Why Startups Skimp on Worker Safety

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A recent Buzzfeed investigative report uncovered labor issues at the warehouses of popular food-delivery startup Blue Apron. It’s another example of tech startups skimping on worker safety and not integrating low-level employees as meaningful members of their company.

We’ve heard this story before. Amazon has similar issues in its warehouses. The e-commerce giant relies on temporary, contract labor and enforces high work quotas that often drive workers to exhaustion – even death in one case. Uber keeps cutting its drivers wages even as its founders become wealthier and wealthier, and resists any effort by workers to organize through lawsuits or blatantly deactivates the accounts of drivers who complain. The ride-sharing company is so averse to regulations that it will even leave a city – as it did when it departed Austin, Texas, earlier this year — rather than compete on a fair playing ground.

In the modern tech industry, companies are funded by venture capitalists that require massive growth to keep up with inflated valuations. Strangely, profits don’t seem to matter in this equation (for example, Uber has yet to turn a profit). The cash keeps flowing, but the cash and benefits — nevermind basic safety protections for manual workers — don’t always float down to the lower levels.

The flip side of the buckets of cash that come with VC investment is extreme pressure to scale rapidly. That growth often comes through hyper-efficient use of labor — organized through fancy algorithms focused on efficiency and cost, not human well-being. Or they use other methods to outsource labor – such as Amazon, which relies on contractors to staff its fulfillment centers, ensuring these operations are not the responsibility of the tech retail giant.

Blue Apron followed a similar model. Run by chefs and financial advisors, with a model bent on transforming family dinner through efficient  food delivery, Blue Apron rushed to scale up fast. Unfortunately basic worker wellness in the facilities that package the meals for delivery were not up to snuff. One warehouse in the poor, working-class Bay Area suburb of Richmond, California  suffered the most. Numerous health and safety violations took place in the factory, and the company’s owners – who are regularly featured on tech news sites as “visionary leaders” — did not respond to the allegations with quick action to improve working conditions. Hopefully now that allegations have been raised in the press, Blue Apron will implement necessary safety regulations.

Indeed the boring side of business operations — paperwork, health and safety code adherence, OSHA compliance — are just tough to scale when a company is moving so quickly that hundreds of new employees are starting every week. Many tech start-ups thrive with the “fail fast” model — try something and scrap it quickly if it doesn’t work out. That’s all fine and good for code or a new marketing strategy, but when a company plays fast and loose with employee status or safety regulations, someone is bound to get hurt. And it’s likely to be the workers at the bottom of the pyramid who lack the authority to fight for change.

This is not to say all startups or tech companies are the same. Some are following a different model. New York City’s Juno, which competes with Uber, pays drivers higher wages and saves 50 percent of its equity for its workforce.

Unfortunately, these examples are few and far between when compared to the tech unicorns that dominate the growing app economy. Because they focus on workers rights and building real community, they tend to grow at a slower pace — and get less VC money.

There is something dreadfully wrong when companies that take workers rights seriously have to compete on an unfair playing field with companies that get more money partly for taking shortcuts. Juno, despite its ethical model, faces an uphill battle to compete with Uber’s relentless undercutting of fares.

Perhaps it is time we reconsider the entire growth model of tech startups and realize there is more to a company than how quickly it dominates a market. People (and planet) matter too.

Image credit: Senator Mark Warner via Flickr

Corporate Responsibility

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Nithin Coca is a freelance journalist who focuses on environmental, social, and economic issues around the world, with specific expertise in Southeast Asia.

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