Innovator Update: The Drivers Cooperative

The Drivers Cooperative provides a socially responsible alternative for riders in New York City, and soon in Denver. 

The Drivers Cooperative is a New York City-based ride-sharing cooperative launched in 2021 that specializes in paratransit and non-emergency medical transportation. The co-op provides a lifeline to drivers who are unfairly “deactivated” by Uber and Lyft. The organization is owned by the drivers who make more on every trip, share in the profits, and share in the democratic decision-making for the business. Per-mile and per-minute pay is set about 10% above the minimum pay rates that Uber and Lyft are required to adhere to in New York City, while fares for riders are about 5% under the other app-based companies’ rates. On a pilot project focused on its paratransit contracts, the co-op created custom code that ensured drivers made a minimum of $30/hr before vehicle expenses– the first hourly living wage guarantee in the gig economy. If there are profits, the money goes back to drivers and co-op workers as dividends. The organization started more than four years ago and has grown substantially, seeing both membership and revenue explode in the last few years. The Workers Lab, alongside some of its partners, supported the early stages of The Drivers Cooperative, and we recently caught up with Erik Forman, who led the creation of the co-op, to learn more about the organization and what’s next as it continues to grow.

How has your organization changed or grown since the initial investment? 

The project started with a participatory action research project I organized in 2019 when I was working with rideshare drivers as a labor educator. The project was focused on the feasibility of platform cooperativism as a strategy for system change in rideshare. Our initial research questions included “Can a cooperative model upgrade job quality for drivers in the gig economy?” and “Can cooperatives succeed as a business and achieve impact for workers?” In 2020, we had about two dozen drivers who were invested in the idea of a cooperative model, but no funding, no technology, and no license to operate. We were starting basically from zero.

During the pandemic, I incorporated the business, built a team, and crowdfunded to cover the costs of getting the co-op started. The Workers Lab provided us with seed funding that helped us kickstart a membership drive to find drivers who wanted to be a part of a cooperative. About 2,500 drivers signed up and joined online orientations, and we got our license to operate in New York City in early 2021. Over the following years, we grew to become a multi-million dollar operating business that supported more than 200 drivers, and while we’ve faced continuous constraints due to a lack of access to resources, we built our own platform and have created a viable alternative to the larger rideshare apps. We also achieved a $30 per hour minimum wage guarantee for drivers doing paratransit work, although that is on pause now as the co-op pushes toward greater profitability and sustainability.

What are you focused on today/what are your top priorities looking forward?

The co-op in New York City is now run by drivers who joined the co-op effort, and is focused on our paratransit and non-emergency medical transportation work. I’m focused these days on taking the impact of this model to the next level through two new projects.

Through the process of launching the co-op effort in New York, I became well-acquainted with the barriers to creating successful worker-owned tech-enabled businesses, and the gaps in the existing infrastructure to support worker-owned cooperatives. Frankly, it’s rough out there. I had to take on substantial personal risks for this project, like at one point providing a personal guarantee for a $400,000 line of credit for our payroll, and crazy work hours of donated labor for years and years. Not everyone is in a position to be able to do that, which is a problem if we want things like The Drivers Cooperative to become more common. The fact is that the gap between what it takes to get something like this started, and the resources that are available to support things like this makes it impossible and makes this kind of thing inaccessible to workers who have to work 60+ hours/week in gig economy jobs. To have more co-ops like this, we need a robust infrastructure that smooths the path so that cooperative entrepreneurship of this kind becomes accessible. Similar to how venture capital creates ecosystems of funding and resources to support businesses that create the work the Peter Thiels of the world want to see, we need institutions and infrastructure that make the world we want to see possible.

Together with the engineers who built our platform, I'm working on building a new cooperative development organization called Driver Systems to provide support for any group of drivers and allies worldwide that want to launch a co-op. Our goal is to provide stable infrastructure and a pathway to scale for the digital cooperative economy, making worker-owned enterprises as commonplace as fast food franchises in the United States. We’ve already been able to do some great stuff - we’re working with the Rocky Mountain Employee Ownership Center to launch a drivers’ cooperative in Colorado (check out the app), we helped the Minnesota Uber-Lyft Driver Association launch a campaign for a driver-owned co-op in Minnesota when Uber threatened to leave the state, and we’re working now on a free app-based shuttle service to combat voter suppression in the swing states and seed progressive infrastructure those key areas.

The other major project I’ve been working on is legislation. In New York, the co-op was able to demonstrate that we can raise the ceiling in this industry through a guaranteed hourly wage and access to low-cost loans for vehicles through credit union partnerships. A new coalition of labor, environmental, and disability justice advocates is taking that to the next level now through a legislative effort for a just, green transition of rideshare.

We recently achieved state sponsorship of the Green Transition Act, which will bring about a just, green transition of rideshare by creating a $200 million/year funding stream to help drivers buy electric and wheelchair-accessible vehicles (made by manufacturers who uphold labor standards). The funds will be stewarded by a new Green Transition Authority (GreTA) that will be able to issue bonds to build out charging station infrastructure and provide paid training in good green jobs for drivers who want to start new careers, or who are displaced by robotaxi AI.  Support with vehicle expenses will make a life-changing difference for drivers, because vehicle costs eat up about 50 cents on every dollar drivers make, and there is currently no support for these costs at all. We sort of took the Robert Moses idea of creating public authorities to finance infrastructure and turned it on its head – we’re putting workers, environmental advocates, and disability activists in charge of a Green New Deal for this industry. 

What do you want potential donors to know about your work? 

We achieved impact and growth on a scale that beats the average venture-backed startup, and with a fraction of the resources. We can continue that growth with additional investments. The New York co-op saw 12x growth from our first to second year and grew to 12,000 drivers. We’re putting the foundation in place to enable 10x growth again, and replicate this model across the country.

We’ve demonstrated that worker ownership is a powerful tool for system change in the gig economy. Cooperatives can “raise the ceiling” by demonstrating more responsible ways of doing business, and through building a large and organized membership, can fight for legislation that “raises the floor.”

We have an infrastructure to bring this model to scale, we need investment and donations to make it happen. 

You can donate to help us build the tools workers need to build the cooperative future. 

What advice do you have for other innovators trying to help workers? 

The most important thing is to believe in yourself. Starting anything new is not easy, and it's doubly hard when you’re building something that seeks to address wealth and power inequalities in our society. However, one of the things that I've come to appreciate about capitalism is that there is room for a lot of creativity. A good idea well-executed can mobilize resources and amplify your success if you believe in yourself and keep at it.