Afsoon Shirazi, MPH
On November 3rd, 2020 California voters passed Proposition 22, now classifying ride-hailing drivers, food and drink delivery drivers, and other gig workers as independent contractors rather than employees across the State. Gig economy companies have used their economic influence to convince state and local legislators to preempt local employment regulations and peel away drivers’ rights, and have done so at incredible speed and magnitude.
By Afsoon Shirazi, MPH
Content Warning: This piece contains references to acts of self-harm and suicide.
On November 3rd, 2020 California voters passed Proposition 22, now classifying ride-hailing drivers, food and drink delivery drivers, and other gig workers as independent contractors rather than employees across the State. The passage of Proposition 22 has led many on the Left to question how we go to this point. Right-to-work advocates have been successful at influencing the passage of laws that require that no worker be forced to pay union membership dues. For decades, labor organizers, alongside civil rights leaders, have been involved in the fight against right-to-work policies which have been used to shrink union power and isolate and disenfranchise workers from dignified employment. Uber and Lyft’s practices are well in line with current and past right-to-work practices. The Economic Policy Institute found that states with right-to-work policies have lower on-average wages. On the other hand, workers in non-right-to-work states are twice as likely to have union membership, positively impacting their access to benefits unlike their peers in other states. Currently, there are 28 right-to-work states, and many are already perfectly poised to take similar actions against gig workers imminently once Uber makes the call.
The New Right-to-Gig Economy
Why do Americans work gigs? Oftentimes, they want to save money or supplement their income, they want flexible hours, or want to raise a family or care for a family member. Simply put, we are working gigs because we are not making enough money while our day-to-day expenses are increasing. In their 2019 study “Freelancers in America”, the Freelancers Union and Bureau of Labor Statistics projected that there were 57 million gig workers in the US alone, accounting for 35% of the US workforce. Because of the demand for easily accessible jobs, the gig economy has flourished to such an extent that we are feeling its influence across the global political-economy.
Gig economy companies have used their economic influence to convince state and local legislators to preempt local employment regulations and peel away drivers’ rights, and have done so at incredible speed and magnitude. The National Employment Law Project and Partnership for Working Families have likened these aggressive lobbying tactics used by Uber and Lyft to those used by tobacco and gun lobbies. In 2018, these organizations identified 41 states where these successful tactics have loosened or eliminated the rights of cities to regulate ride-hailing companies. Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, explained in an interview with Democracy Now that everyday workers are going deeper and deeper into poverty while companies such as Uber and Lyft use their political might to lobby for deregulation of the transportation industry. In fact, they spend more money than Walmart and Amazon combined to lobby our national and state legislatures.
Uber and Lyft prices have dropped significantly over the last few years, and with the addition of programs like ridesharing or co-riding, drivers are finding that they are earning significantly less per mile driven than ever before. One study out of UC Berkeley found that Lyft and Uber drivers were guaranteed approximately $5.64 per hour. Before our current economic crisis, California drivers earned on average $2.81 per ride. Companies will not pay for the time that drivers are waiting between passengers or returning from trips. But, as the researchers put it: “Not paying for that time would be the equivalent of a fast food restaurant or retail store saying they will only pay the cashier when a customer is at the counter.” Uber drivers drive on average 20 miles an hour, but approximately 6 miles of that is not reimbursed, illustrating major issues faced by gig workers: under-reimbursement and wage theft. The lower the ride fare, the bigger chunk of commission taken by Uber, and the less drivers earn.
The Economic Policy Institute found that states with right-to-work policies have lower on-average wages. On the other hand, workers in non-right-to-work states are twice as likely to have union membership, positively impacting their access to benefits unlike their peers in other states.
Now, during the COVID-19 pandemic, Uber and similar companies have seen drops in quarterly revenues compared to previous years due to the ongoing economic crisis. In early May, Uber announced that it would lay off more than 14% (around 3,700 workers) of its total global customer service and recruiting workforce in order to cut company costs, only to invest $170 million in a scooter company the same week. Uber tapped into the commissions they have taken from driver earnings to acquire rival company Postmates in a sale valued at $2.65 billion in July of this year. Back in 2019, Huber Horan wrote that Uber does not make money off rides. “It is built to eliminate all meaningful competition and then profit from this quasi-monopoly power.” Uber has successfully marketed itself as the only company that can give everyone a job by giving everyone as little compensation as possible.
If stakes were high for gig workers before, now even more people are flocking to these jobs which are perceived to be readily available and highly profitable — already marketed as a job between jobs, or a way to supplement a little extra income. The COVID-19 pandemic has made traditional work untenable, and during springtime shutdowns Americans began looking for gig work to make up for lost wages due to furlough, loss of and underemployment. When we open our app and agree to wait 15 minutes for a driver to swing by our house to take us to a shopping mall, we often fail to recognize that our chauffeur might be working through Uber or Lyft as their only source of income during this pandemic.
Gig workers in Arizona waited months after the shutdown began to receive pandemic unemployment assistance. In mid-May 2020, gig workers could finally apply for unemployment benefits, resulting in a backlog lasting through early months of summer. The Department of Economic Security, up until May, did not have anyone to address and handle gig worker unemployment claims. Ironically, they hired a contractor to oversee these claims. The contractor, Geographic Solutions Inc., only began processing these claims May 12th, 2020, almost two months after lockdowns had begun.
Today, American workers are extremely vulnerable to job loss, wage loss, and serious injury from COVID19. While our Congress has stalled on providing the most basic relief to working people, they have boosted and bailed out corporations to protect their bottomline: profit. This setting made for the quick and ruthless passage of Proposition 22.
CA Prop 22 Succeeds with the Most Expensive Campaign of its Kind
In 2019, California Assembly Bill 5 instated new narrow definitions of which professions could be classified as independent contractors. Seeing this as a clear affront to their business model, Uber and Lyft got to spending.
Passage of Prop 22 is a major win for major tech companies in Silicon Valley who have, for years, cut away wages and benefits from gig workers who rely on their platforms for access to clientele. Under Prop 22, these workers will no longer be offered part-time or full-time employee status in the state of California. Rather, they will be categorized as gig contractors. Companies like Uber, Lyft, and Doordash will have to pay contractors 120% of the state or local minimum wage, and will not be required to offer healthcare or sick leave benefits. Furthering the wage theft experienced by these workers, these gig contract workers will not be protected by changes in commission rates nor will be compensated for time spent waiting or searching for a new location with better chances of finding passengers or deliveries. Now, gig workers under their new independent contractor status no longer have the right to accrue or access paid sick leave, overtime pay, unemployment insurance, or workplace health and safety regulations – buttresses for economic stability both during a pandemic and normal times. Drivers in California will, essentially, be running their own businesses using Uber or Lyft as their operating system.
Proposition 22 received the red carpet treatment: $204 million campaign paid for by Uber, Doordash, Lyft, Instacart and Postmates. During this election season, a total of $224,271,800 was spent towards campaigning towards and against the proposition. This campaign was the most expensive proposition campaign in California state history.
Service Employees International Union, United Food & Commercial Workers, Teamsters and California Labor Federation raised around $20 million to try and thwart the will of the popular tech companies. However, the $200 million given by gig economy companies led to the creation of an unprecedented, aggressive campaign which overwhelmingly targeted Democratic voters – who otherwise may have voted against the proposition and in favor of regulations which support workers. They used deceptive claims, like claiming falsely that there is a law which prohibits flexible or part-time hours for gig employees. More, Uber used its own app to promote Proposition 22. This angered some Californians, who went to Twitter to share experiences of being targeted by this misinformation campaign while using the Uber app.
(Images above are screenshots from an Uber app-user. One screen shot is of a confirmation screen stating “If Prop 22 fails to pass, riders and drivers will be affected. Your ride prices and wait times are likely to substantially increase while most drivers will lose their incomes. Yes on Prop 22.” The next image is of an Uber ride option, Uber X. Next to this option is an image of a white car with a bubble above, “Yes on 22.”)
The passage of Prop 22 is one symptom of the overwhelming power companies like Uber have been given, especially during a national crisis.
Proponents of Prop 22 also argued that the current laws would badly damage the on-demand business model, resulting in longer wait times, higher prices and the loss of jobs. (include images from twitter source here). That is to say, if Uber, Lyft, Postmates and others did not have it their way, they would choose to raise prices and lay off drivers – despite seeing ever-growing profits over the last decade and unprecedented economic disaster from COVID19. Despite their claims, fees have been going up since Prop 22’s passage, anyway.
If the rest of the US takes after California, a larger share of workers in the country may no longer be considered employees of the companies they work for, but will be forced into contract worker status, barring them from health benefits, sick leave, family leave, dignified salary, and job security. Bringing Prop 22-like policies to other right-to-work states will further push non-union wage workers away from autonomy and financial solvency. If Uber and Lyft are successful in passing similar laws in non-right-to-work states, it may be a stepping stone towards lower wages and fewer benefits for workers. Uber and Lyft’s aggressive actions makes all part-time and full-time workers more vulnerable to exploitation, economic immobility, and poor mental health.
The New York Case
Since the advent of Uber and Lyft, New York City taxi drivers have felt unbearable levels of economic pressure; the once iconic yellow cabs have been shoved out of the City’s busiest corners as the number of rideshare options grow. As recently as 2015, almost 90% of all trips in for-hire vehicles in NYC were made with taxis; by 2019, this percent had dropped to approximately 25% (and has dropped again during COVID19). The battle between Uber and Lyft and unionized taxi and livery drivers in New York City lead to national attention, particularly in regards to a spate of driver suicides in 2018.
For decades, taxi, black car and livery drivers have been required to purchase medallions in order to legally operate their businesses. As medallions were required for each vehicle, many drivers across New York had to take out loans, ranging from $100,000 to $1 million to cover the necessary cost. However, when Lyft and Uber came to NYC, medallions became an obsolete condition for driving, a shift which filled many already-established drivers with regret, anger, and desperation to pay off their loans. Seeing their work taken away, their savings tank and interest accrue on their un-payable medallion debts, taxi and livery drivers have experienced a growing incidence of anxiety, depression, and suicidality. In 2018, at least eight taxi, black car, or livery drivers were known to have committed suicide. Suicide notes written by many drivers, including immigrant workers, expressed shame and worry about the financial security of their families. From their point of view, they were made fools of, and no longer saw dignity in their work.
In February 2018, NYC taxi driver and contributor to Black Car News, Doug Schifter killed himself in front of NYC City Hall. Earlier that year, Doug had posted on Facebook describing the financial ruin he experienced due to the lobbying and expansion of tech companies such as Uber and Lyft. Before he died, he wrote: “When the industry started in 1981, I averaged 40-50 hours. I cannot survive any longer with working 120 hours!… There seems to be a strong bias by the Mayor and Governor in favor of Uber. A Company that is known to be a liar, cheat and thief.” Rapid industry disruptions meant Doug was no longer able to pay for life’s necessities and this brought about severe depression. Economic insecurity is one of the world’s leading factors contributing to poor mental health and diseases of despair: depression, anxiety and suicidality. The death of any worker due to the diseases of despair or a pandemic is a travesty for all of us living in the wealthiest country in history. With no end to our current economic crisis in sight, implementation of Prop 22 may prove dangerous to gig economy workers in California who have to work despite the risks.
Workers’ Rights Must Be the Center of Our Pandemic Survival
The passage of Prop 22 is one symptom of the overwhelming power companies like Uber have been given, especially during a national crisis. Right now, we need to prevent worker despair. We can do this by ensuring dignified, full-time work is accessible for everyone. No one should have to work a gig to survive a pandemic. If that work is not safe, we can uplift workers and their families by providing direct cash payments and by canceling rent and student loans. We can also provide supplemental income and create career-advancement programs for workers whose industries are rapidly transforming. Further, we can create safer working conditions by building a national public health force that can oversee COVID19 testing, treatment, and vaccinations, and provide free healthcare for all. The American government has the money.
The COVID19 Pandemic is doing a lot of work for us: making clear as day that our current economic system is unsustainable without some form of redistribution of wealth from the biggest companies, gig-economy giants included, to actual people. Organize your coworkers, neighbors, and family members to put pressure on our local, state, and national represented leaders to demand economic justice for all.
