Ken Lewis moved from Grenada to New York City in 1989 at a time when he says employment options for immigrants were limited. “You either got into construction or drove a taxi,” he says. Alongside grad school study, he drove a cab and remembers being alarmed at drivers footing the bill for all their expenses, from gas to vehicle repairs.

“Then in 2011, Uber came along and everything got worse, as drivers ran from the yellow taxi industry in the hope of finally making more money for themselves and their families,” he says. “We invested our life savings into buying cars, but actually, we were just buying the tools to exploit us further.”

In the following years, Lewis was among the rideshare drivers who found they were losing more money than they were making. According to studies from March 2018, once Uber and Lyft drivers had factored in insurance, maintenance, repairs, fuel, and other driving costs, 54 percent of them made profits that fell below the minimum wage, and 8 percent lost money doing the job. Lewis recalls how, in 2018, several drivers with Uber and other for-hire companies died by suicide after experiencing increasing debt and financial worries. 

At the start of the pandemic conditions worsened, and self-employed gig workers around the world were left with no safety net as they saw their work drying up and became afraid to continue working. Uber and Lyft eventually offered drivers sick pay benefits, but they did not qualify for them unless they had a positive result from a Covid-19 test or an order from a medical professional asking them to self-isolate, which were very difficult to obtain at that time. This meant that, in that period, many drivers were forced to pick between avoiding the virus and making a living. In California, unemployment support for gig economy workers was eventually funded by federal taxpayers instead of state employment funds and the companies themselves.

Uber spokesperson Freddi Goldstein said that the company worked with the New York City Council and the city’s Taxi and Limousine Commission to introduce a yearly cost-of-living increase tied to inflation for drivers in the city, bringing the rate to $31.74 an hour, alongside paid sick days.

Katie Kim, a spokesperson for Lyft, described the pandemic as a “uniquely terrible time” and said that with ride demand steadily rebounding, drivers are earning $24 per hour on average, including tips and bonuses, even after higher fuel expenses, "which is not only up year over year but also exceeds earnings from May 2019.” This calculation excludes the company's recent fuel surcharge, which is 55 cents per ride.

Collective bargaining for better working conditions was a regular discussion among Lewis’ network, but ultimately they decided they had to create an alternative. “We had to try to own our own company—it felt like just an app between us and choosing our own destiny,” says Lewis. So he mapped out a potential ownership structure with other rideshare drivers and labor organizers.

They launched the Drivers Cooperative in December 2020, which aimed to give drivers a greater portion of their earnings, have profits redistributed back to them with an annual dividend, and give them assistance with auto loan refinancing. The Co-Op Ride app followed soon after, and within a few months, had been downloaded 40,000 times. Its drivers earn approximately 8 to 10 percent more than those working for Uber or Lyft, and with 6,000 members it is the largest worker-owned cooperative in the US.

In recent months, the model that underpins existing “sharing economy” platforms has been battered by high fuel costs, exploding interest rates, hiring problems, and stricter regulation from governments, which all impact companies’ bottom lines. The slump in share prices has wiped $100 billion of market value away from large food delivery firms, erasing the gains made in 2020 and 2021. Shares in publicly listed gig economy companies have plummeted: In the 12 months to June 2022, Deliveroo’s share price fell by 69 percent. Rival delivery company DoorDash experienced a similar drop of 63 percent in the same period, and Uber’s share price fell by 57 percent from June 2021, according to data from the New York Stock Exchange. With the promise of more profits and buy-in from drivers, platform cooperatives like the one Lewis cofounded could be entering their heyday.

The growth rate of platform cooperatives is hard to pinpoint, because they don’t have to be registered with any government to exist. According to the UK’s Employee Ownership Association, the employee-owned sector (which includes platform cooperatives) has doubled in the UK since 2020 to over 1,030 companies. Close to two-thirds of these employee-owned businesses have a statement of purpose, which includes making a positive contribution to society and the environment, while 96 percent saying that looking after the workforce is a key measure of business success.

The Platform Cooperativism Consortium, based in New York City, has taught 1,300 students from 60 countries over the past two years in collaboration with Mondragon University, and it alone has created hundreds of projects.

“Platform co-ops offer a more democratic and equitable alternative to traditional companies, and they have the potential to create good jobs, boost local economies, and increase resilience in the face of future shocks,” says Trebor Scholz, founding director of the Institute for the Cooperative Digital Economy. “In a post-pandemic world, platform cooperatives could help to build a fairer, more sustainable economy that works for everyone.”

Schulz estimates that there are around 550 projects in 43 countries, spanning industries like short-term rental, transportation, domestic work, care, and energy, but the real figure could be much higher. There’s cleaning business Up & Go in New York City, ethical home-sharing alternative Fairbnb, which operates in more than 20 European cities, and Cataki, a Tinder for informal waste collectors in Brazil—known as catadores—to connect with residents who want to recycle their trash.

“Much has been made of Glovo, Deliveroo, UberEats, and other supposedly innovative gig economy delivery platforms, but this focus on technological development distracts from the fact that working conditions in the delivery sector have been going from bad to worse in most countries for decades,” says Paul Iano, cofounder of Eraman Repartos Koop, a cooperative bicycle delivery service that began operating in Vitoria Gasteiz, the capital of Spain’s Basque region, in March 2020.

Its 15 members and workers deliver goods on cargo bikes, as well as complete administrative tasks, and Iano says it is scaling significantly. “We believe we can maintain our growth rate for the next 10 months in Gasteiz without entering new local markets,” he explains. With digital infrastructure and resources provided by the CoopCycle Federation, which supports 60 worker-owned co-ops across the world, Eraman hopes to push Glovo and other transnational gig economy platforms out of the Basque market.

Still, it is unclear whether any of these models could ever challenge or replace the Goliaths of the gig economy. “It’s difficult to establish a large market share in services where there’s already a dominant player or other players like ride-hail or food delivery,” says Juliet Schor, an economist and sociologist at Boston College. “But in other services, like cleaning for example, co-ops can thrive and food delivery coops in Europe are having an easier time because the market isn’t a duopoly and there’s a lot of labor resistance on big food delivery apps in Europe.” Indeed, social enterprises, which aim to improve their local social economy and include platform co-ops in their remit, already represent more than 8 percent of Europe’s GDP and provide 13.6 million jobs.

When workers own and govern their own firms, they don't have to be subject to problematic algorithms, arbitrary dismissal, or a lack of customer service, running the firm—or voting on its running—in a way that meets their needs. “Given the litany of problems that app workers have identified with the Uber and Instacarts of the world, this is not a trivial thing,” says Schor. “The benefits for workers are both on the remuneration and labor process side and they can do more to control malfeasant customers, which the platform companies have largely been unwilling to do.”

However, the challenge to get up and running is mammoth, particularly in regard to funding. “Most tech startups use friends-and-family money in the early phases, which isn’t an option when everyone you know is broke,” says Erik Forman, cofounder of the Drivers Cooperative. “Venture capital isn’t an option, because that buys equity ownership.” The team behind the Drivers Cooperative had to bootstrap by taking out loans, and it took a year to raise the $300,000 needed to launch. Forman says a lot of investors were dismissive when they began pitching for funding, which he believes is down to classism about who can start and run businesses. His organization did go on to raise $2.8 million through crowdfunding, which will be used to scale and to focus on trips for overlooked passenger groups, such as people with disabilities.

To compete with well-funded private platforms, active government and municipal intervention is vital for platform cooperatives. This could be through procurement policies that give platform cooperatives preferential treatment over privately-owned companies, conducting research into how laws must adapt around shifts in digital technology and designating public spaces to be used as platform cooperative hubs. Examples of this already exist: Kerala’s government has pledged to help establish 4,000 platform cooperatives over the next five years, and in 2016, Barcelona City Council launched Decidim, an open source platform that enables citizens to take part in democratic decisions, including setting up platform cooperatives.

“The key is a combination of robust regulation at the municipal level, plus a gradual expansion of co-ops,” says Schor. “One possibility is municipally-owned coops which are big enough to compete with the private platforms—I'd like to see a city or two try this.”

The city of Bologna, Italy, has been supporting cooperatives and workers rights for decades, and now its municipal institutions are acting as incubators and facilitators for ethical alternatives to the gig economy and its digital infrastructure. One of these is food delivery cooperative Consegne Etiche (Ethical Deliveries), co-planned by urban designers, local shopkeepers, academics, and gig workers’ union representatives early in Bologna’s Covid-19 lockdown.

Consegne Etiche started with delivering antiviral masks to residents’ homes, then expanded to other essentials for people who couldn’t leave home. Riders are always paid a flat rate of $9 per hour. It now also delivers books to people who can’t get to the library, for which it receives 15,000 euros (about $15,600) in European funding annually, and to those living in particularly economically and socially fragile areas of Bologna, for which it receives another 15,000 euros each year.

But government-sponsored cooperatives are springing up elsewhere, too. To help drivers cope with increasing fuel prices, the mayor of the Brazilian city of Araraquara helped set up the co-op Coomappa, which worked with a traditional software company to build a ride-hailing platform. Fares start from R$2.50 (about 50 cents), and it pays drivers 95 percent of the revenue, meaning they make 40 percent more than they do on other platforms. With no surge pricing and low cancellation rates, it’s popular with passengers too.

Even with appropriate funding, finding team members with the expertise to build the cooperative models and develop the digital tools isn’t easy. “Most people who learn how to build businesses build them for their own wealth, not to target social change and grow community wealth,” says Forman. The Drivers Cooperative is appealing for volunteers in the coming months, especially Big Tech employees who can donate their time and knowledge to help them grow. It plans to roll out a three-month fellowship, hoping to attract highly skilled tech workers who are in between highly paid jobs. They would earn a monthly stipend to learn about the platform cooperative model in exchange for finessing the app and imparting wisdom about the inner workings of a larger, traditional tech firm.

As these projects grow, it will not be possible to apply the same success metrics as a Silicon Valley gig economy startup. Instead of number of downloads, funding round value, or profit, the focus is on whether it achieves its social and environmental goals and serves its member-workers. “We don’t have the constant stream of trips like Uber or Lyft, but we have been piloting hourly pay, and the next step will be benefits like paid time off,” says Forman. “Refinancing driver’s vehicle purchases means one of our members, who went from paying $1,500 to $500 a month and can finally take a vacation, while another got married, because he’s no longer working all the time."