Are Airbnb and Uber Saviors of the Middle Class?

The two industry disruptors argue that they are able to help middle-class Americans earn a little extra income in spite of the wage stagnation felt across the nation.

by Carolyn Said, San Francisco Chronicle / November 11, 2015
Uber CEO, Travis Kalanick (left) and Airbnb CEO, Brian Chesky (right). Images cropped, added together Flickr/Travis Kalanick and Brian Chesky

(TNS) -- Airbnb and Uber, two of the most valuable and controversial U.S. startups, have disrupted established industries — hotels and taxis, respectively. Now the two San Francisco companies are renewing efforts to disrupt politics with unprecedented campaigns to position themselves as champions of working folks, while influencing legislation that favors their business models.

“Our community represents a significant voting bloc, a voting bloc that is growing; it’s a formidable constituency,” said Chris Lehane, Airbnb head of global public policy, last Wednesday, the day after the defeat of San Francisco’s Proposition F, which would have curtailed Airbnb’s business of residential rentals for travelers.

Now Airbnb is launching a political crusade, he said, providing money and resources for its hosts and guests to organize into city-based guilds to lobby on its behalf, aiming to have 100 such clubs worldwide by late 2016. The campaign against Prop. F provided the impetus. “San Francisco is where our community evolved into a movement, where hosts and guests organized to become a political force,” Lehane said.

A day earlier, Uber’s David Plouffe, who has kept a low profile since leaving his post as senior vice president for policy and strategy to become an Uber board member and “chief advisor,” gave a major talk in Washington, D.C., appearing to chart a new course for the company’s image: savior of the struggling middle class.

“Platforms like Uber are boosting the incomes of millions of American families,” Plouffe said. “They’re helping people who are struggling to pay the bills, earn a little extra spending money, or transitioning between jobs.” Overall, he said, Uber and similar plaforms address “the challenges of wage stagnation and underemployment.”

That message is strikingly similar to Airbnb’s self-portrait. “Homesharing provides an economic lifeline to the middle class in a period where economic inequality is one of the defining issues of our time,” Lehane said on Wednesday.

The two seasoned Democratic operatives — Plouffe was Barack Obama’s campaign manager, and Lehane was a top advisor to Bill Clinton and Al Gore — appear to be reading from the same playbook in casting their companies as populist movements to help struggling average Americans. The underlying refrain is that Uber and Airbnb are so beneficial that lawmakers would be short-sighted to rein them in.

“This is populism if you think John D. Rockefeller was a populist,” said Harley Shaiken, a UC Berkeley professor specializing in labor issues. “These are multibillion-dollar startups that are seeking to garner support for their own narrow self-interest. I don’t think it’s the next evolution of social movements; if anything, it’s a devolution.”

But Arun Sundararajan, an NYU business professor who studies the on-demand economy, said both companies actually have a valid point.

“Their narratives are grounded in the truth,” he said. “Uber creates a form of work for hundreds of thousands of people. Airbnb’s hundreds of thousands of hosts are leading better lives because they can supplement their income with their Airbnb revenues.” Although they are multibillion-dollar companies, their models “actually do share a pretty large fraction of the value created (by renting rooms or giving rides) with the people providing the service.” Airbnb charges hosts a 3 percent service fee, while Uber takes 20 percent or 25 percent from drivers’ earnings.

From a business perspective, efforts by Airbnb and Uber to harness their vast user bases makes sense, he said. “Much of the companies’ fortunes rest on successfully reshaping regulations to accommodate their business models,” he said.

Both companies have already turned to their drivers, passengers hosts and guests to lobby lawmakers on their behalf. But now, they seem to be upping the ante.

Uber showed the evolution of its political prowess this summer in New York when it crushed Mayor Bill de Blasio’s proposed temporary cap on ride company growth. It organized riders to send at least 17,000 e-mails to City Hall in protest, staged demonstrations with drivers, ran TV ads featuring drivers saying their livelihood would be hurt, unleashed a battalion of lobbyists, and rallied other politicians to its side. It even framed the issue as one of racial equity. “It was Uber’s ability to make the fight about an upstart company ferrying black and brown people in the outer boroughs ... that helped win the day,” the Observer wrote.

Edward Walker, a UCLA sociology professor an author of “Grassroots for Hire,” said it’s not unusual for major corporations to portray themselves as the friend of the little guy.

“You see this in other industries that face major controversies, where they want to show the public is on their side so they highlight that people from disadvantaged backgrounds benefit from their service,” he said. Examples include the battles over a soda tax (beverage companies said small local merchants would be harmed) and clampdowns on for-profit colleges (they said that veterans, single moms and working people taking night classes would be harmed).

But what’s unique about Uber and Airbnb is the way they seamlessly blend their advocacy and marketing strategies, he said.

Sundararajan expanded on that theme. “It’s an example of what some people call ‘new power,’ ” he said. “In the 21st century, digital technology allows distributed groups of people to collectively exert power. A smart company should harness and nurture it.”

Steven Hill, a senior fellow athe New America Foundation is no fan of the companies, as apparent from the title of his recent book, “Raw Deal: How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers.”

While he thinks Airbnb is disingenuous about how many professional landlords use its site, he sympathizes with the Airbnb hosts who rent a single spare room for extra income. Such people make an extremely effective lobbying force because they are both genuine and motivated, he said. “They’re not only real people, but real people who have an economic interest,” he said. “In a classic political science sense, groups with a more-vested interest will be more passionate.”

UC Berkeley’s Shaiken also sees that the companies have a compelling argument in terms of the services they provide. His problem is that they “are masquerading as a social movement,” he said. “They want the image of populism, but what they are protecting is venture capital rights.”

©2015 the San Francisco Chronicle  Distributed by Tribune Content Agency, LLC.

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