In yet another example of the disconnect between corporate media and the American public, scant coverage has been given to a recent Government Accountability Office report showing that Uber, Lyft, and DoorDash now have the most workers receiving Supplemental Nutrition Assistance Program (SNAP) benefits among all major employers. Back in 2020, Walmart and McDonald’s claimed those top spots.
The report marks a remarkable shift. For years, Walmart and McDonald’s symbolized America’s taxpayer subsidized low-wage economy. Now Silicon Valley’s signature platform companies have taken their place.
At least Walmart and McDonald’s offer some socially redeeming utility: Walmart delivers low consumer prices on essentials, while McDonald’s, its unhealthy fare notwithstanding, remains one of the few dining experiences many working families can still afford.
Uber, by contrast, is a masterclass in the perils of unfettered platform capitalism. It has engineered a model that benefits few besides its obscenely compensated CEO and executive suite. Even the company’s long-term shareholders have comparatively little to celebrate.
As I’ve noted previously, I drove a taxi in Toronto during college. In those days, cab driving was a legitimate, sustainable profession. I befriended many career drivers who owned homes, raised families, put children through college, and took annual vacations. There was virtually no capital barrier to entry beyond passing a local street knowledge exam and a background check. Drivers rented cabs from established garages at fair, predictable daily rates, covering only the fuel they burned during a standard 12-hour shift.
Taxi drivers could make a viable living in other cities, too. That included New York, until regulators allowed speculative fleet owners and predatory investors to corner the medallion market, burdening drivers with crushing lease fees. New York cabbies were once fixtures who knew every corner of the five boroughs; as speculative buyers of taxi medallions gutted earnings, seasoned veterans were replaced by an underpaid, high-churn immigrant workforce with little knowledge or experience navigating the city’s roadways.
San Francisco, meanwhile, was a driver’s dream. Packing one of the country’s highest meter drop charges into a compact 49 square mile grid, drivers thrived on rapid, short haul trips where generous expense-account tips from convention visitors compounded across every shift. It was precisely the sort of market where someone willing to burn billions in venture capital could underprice an established industry long enough to convince consumers that the old economics had been permanently repealed.
San Francisco gave birth to Uber in March 2009. Tech savvy locals embraced the convenience of on demand hailing, and the company soon burned billions in venture capital to radically undercut municipal taxi meters while dangling lucrative cash bonuses for new drivers.
Uber didn’t rescue consumers from a transportation industry whose economics had stopped working. It entered one of North America’s most lucrative taxi markets and replaced sustainable pricing with venture capital.
Co-founder Travis Kalanick initially pitched Uber not as a career opportunity, but as a casual side hustle, the polite marketing fiction behind the term “ridesharing.” Yet as demand exploded, the algorithm required an ever-expanding, full-time army of drivers to keep wait times low.
Once it established market dominance, Uber steadily increased its platform take rate, turning a flexible gig into a grueling grind. By 2017, national reports were already highlighting a grim Bay Area reality: Uber drivers super-commuting from hours away and sleeping in their vehicles in parking lots between marathon shifts.
As the model matured, Uber’s pricing algorithms grew increasingly predatory. A recent Consumer Reports investigation detailed how Uber’s dynamic pricing algorithm is designed to gauge a passenger’s desperation and charge as much as it believes the rider will tolerate while simultaneously paying drivers as little as the market will bear.
The Consumer Reports investigation highlighted Stephanie King, 61, who left a two-decade career managing a medical office to drive for Uber and Lyft in 2018. In her first year, buoyed by early platform subsidies, she made roughly $60,000. Today, despite years of experience and sharp inflation, her annual earnings have collapsed to around $35,000, forcing her to rely on credit cards to survive.
“They keep shifting all of the ways you can make money, so that you can’t get a good picture of what’s actually going on,” King told Consumer Reports. “As soon as you figure out how much you need to work to live in a given week, they say, ‘Hey, we have another idea.’ They keep pulling the rug out from under us.”
Passenger safety has similarly eroded as Uber prioritized market expansion. The New York Times recently reported that over 4,000 lawsuits have been filed by passengers alleging sexual assault by drivers dispatched through the platform, claims Uber routinely deflects by asserting it does not technically employ any drivers while its lawyers have also pursued aggressive litigation tactics that include probing plaintiffs’ sexual histories, clothing, and other intimate details.
In a deposition tied to an $8.5 million jury verdict awarded to a woman raped by an Uber driver, CEO Dara Khosrowshahi pleaded ignorance of basic platform safety records. According to Courthouse News Service, Khosrowshahi answered “I don’t know” or “I don’t remember” to at least 14 questions regarding whether he was aware that reported sexual assaults during Uber rides rose 3% between 2022 and 2023.
Corporations ostensibly exist to create shareholder value but buy and hold Uber investors have seen little reward. Since its May 2019 IPO at $45 a share, the stock has substantially lagged broader market indices after reaching $100 last October. It has since tumbled back to the mid $70s.
Wall Street’s lingering unease is driven by the threat of autonomous vehicle fleets like Alphabet’s Waymo bypassing third party apps entirely. While Kalanick invested heavily in proprietary autonomous development, Khosrowshahi offloaded Uber’s autonomous division in 2020, leaving the company vulnerable to the very disruption Kalanick pioneered.
When you evaluate Uber’s core constituencies, who actually won?
• Drivers? They net far less than career taxi drivers once earned, with thousands forced onto federal food assistance.
• Passengers? They face opaque surge algorithms, higher baseline fares, and significant safety risks.
• Long Term Investors? The stock remains well off its highs, recently receiving what many contrarians view as a classic sell signal: an endorsement from CNBC’s Jim Cramer calling Uber “one great long-term stock.”
So who benefited from dismantling the taxi industry?
CEO Dara Khosrowshahi, who has pocketed roughly $184 million in executive compensation since taking over in 2017, mostly in equity. Unsurprisingly, Uber recently authorized a massive Share Repurchase Program of up to $20 billion to support its stock price rather than directing more of its financial resources toward improving driver economics or lowering rider costs.
Few numbers better capture Uber’s business model than these: thousands of workers associated with the platform rely on taxpayer- funded food assistance while the company has authorized up to $20 billion in stock buybacks.
Corporate America is fortunate that leaders of the Democratic Socialist movement lack operational business acumen, instead leaning on slogans like “Eat the Rich” rather than pragmatic market interventions. New York City Mayor Zohran Mamdani, for instance, aims to challenge food costs by launching a handful of municipal grocery stores in economically distressed neighborhoods.
If the GAO report demonstrates anything, it’s that Democratic Socialists have been aiming at the wrong target.
Where progressive leaders like Mamdani could actually inflict real damage, and genuinely rattle Wall Street, is by successfully disrupting Uber’s business. Building a modern rideshare application is hardly rocket science. A municipal alternative that guarantees drivers an 80% fare split while eliminating private surge pricing would hit Uber at its most vulnerable pressure point.
By treating dispatch software as a public utility and licensing the infrastructure to other cities, local governments could dismantle Uber’s platform extraction one metropolis at a time. For all of Silicon Valley’s billions and corporate stock buybacks, Uber’s fatal flaw remains the very thing it sought to displace: a straightforward, fairly priced ride where the driver takes home a big chunk of the fare.