Unionizing The Gig Economy Would be a Disaster for Workers

Unionization would mean fewer jobs and fewer hours of work. The workers might be unsatisfied with their current position, but it’s certainly better than unemployment

The push for unionization among some food couriers at Foodora Canada and among hundreds of Uber drivers in Canada will ultimately do more harm than good for workers in the gig economy.

The drive for unionization will actually result in increased unemployment and underemployment.

Unionization defies the law of demand, a central economic concept. Unionizing Foodora would make it more expensive for the company to hire food couriers, so fewer couriers will be hired.

Even without unionization, it’s difficult to get a Foodora shift, according to a Toronto Star report. According to a representative of the Canadian Union of Postal Workers (CUPW), with which Foodora couriers are attempting to unionize, there’s a “mad dash by couriers to score a Foodora shift.” Of 10 workers he spoke to who wanted a shift, only two were successful.

Unionization would discourage Foodora from providing shifts to workers by making it more expensive to do so. That would surely be unhelpful for those looking for more work.

As the late economist Joan Robinson wrote, “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.”

Foodora and other gig workers unsatisfied with their wages and working conditions might feel exploited. But unionization would mean fewer jobs and fewer hours of work. The workers might be unsatisfied with their current position, but it’s certainly better than unemployment.

Proponents of unionization like to imagine that rather than cutting employment hours, companies will just accept lower profits. Again, they’re ignoring basic economics.

Making Foodora less profitable would slow its expansion, reducing the number of food courier jobs available. Making it less profitable to do business means less business will be done, which means fewer workers are hired.

Businesses often react to inflated labour costs by replacing labour with machines.

Minimum wage increases have hastened the adoption of ordering kiosks and mobile ordering at fast-food restaurants. Similarly, the unionization of drivers would provide incentive for Uber to increase their efforts to make self-driving cars a reality.

And higher labour costs resulting from unionization can’t simply be passed on to the consumer.

The law of demand doesn’t just apply to labour – it applies to food delivery and car rides as well. Higher food delivery prices means fewer people will use Foodora’s services. More expensive rides mean fewer people will take Uber. This means fewer jobs for Foodora couriers and Uber drivers.

There’s no escaping that unionization would lead to employment cuts.

And it gets worse. Not only would unionized workers get hours, but some of their income would go to the union instead of to them. According to CUPW, members pay about three hours worth of wages each month in union dues.

Delivering food for Foodora or driving for Uber may not be glamorous or lucrative, but the calls to unionize should be resisted. By cutting employment hours and burdening workers with union dues, unionization would do more harm than good.

By Matthew Lau

Matthew Lau is a research associate with the Frontier Centre for Public Policy.

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