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Nura Jabagi is a PhD candidate in business-technology management at Concordia University.

Uber made headlines last month with its renewed efforts to convince the U.S. Securities and Exchange Commission to allow it and other gig economy players to issue shares to their workers.

Under the current U.S. regulatory environment, Rule 701 prohibits issuing stock to gig workers since they are not officially considered employees. With Uber and Airbnb – the poster kids of the gig economy – petitioning the SEC, it is no surprise that Uber’s letter to the watchdog is drawing attention from boardrooms to classrooms.

Uber’s interest in issuing equity to drivers is easy to understand. Throughout its short existence, Uber has repeatedly been accused of worker exploitation. With its treatment of drivers being compared to Victorian-style sweated labour, offering drivers stock options would allow Uber to increase compensation without having to put down hard cash. Moreover, by allowing “drivers to share in the growth of the company,” issuing stock could help Uber increase driver loyalty. Ultimately, even if the SEC decides against a rule change, Uber’s well-publicized efforts will no doubt help in rehabilitating its tarnished image as the company prepares for its IPO next year, and as more ride-hailing services enter the fray.

As the gig economy continues to grow, a favourable SEC ruling could offer millions of gig workers a new form of compensation.

But given the precarious existence of most gig workers, stock offerings may not be as effective an enticement as a health insurance program, for example, or other benefits associated with traditional employment. Moreover, it’s important to remember that Uber and Airbnb are not the first gig companies to consider issuing stock to their workers. In 2016, Juno (the self-proclaimed “Anti-Uber” ride-hailing startup) pledged to give its drivers equity in the form of Restricted Share Units (RSUs). Unfortunately, shortly thereafter the company was sold and the equity program was rescinded, with drivers being cashed out for pennies on the dollar. Considering this precedent, and Uber’s history of poor employee treatment, drivers may rightfully have reservations in participating in an equity program.

Another important question is whether stock options are enough to align worker motivations with company objectives. In its letter to the SEC, Uber promotes its vision of the gig economy as one that allows individuals to control the terms of their work, rewards effort and encourages personal growth. This language harks back to long-established theories of motivation, which suggest that individuals are most inspired when their work is empowering, provides opportunities to validate their skills and promotes personal enrichment.

Yet, beyond the rhetoric of calling its drivers “partners” and referring to the gig economy as the “entrepreneurial economy,” whether Uber truly empowers workers and provides avenues for personal development is arguable. It is possible that equity may provide drivers with capital to pursue educational opportunities and entrepreneurial activities. However, compensatory equity programs are inherently unpredictable.

As motivational tools, equity programs are only effective when the corporate stock is valuable. Moreover, since share performance does not necessarily correlate with worker performance, swings in equity value can be confusing and demoralizing. Should Uber decide to issue RSUs, as many tech companies do, these units have no tangible value until they are vested. Considering the transient nature of gig workers (and the reality that the majority tend to work across a variety of platforms), whether an equity program would be attractive to Uber drivers is unclear.

Perhaps most important, studies have shown that monetary incentives tend to reduce workers’ autonomy, and are unlikely to foster their enduring commitment to any set of values. Moreover, such rewards can prompt workers to act opportunistically, which explains why “free riders” are a common problem for employee ownership firms. Considering that workers’ perceptions of fair treatment, managerial support and acknowledgment of their input has been found to play a crucial role in the performance of ESOP (employee stock ownership plan) firms, Uber will have to ask itself many more questions even if the SEC allows it to issue stock to its driver partners.

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