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We Didnąt Want to be First -
From Employee to Independent Contractor Status
A Story About Cab Drivers in Four Acts
By: Ruach Graffis
November 23, 2003

San Franciscans are rightly proud of the many "firsts" this city can boast of, but today we are examining the effects of one of the most pernicious ideas that business has ever used in the pursuit of profits.  In some industries it is called "contracting out," in others, "sub-contracting," in others, "privatization."  In the cab business, it is called "independent contractor status," and for us, it started in San Francisco.

Four years before Reagan would darken the doors of the White House, ideas that would make him infamous in the labor community made their appearance in San Francisco.   We were on the unfortunate cutting edge of a change that would soon overtake not only our industry nationwide, but would become a condition for many other workers as well.  In the United States, the reality of these ideas would create pockets of Third world conditions in inner cities and on farms alike.  People with jobs as diverse as farm workers and photo journalists would find themselves classified as independent contractors, with no benefits, no regular salary and unprotected by Americaąs most basic labor laws.

And when American businesses exported these ideas overseas, the results were even more horrifying < environmental disasters like the mud slides in Nicaragua that killed hundreds, the result of rainforest slash and burn techniques used to facilitate growing cash crops for middle class consumers in America and Europe.  The sweatshops and sex shops of Malaysia are human disasters, filled with children sold by their own parents, who, when unable to buy enough food for their family, are forced to sell one child to buy food to feed the rest of the family.  And of course, the jobs that left America created unemployed workers willing to work longer hours for lower and lower wages just to have a job.  The sweatshops have come home to us.

Change does not happen in a vacuum, history is not just dates and places, battles and treaties.  History, and changes, are propelled by the personalities of the people involved, looking out for what they perceive to be their best interests, based on their beliefs.  In this story I will try to give a sense of the people who changed the taxi industry, and a little of why they did it.    

The new world order arrived in the San Francisco taxi industry in 1978, and was called Proposition K.  It was billed as the answer to the chaos of the previous two years, but hidden inside the Trojan Horse was a clause, or rather the elimination of a clause, previously part of the city charter, which required that cab companies and their cab drivers must have "?the relationship of an employer to an employee."

Act I scene 1, The initial crisis
But I get ahead of myself.  To understand why it happened here, we must go back about 27 years.  The industry had just been through two years of a free-for-all.  In November 1976, Yellow Cab Co., due to the problems of its parent company, Westgate Corp. (owned by C. Arnhold Smith, Nixonąs old buddy), went bankrupt and closed its doors.  I was one of the drivers who got to the taxi lot one cloudy fall day to find the gates chained together and locked shut.  I thought it was great.  I had no children, no bills, my partner had a good job, and our combined rent was $27.50 a month.  That was cheap rent even in ą76.  I happily went down to the unemployment office and filled out the requisite forms.  But for many drivers with families and bills, it was a disaster.  I donąt know what they did for the next few weeks, but in December, the Veteranąs Cab contract with Teamster local # 265 came up for renegotiation.  Veteransą management didnąt even pretend to bargain in good faith.  They were out to break the union.  They figured there were nearly 1,000 former Yellow drivers walking the streets who were hearing the howl of the wolf at their door, and especially with Christmas coming up, those drivers would be the willing instruments of the unionąs destruction.  While Vets drivers walked the picket line, their former union buddies crossed it and took their jobs.  Five months later in May, the scenario was repeated at De Soto Cab. That time, both former Yellow and Vets drivers crossed the line.  In six months, three of the five biggest garages had gone non-union.  

Act I scene 2, The crisis unfolds
Chaos reigned in the cab industry.  Yellow went into bankruptcy court, and all of its company-owned cabs were pulled off the streets.  Passengers were stranded all over town.  Out-of-town cabs came in and had a field day, poaching city fares.  But those out-of-town cabs didnąt charge the same meter rates as city cabs, so passengers who did get a cab, were often ripped off by higher fares.  Former cab drivers picked up passengers using their personal cars.  There were fights on the streets between former union members, between passengers and drivers? it is still referred to by those who lived through it, as a ?free-for-all."

Act II scene 1, The solution imagined
In the breach, stepped four groups, all trying to return some sense of normalcy to the industry.  Each of course had their own self-interest in mind.  Some were also trying to do something good for the industry, and San Franciscans.  One was lead by two Yellow drivers, John Robb and Jim Bolig.  Good union members with strong worker-driver sensibilities, they wanted to put together a stock ownership KESLO plan.  Another group was lead by two other Yellow drivers, Patrick Shannan and Jimmy Steele who wanted to start a Yellow Cab Co-op.  There were also two ballot initiatives, one promoted by cab companies and one authored by San Francisco Supervisor Quentin Kopp.  Each of the ballot measures headed for a showdown on the June ballot.  One retained the rights for corporate permits and transferability but with some new controls, the other eliminated the section on transferability from the city charter, and municipalized all cab permits requiring them to be issued to "real persons." All new permit holders would have a driving requirement in order to keep the permit.

Koppąs idea was to give the working cab driver some control over their own industry.  By outlawing corporate permits and allowing real drivers to take "their" permit to the company of their choice, he hoped to break the iron handed control of the big companies on the industry.  If drivers didnąt like the way a company treated them, from the quality of the radio dispatch service to the quality of cab maintenance, they could take their permit to another company.  The industry used to have its own "checks and balances" of power: the companies, the city (through regulations), and the union. But in the void left by the demise of the union, the companies wielded near absolute power.  Ideologically, Kopp distrusted big government as much as he distrusted big corporations.  He saw his initiative as a way for the drivers to individually exert pressure on the companies to service the public better and, as well, to recreate the necessary third check/balance in the industry.

When the lottery was held in the basement of City Hall to assign letters for each initiative, Koppąs baby was christened "Proposition K."

The Labor Council took no strong position on either initiative.  Many of the remnants of IBT #265 were intent upon getting their own permits and favored K.  So people who should have been watching carefully, were not.  Others may have noticed, but didnąt care.  A few knew, and stayed mum hoping no one would mention what was missing.   No one did.

Prop K passed with a narrow margin.

The part that was missing, was that tiny clause, embedded in the section on transferability, that required all cab companies and drivers have an employee-employer ("EE") relationship.  Prop K was silent on the subject, so when Prop K was passed, deleting the section on transferability in the old city charter, it also deleted the quality of the work relationship as well.  The old section wasnąt well written, or there would have been two sections, but? life is filled with sloppiness and greed.  This story has aspects of both.

The stage was now set for the real disaster.

Act II scene 2, Other people have problems too
Unions apparently didnąt read Prop K close enough to even realize they were loosing EE status, but people who were working behind the scenes, people who eventually became company managers, certainly did.  Many of these people already had their permits, bought for nearly the price of a house, in the pre-Prop K era.  They wouldnąt have to drive to keep their permits.  Pre-Prop Ks had been "grandmothered in," to be held by the permit holder until death.  K was "sold" to drivers as a way to get a permit for "free."  A couple of hundred dollars to put your name on a waiting list, wait until it came to the top, and bingo ­ instant riches < because the companies would pay the permit holder a fee for the use of that permit when the permit holder wasnąt driving the cab.

For the promise of a cab permit, those that understood the deal, were willing to make a bargain with the devil.  Most of these people were cab drivers, former members of Local #265.

Other people who should have been paying attention, the leaders of other unions, had their own problems and didn't see how what was happening in the cab industry might be the handwriting on the wall for their own.  They allowed #265 to go down, and didnąt pay attention to the industry once it did.   When Vets, and later De Soto went on strike, for some reason, there was no strike fund, but things were in such disarray, no one pursued that fact.

If there had been a strong Labor Council position, K probably wouldnąt have passed.  But there was no outcry from that quarter.

Act II scene 3, The problems become visible ­ creating sweatshops on wheels
For the next 20 years, cab driversą rights were whittled away.

The first thing the companies did was quit hiring employees.  If you went in for a job, the manager would say "We can hire either independent contractors or employees, but today we are only hiring independent contractors."  Of course there was never a day when they hired employees.  Drivers were handed a "lease," and not allowed to change any of the terms of the document.  Companies demanded an accident deposit of hundreds of dollars.  And often didnąt return it when the driver left - they would suddenly find that the driver owed them the whole deposit for "back gates," or some other fiction.

The length of the shift was extended from nine hours with an hour break to ten or twelve.  And no one took breaks anymore.

Without a union contract to control the gates, the companies began to raise the fee paid by the driver to work.  For twenty years it went up at twice the rate of inflation until the city, pressured by the driversą organizing group, the United Taxicab Workers (backed by Communications Workers of America) stepped in.  Under intense pressure from both companies and UTW, the San Francisco Board of Supervisors passed a law limiting the amount companies could charge drivers.  Similar to apartment rent control, it was called the "gate cap."  Much negotiation went into determining that gate cap.  Gates at that time averaged about $95, but if they had followed the trajectory of inflation, like the old union contracts did, they should have been about $68.  Unfortunately, there was no political will for that big a rollback, however justified, and the dust settled at averaging out the weekąs shift at $83.50.

The difference between the $68 and the $83.50 average works out to $15.50 out of each driverąs pocket each day, five days a week.  $77.50 a week.  $310 a month.  $16,120.00 a year less in each driverąs pocket.  And each cab is driven by 3.5 drivers.  Even when you factor in the permit holder driving, itąs an astounding sum.  Especially when you know the permit holders were just paying for the cab maintenance for their shifts ­ they didnąt have to pay the higher gate that included the money going into their own pockets.  Permit holders were getting $2,000 - $3,500 a month before the gate cap for the lease of their permits to companies.  Which of course doesnąt even begin to discuss company profits.  $83.50 covers a lot of profit when you remember Hertz was renting the very same vehicle for about $40 a day at that time.  No wonder the companies and the permit holders had money to put on an expensive ballot proposition every three years.  They were using our own money.  Against us.

Inexorably, from 1978 on, the damage was done.  Drivers scrounged to make a living wage, in a job that used to allow some at least, to buy a house in San Francisco.  Living in town with a family became out of the question.  Drivers were forced to live farther and farther away, in Berkeley, then Union City, then Tracy. Some moved families to Sacramento, and visited them on the weekends sleeping in their cars when they were in town.  Showering at friendsą houses.  Others commuted in, two hours from Cotati, drove a 10 or 12-hour cab shift, then drove back to Cotati.  The partner of a cab driver I know used to say she could always tell if she was in a meeting with a bunch of cab drivers, because they all looked gray from lack of sleep.  Those that lived in town lived in one room residential hotels in the Tenderloin and the Mission and didnąt marry.  Or maybe their kids were already grown and out of the house.  The driver turnover rate exceeded 2/3rds every three years.

For a few years after 1978, you could call in "sick" and get your shift covered by another driver.  Some companies allowed drivers to find their own substitutes from among other company drivers, as long as the company was notified ahead of time.  But eventually company management realized there was extra money to be made if they found the replacements.  Often if five drivers called in sick, and only four shifts were covered, management would charge all FIVE drivers for their missed shift.  Drivers routinely had to tip the garage dispatcher to get the cab they were assigned at the time they were scheduled.  (Remember the "shape up?" < the reason for the 1934 General Strike < does this sound familiar?)  Who knew what dispatchers and companies declared for tax purposes?  One dispatcher owned a racehorse.  Hey, it was a cash business.

Act III, The problems in the cab industry are exported
When Reagan entered the White House, the air traffic controllers got a taste of the same medicine.  Get rid of the workers with any institutional memory, wreck the union and then itąs open season on the workers.

Now the assault on workersą rights has many names, but whatever it is called, it is an effort to reduce costs by lowering the wages, eliminating worker benefits, making it difficult or impossible for the workers to organize to combat the downsizing of their jobs and working conditions, and with it, their standard of living.   

If the good people had stopped the process when they first saw it happening, we wouldnąt have NAFTA or the FTAA or GATT now.  But they said nothing.  It wasnąt happening to their industry, to their families.  But eventually it did happen to them as well, and by then, there was no one left who was not also fighting the onslaught.  Whatąs the famous quote from WWII?  "First they came for the communists, then the trade unionists, then the Jews, and I did not speak up.  When they came for me there was no one left to speak for me."  Bad things happen when good people are silent.  

Life is a tightly woven web.  Pull one thread and it may all unravel.  When people are charged with doing a job and do it badly or not at all, threads come unraveled.  Unions did not start paying attention to what was happening in the cab business, because it seemed small and parochial.  Just one industry.  But independent contractor status spread from the San Francisco cab industry all across the nation.  Now almost every cab driver nationwide is considered an independent contractor.

Other industries saw an opening, and its advantages, and began to exploit it.  Too late, unions woke up and started to fight back.  Now we are fighting a many-headed hydra rearing its multiple ugly heads in every industry.   

® Few journalists or news photographers are salaried staff anymore; theyąre all independent contractors.
® Clothing manufacturers sub-contract to local fly by night firms or outsource to off shore suppliers; in both cases, workers are often paid by piece rate, and called independent contractors.
® Government functions are being privatized: public schools, prisons, and the postal system are being taken over by corporation and run for profit.

The results for the worker are lower wages and worse working conditions, and often the impossibility of organizing to stem the downslide ­ let alone reverse it.

Where will it all end?

You decide.

Act IV, The future
Once again, cab drivers in San Francisco are ahead of the curve, but this time the news is good.  We may be the wave of a new kind of organizing.  The United Taxicab Workers have been evolving an unusual method of organizing for the last 15 years.  Because we are such a highly regulated industry, we have been able to use legislative and judicial means to create city mandated standards high enough so that when we finally get to card check status, the first union contract will look pretty good.  Legislatively we have won city-mandated health care, and gate control.  We are working on getting city-mandated disability and retirement.  Judicial decisions have found that we are employees for purposes of Workers Compensation and Unemployment benefits, and that we come within the jurisdiction of the State Labor Commissioner.  But it has been a long battle and we have had a lot of help from grassroots activists, neighborhood and community groups, and, most especially, the labor community.

UTW has also been forced to become very politically active.  Because the companies want to protect their advantages of having independent contractors, they want the city to do the regulation, which would normally fall to an employer.  Police regulations governing our industry now run in excess of 40 pages.  Other things have gone on the ballot.  Dress codes, mandatory radio pickups, all have appeared on the ballot in order to sweeten the initiative really designed to further advantage the companies.  In the last 25 years there have been eight initiatives.  Thanks in large part to the UTW, they have all failed.  What the city is experiencing is contract negotiations going on in public.  If there were a union-negotiated contract, most of these would have been unnecessary.
In some ways, we have been lucky that we have had to fight so many ballot measures, because it has forced us out of our insular little industry to make allies across the communities of San Francisco and California.  This past election proved the worth of those connections when we beat a permit holder generated initiative by 72.1%.  We got the endorsement of almost every endorsing group in the city.   It was an amazing victory considering that in the beginning, almost every politician predicted it was sure to pass.

This is the kind of event that gives us hope. But itąs far from a rose garden yet, either locally or nationally.

Because they have the money, the corporations have the upper hand.  We need to look at changing the way we elect our public officials.  We will almost certainly have to cut the money out of elections because right now what we get are the best politicians money can buy and the corporations are doing the buying.  That will be a tough change because money is entrenched in our political process.   But we will do it because we must.

We canąt look into a crystal ball for exact dates, but the idea of democracy has spread around the world, and the desire for justice and fairness are part of human nature, so we know how it will end.  When enough people get abused long enough, when they have nothing left to lose, they will band together, they will rise up and they will make a revolution.  It may not happen next week, maybe not next year, but it will happen.  If we are lucky, the revolution will not be a war in the streets, but it will not be bloodless.  Countless workers have already bled and died in the struggle so far.  And the struggle will continue because the ideas, the desires, for justice and fairness will not ever go away, they are in our hearts, and we will not forget them.  Once again the people will rise and claim the promise so eloquently stated in the Declaration of Independence:  "All men < and women < are created equal."

Ruach Graffis is a union-environnmental activist who used to switch those two words); she has driven a cab more years than not since 1973.

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