As gig economy companies like Uber continue to bring in more money and users, the rising tide has not lifted all boats.
In the last quarter, rideshare and food delivery companies raked in the revenue: Uber brought in nearly $4 billion; DoorDash accrued $1.24 billion; Just Eat Takeaway, which owns Grubhub, made $884 million; and Lyft generated $765 million. But where is that money going?
According to Matt Spoke, CEO of gig economy fintech provider Moves Financial, a lot of it is being spent on drivers, but not in the way you might think.
“[Gig companies] lose hundreds of millions of dollars just on the back of losing workers all the time, churning out of the gig economy,” Spoke told Modern Shipper.
With companies hemorrhaging money on drivers only to see them leave because they feel they aren’t being paid enough, neither gig employers nor gig workers are reaping the full potential benefits of the gig economy. Moves Financial wants to change that.
The company recently announced an initiative called The Moves Collective that will reward gig workers with shares of stock in the very companies they work for, aiming to give them greater leverage in their workplaces.
In addition to rewarding gig workers with a monetary benefit, Moves Financial will give them the power to influence the gig economy platforms they work for at their annual general meetings (AGMs).
“The premise of our business from the very beginning was to figure out how we can step into what seems like an increasingly hostile gig economy and try to find ways to rebalance the economic alignment that seems to be missing between the workers and the marketplaces that they work for,” Spoke explained.
An amplified voice
Spoke recognized a concerning trend among gig employers: low worker retention. Two years ago, when he founded Moves Financial, he noticed that gig workers had a shockingly high turnover rate — as high as 500% for some companies, compared to an average of 3.5% for employees in traditional workplaces.
Initially, Moves Financial was a personal finance platform for the gig economy, but as Spoke recounted, “The goal has always been to sort of evolve that towards something where we can actually meaningfully make a difference in the way that [gig workers are] viewed.”
As he sees it, the way to do that is by giving gig workers a tangible stake in their companies. Gig workers have been up in arms over what they describe as unfair working conditions, staging strikes and protests in order to get employers like Uber (NYSE: UBER), Lyft (NASDAQ: LYFT) and DoorDash (NYSE: DASH) to listen. Gig workers, who are classified as independent contractors under U.S. labor laws, are denied the protections extended to employees under the Fair Labor Standards Act, such as a minimum wage.
“Petitions and protests and walkouts are not necessarily the most effective way to get Uber to change their strategic priorities,” Spoke said. “But if you show up as a group of shareholders and serve the demands, as such, there’s a greater likelihood that these become priority issues.”
Despite protests, gig companies spent millions pushing forward the passage of California’s Proposition 22, which exempted rideshare companies in the state from AB5. That allowed them to continue to classify their workers as independent contractors and deny them the benefits of employee status.
Spoke said that although some companies like Uber and Lyft have seriously considered awarding stock to their workers, their independent contractor status has been a major impediment.
“If [Uber and Lyft] wanted to do more proactively for their workers, that would be used as ammunition against them to sort of write the case of why they’re acting and behaving like an employer,” he explained. “So if Uber started issuing stock to its drivers, they’d have a really hard time making the case that they are not employing these drivers.”
He also points out that the vast majority of gig workers spend their time on multiple apps, and gig employers may not want to award them stock if they also work for their competition. That’s why Moves Financial is doing it on their behalf — the goal is to help the companies by helping their workers, which would reduce turnover and put the companies on the path to profitability.
“If we can address some of the root issues of why the group is unhappy, then we expect that leads to a more loyal, durable, long-lasting workforce that Uber doesn’t have to spend money replacing every six months,” Spoke said.
Gig workers are making Moves
Right now, gig workers that have a Moves Financial profile, earn more than $500 and drive or deliver for Uber are eligible for the program’s soft release (the company is starting with just Uber as a test). But with the full release, which Spoke says will happen by January, all Moves Financial customers will be able to opt in and receive stock from other platforms.
In its current form, The Moves Collective has two main components. The first is a set of “tasks” that customers can complete in exchange for a reward denominated in company stock. For example, one task is to earn $5,000 on gig economy apps over 90 days, for which a user will be rewarded with $50 in Uber stock.
The second component is a brokerage account that holds the stock for the user. For every user of The Moves Collective, Moves Financial goes through the legal process of creating a brokerage account, which would give workers legal ownership over the stock and the ability to sell it or move it to a different account.
Spoke clarified that Moves Financial is not a trading company and that customers cannot use money in their bank account to buy stock. Rather, the initiative rewards the user with the shares for completing various tasks.
But the other, equally important component of The Moves Collective is a mechanism for communicating with gig company executives. According to Spoke, Moves Financial owns and is currently growing “significant stakes” in Uber, Lyft, DoorDash, Grubhub (NASDAQ: GRUB), Amazon (NASDAQ: AMZN) — which has its own gig worker platform, Amazon Flex — and Target (NYSE: TGT), which owns Shipt.
In doing so, Moves Financial gets a seat at the table — it can submit materials to gig companies’ AGMs as a shareholder.
“What we can then do, in the process of editing those materials, is we can inform our users and inform gig workers in general about the submissions that we’re doing,” Spoke explained. “And the proposals that we’re putting forward, the nature of the submissions that we will work on, will be informed by feedback.”
Spoke emphasized that The Moves Collective will not submit proxy materials on behalf of its gig service workers. Rather, Moves Financial will submit its own independent materials with input from its users and other gig workers. But eventually, Spoke envisions the workers themselves having a larger voice.
“All of a sudden, gig workers, in theory, as they earn their stock, can actually show up to AGMs, they can vote on issues. They’re not necessarily going to carry the heaviest weighted vote. But the very fact of showing up and having a voice changes the dynamic of the conversation pretty dramatically.
“‘One thousand Uber drivers protest in New York City by not driving one day’ is an interesting headline,” Spoke continued. “I think it’s a different headline when we say, ‘One thousand Uber shareholders are demanding change from their company.’”
That could redefine the gig employer-worker relationship.
“We’re really leaning into this idea that gig workers are going to be motivated to join a movement of similar people that live a similar lifestyle and earn their money in a similar way, and that as a group, we can start to influence the way the economy functions,” Spoke said. “The gig economy, to date, has just not had a coordinated group of gig workers speaking as a unified voice. And that’s what we’re trying to build.”