 copycat bills (like one masquerading as a “portable benefits” law in Massachusetts) have sprouted up in Illinois, Connecticut, New York and New Jersey; the New York coalition has even been aggressively endorsed by Arc of Justice, a “social justice” nonprofit ostensibly formed to fight police brutality that also receives funding from Airbnb and the United Federation of Teachers.
As they did in California, the apps have also started laying hard on workers to demonstrate their “support.” An Amazon seller in Connecticut who says they make “really good money” moonlighting as a delivery app driver on weekends because their area is “filthy rich” was unnerved to receive an email in late February from DoorDash titled “Take Action Now To Protect Your Flexibility!”
The delivery app driver wanted to research the bill before they fired off any emails about it, but when they Googled various search terms that might bring something up, they couldn’t find any references to it — because the bill had been proposed but not actually drafted. So the driver emailed DoorDash asking for the name or number of the alleged legislation, only to receive a hostile reply refusing to provide more specifics and “reminding” them of the “independent contractor agreement” they’d signed when they’d started driving for DoorDash. “I actually don’t want things to change,” the driver says, but the exchange troubled him. “It seems dirty to me.”
It would hardly be the first dirty move the gig apps have been accused of: DoorDash recently hired the DCI Group, a Republican lobbying firm synonymous with Exxon-funded climate science denialism. In a tactic widely used by the climate denial lobby, the coalition of gig apps behind Proposition 22 hired a consultant to file Freedom of Information Act requests demanding every email sent and received by a state university professor who has criticized their practices, and used its official Twitter account to orchestrate a (quite vile) online harassment campaign against her. Uber allegedly hired ex-CIA agents and developed a software called “Hell” to spy on employees, executives and drivers it suspected of double-apping, according to its former global intelligence manager. Before that the company developed a fake malfunctioning version of its delivery app downloadable exclusively by suspected taxi regulators in Portland and other cities, in an ultimately successful effort to sabotage their attempts to enforce taxi regulations.
Seth Harris, too, is no angel. In addition to whichever Silicon Valley cash incinerator financed his Hamilton Project paper — his co-author was working for Uber at the time, and the invariably described as “liberal” Brookings Institution that runs the Hamilton Project is in turn run by some comically villainous private equity ghouls — Harris serves or has served on the board of a monstrously predatory subprime student loan servicer called Meritize, a probably equally despicable for-profit online charter school called Penn Foster, numerous miscellaneous startups mostly purporting to somehow “disrupt” education and workforce training and/or perform “strategic communications” on behalf of said Disruptors. He also makes unspecified “contributions” to the powerful reactionary judge incubator the Federalist Society, heads a self-regulatory agency for fantasy sports companies (which to be fair does sound like the kind of job you could hold down while driving for Uber) and subscribes to the “skills gap” narrative of the decline of the American workforce, whereby the stagnant wages and plunging living standards experienced by the vast majority are rooted in the laziness and stupidity preventing us from acquiring the “skills” required to thrive in an Innovation Economy.
An attorney who worked with Harris during the Obama Administration says Harris was notorious among career civil servants for “neglect[ing] every priority” of the Labor department in favor of obsessing over meaningless performance metrics, turning a blind eye to flagrantly inappropriate behavior perpetrated by two of his deputies, and fostering a micromanagerial work environment wherein some departments forced workers to sign in and out every time they went to the bathroom. (Even a glowing profile in the Cornell Policy Review notes that the president of one of the unions representing Labor Department employees hated Harris so much he tried to get him fired.) Says the attorney: “I am not excited about his White House job because one bad White House staffer reviewing an agency can cause so much havoc.”
Americans who care about labor rights have historically given guys like Seth Harris a pass for selling out to companies like Uber and Lyft because they’re Democrats. Like virtually every other big tech company, Uber and its executives make less than one-fifth of their political contributions to Republicans — and Democrats are also, historically and currently, less bad for labor.
But it’s worth contemplating what it means that the labor movement won its biggest 2020 victory in Florida and sustained most crushing defeat in California. It’s worth wondering why DoorDash and Lyft are leading a kind of dystopian 21st century sequel to the John Birch Society-fueled “Right To Work” campaigns of the 1950s and 1960s in states where Right to Work fizzled out while workers in Alabama, of all states, may be on the precipice of pulling off the first successful union drive in the history of Amazon.
Silicon Valley is uniquely and exceptionally anti-labor, in some ways more insidious than the old union-busting factory bosses and even the contemptuous bean counting Jack Welch wannabes used to be.
The former tech lobbyist says Big Tech has simply gotten too good at the political influence game in blue states.“They know exactly what to do. You give a little to Republicans and more to Democrats. You hire some veteran Republican consultants to do your dirty work. Get at least one Obama person, buy off a Black pastor. This is their comfort zone, they know the terrain at this point. They don’t have this whole political infrastructure in place in Alabama or Arizona, and that’s why they’ve been caught flat-footed.”
But while it is now conventional wisdom that Silicon Valley did, indeed, get too good at wooing Democrats during the Obama years — and that the Big Tech Four in particular became far too powerful too quickly with too little resistance from an administration full of eager soon-to-be sellouts like Jay Carney, David Plouffe, Anthony Foxx, Lisa Jackson and Tony West — we have yet to really grapple with how uniquely dangerous the Big Tech-Dem establishment love affair has been for workers.
For Silicon Valley is uniquely and exceptionally anti-labor, in some ways far more insidious than the old union-busting factory bosses and even the contemptuous bean counting Jack Welch wannabes used to be. The drive to exempt companies with apps from observing labor laws and gigify professions from driving to cooking to practical nursing (while outsourcing as much customer-facing work as possible to artificial intelligence and offshore call centers) is just a short-term cash-flow milestone on the way toward an even darker vision. Rendering workers anonymous, disposable, completely interchangeable and silent is certainly a path to profitability in many sectors of the economy, but it’s not what these guys got into the Disruption business to do. In the long term they literally want to eradicate labor entirely; we know this because guys with silly job titles have been going on and on about self-driving cars and delivery drones for so long now, we’ve stopped believing anything they say and begun dismissing their dystopian fantasies as colossal failures.
And yet the flow of cash into these efforts does not cease. DoorDash and Uber have invested billions of dollars into not just autonomous vehicles and delivery drones, but robots that deliver food and make salad; their lead parent investor Softbank has sunk $375 million into a company that manufactured pizza-making robots and another $32 million into a company that makes robot food runners.
Robots are pretty bad, it turns out, at doing most of these things; Uber famously murdered a jaywalker by accident in Arizona in a disaster that was mercifully (for Uber) eclipsed by the 346 needless deaths caused by a rogue autopilot system installed in the Boeing 737 Max around the same time. In less gruesome adventures, the Softbank robot pizza business shut down after posting annual revenues “well under $1 million” in 2019 in a boondoggle that got barely any press attention at all. But if you’ve got time to kill I highly recommend watching this video of Softbank’s erstwhile pizza robot assembly line, then if you’ve never had the pleasure of watching a competent human do the same job up close, watch a video of one on YouTube for a minute or two. It won’t be hard to spot the most conspicuous flaw in the pizza robot business model: the robots are glacially slow, clumsy with dough, incapable of handling toppings, and you need five of them in addition to a human to produce a single pizza in the time it takes that same human with no robot help to produce five. In America you can usually hire that human for $15 an hour, though they might demand a little more if they knew how badly a six-figure fleet of state-of-the-art pizza robots would botch the job.
I think about Softbank’s pizza robot assembly line a lot, because it’s so obvious from the video that no one involved in the enterprise had any experience in the pizza business when they decided to Disrupt it, and yet this didn’t stop Softbank from handing them $375 million, a sum that could have saved a thousand of the independent restaurants that folded last year, though it doesn’t hold a candle to the tens of billions venture capitalists have allowed the as-yet-unprofitable Prop 22 Mafia to burn. Which is the other thing. When you couple the capacity to sustain bottomless losses enjoyed by the Disruption cartel with the ability to pay less than the minimum wage, it really doesn’t matter how foolish or ill-conceived or operationally incompetent a company is; it’s going to win. Anyone who has ever worked with DoorDash can attest that the company is a hot mess, but as soon as Prop 22 passed, the $62.5 billion supermarket chain Albertsons announced it would lay off its non-union California delivery drivers and outsource their job to DoorDash.
DoorDash’s latest project involves getting popular restaurants to license their names and recipes to DoorDash, so that DoorDash can hire gig workers to produce their food in massive centrally-located delivery only food courts that will cut down on delivery times. Since DoorDash controls the interface through which its users order food and has billions of dollars with which to invest in real estate and equipment — and also gets to call its workers “contractors”, pay them whatever it wants, and shuttle them between restaurant brands in line with demand—it’s fair to expect DoorDash will soon be cannibalizing the restaurant industry no matter how poorly run its operations are.
Which brings me back to Seth Harris at the diner ranting about the Pizza Hut subsidy. When I waited tables I sometimes daydreamed about confronting arrogant neoliberals, though I never did. Sometimes it was satisfaction enough, though, to just be good at my job. To recommend the right cocktail, remember all the ingredients in the special and the Falanghina they liked last time, to debone the fish before it got cold, to crumb the tablecloth between courses, to convey through every tiny inconsequential but deftly-handled detail a giant middle finger to anyone with the fucking fact-allergic audacity to accuse the American working class of suffering from its own “skills gap.”
I didn’t take naturally to any aspect of (and thus mostly hated) waiting tables, but there were a few things I liked about it. I liked getting better at everything with time, and being possessed with the tools and power to make painful moments more pleasurable, the way the diner waitress did for Harris and his wife back when he was a new dad. I appreciated that the very best servers were the two older guys in their fifties who had been doing it for decades. And I liked—every two weeks anyway—getting paid in tips, because although I never made six figures like the OGs, I did make more than nearly all of the chefs, on just over half the hours they worked, and I had a sitter to pay. The tipped minimum wage is often abused—illegally—by valet contractors and car washes and pizza chains, but for the most part within the full service restaurant industry the tipped employees would probably rate themselves pretty far down the list of exploited workers they know.
In fact, in seven years waiting tables I only ever knew one server who wanted to end the tipped minimum wage. Like me, his opinion on the matter was motivated solely by spite toward our bosses, but where he wanted them to be legally forced to give him a raise, I worried about what our bosses might do with our tips once freed from the highly-regulated distribution regime imposed on them by the minimum wage loophole. In the end we knew we were happier getting our pay from the people sitting down in front of us, entrusting their birthday and anniversary dinners to our care than we would be if the bosses were in charge of paying us, and while I dreaded the cortisol bath involved in rearranging silverware for three and a half four hours pulling in $3.33 an hour before anyone sat down in my section, I almost never failed to make enough to pay the sitter, even on the occasional awful night I got triple sat with three four-tops of Scandinavians (citizens of countries with robust welfare states=the worst tippers, albeit in the most pleasant way.)
I suppose it’s another paradox of America that a custom—the 20% tip—enforced by nothing more than an honor code, protected my earning power far more effectively than any putatively well-meaning Democratic labor secretary who ever existed, or for that matter any well-intentioned newspaper union to which I ever belonged. I’m not sure there’s a reason for this, other than the almost arbitrary fact that tips are calculated on a percentage basis that by definition increases commensurately with prices, rendering dastardly Dennis Hastert’s wage freeze effectively moot. I mean: this is not complicated stuff. Everyone with a close enough friend who has worked in a restaurant knows tips are one of the few broadly accessible avenues in the labor landscape that exists to earning a living wage, that the most exploited workers in restaurants are the ones who don’t get to work for them, and that whenever the occasion arises tipped employees pay for the drinks of non-tipped employees. Getting 20% of $200 will get a waitress to the federal minimum wage for an eight-hour shift, and 20% of $520 will get a waitress to $15. Most waitresses have to fork over some of their tips to support staffers, but most don’t sell less than $1,000 during a shift; $2,000 was pretty average across the board before Covid. I bring this up not because I believe it’s the way things ought to be, merely to point out that the movement to repeal the tip credit, which has become quite trendy since Harris wrote his column, has always struck me a bit oddly, like a solution in search of a problem.
Uber, incidentally, used to pay its workers a generous percentage of their fares, as much as 80% of each fare back in the good old days, when our servers with nice enough cars would release their Friday night shifts to drive. Then in 2018, the company “adjusted its algorithm” to pay drivers a flat fee for surge fares, and the percentage they got to keep plunged to just over 50% during rush hours by some estimates. A restaurant could never get away with this kind of move without losing all its best servers, of course, but there are really only three major gig apps and if you work for one, you’re probably working for all three already. The crazier part, though, is that even after giving all its drivers this massive unilateral pay cut, Uber still proceeded to spend the next two years burning more than $15 billion.
It’s hard to think that anyone would willingly sign up to work for a company that was losing a billion dollars every six weeks and had a history of sudden unilateral wage cuts no matter what the pay, but times are desperate for those lacking the skills to navigate the information economy. Harder to understand is why a Washington insider who had served as the most powerful labor regulator in the land would, as one of his very first moves as a corporate sellout, propose giving such a questionable institution an expansive exemption from the fundamental tenets of labor law when just a few years earlier he’d denounced a far narrower exemption on the grounds that it might unduly enrich Pizza Hut.
But the biggest mystery is why a president immersed in a public fight to pass a $15 federal minimum wage would at the very same time privately appoint, to a position of expansive authority, the architect of a broad and unprecedented minimum wage exemption, designed solely to enrich the world’s most gratuitously cash-flush firms at the expense of one of the fastest growing class of workers in America.