Will Uber And Lyft Ever Stop Fighting Laws, Or Their Workers?

US-TRANSPORT-UBER-PROTEST
AFP via Getty Images

As a rule, firms like Uber, Lyft, and DoorDash seem unwilling to cede ground without a showdown. In California, one of platform workers’ biggest strongholds, the companies continue pushing back against the soon-to-be-implemented law known as AB5, which creates a new state framework to classify workers as employees or independent contractors, for the sake of allotting unemployment insurance, workers’ comp, and other benefits.

In October, as part of a reported commitment to spend $90 million or more opposing AB5, platform companies announced a proposed ballot measure that would exempt drivers from AB5 in exchange for certain wage, benefit, and support guarantees. In order to get the proposal on California ballots in 2020, proponents will need to gather more than 600,000 signatures.

According to the newly launched Protect App-Based Drivers & Services coalition, which receives major funding from Uber, Lyft, and DoorDash, the measure would ensure that app-based drivers earn at least 120% of California’s minimum wage during rides, establish a reimbursement rate of $0.30 per mile for vehicle expenses, and provide drivers with healthcare subsidies from the companies if they work above a certain amount per week, among other things.

Critics have been quick to question the aims of the proposal, and how these factors would really add up for California’s app-based workers.

According to The Verge, the proposed ballot measure represents “a new spin on the failed proposal that Uber and Lyft [previously] presented to state officials as a compromise to prevent the passage of AB5 ... [promising] to pay their drivers $21 an hour (but only while on a trip), provide them with sick leave, and ‘empower’ them to ‘have a collective voice’ — a nod toward drivers forming a union.”

UC Berkeley labor researchers Ken Jacobs and Michael Reich and colleagues performed their own assessment of the proposal, and concluded that – after expenses and unpaid time, which add up quickly – drivers’ average pay could be significantly lower than the guarantee suggests.

In a blog post entitled “The Uber/Lyft Ballot Initiative Guarantees only $5.64 an Hour,” Jacobs and Reich weighed the costs of gas and wear-and-tear per mile, the amount of that time that drivers spend carrying passengers vs. returning from or looking for their fares, the cost and quality of California insurance, and how many drivers would actually qualify for minor or major healthcare subsidies under the proposal, among other factors.

They concluded that California drivers could end up pocketing less than half of the state’s minimum wage per hour, which rises to $13.00 in 2020, after all these factors are accounted for.

See also: As Dairy Workers Fight For Better Conditions, Will Chobani Help Lead The Way?

“We decided to write this piece because we’re consulted [about] pay standards by many people, including policymakers, and we’ve both worked on the question of pay standards, especially state and local ones, for a couple of decades,” Reich said in a phone interview. “I’ve been very concerned that [ride-hail] companies have not been wanting to pay for, for lack of better term, cruising or waiting time.”

“Even in states like Massachusetts and New Jersey that already have the equivalent of AB5, the companies have been fighting any lawsuits which could warrant individual arbitration,” he continued. “They have been claiming they’re not a transportation company, that they’re just a platform that connects drivers and passengers; they’ve gone even further, saying they’re just a third-party payment system, but their fee is [usually] 10 times what that kind of service takes.”

Reich added, “Our study in NYC showed that companies are actually making quite a bit of money on each ride, and while it’s true that they’re losing a lot of money corporation-wide, I think it holds across the country that they’re making good profits in urban markets. They can afford to pay drivers more, and take lower commissions.”

Jacobs echoed that point, referencing Uber’s recent comments to investors on their latest earnings statement, essentially telling them that the NYC market is still resilient and growing despite new city-wide pay and utilization rules. “All the while they’re telling drivers there’s no way to continue to have flexible work periods while also being paid for waiting periods.”

“If you were to ask, who are they being honest with – drivers or investors – my guess would be investors. And the premise that there’s no way for drivers to continue having flexibility while also having basic labor protections is demonstrably false.”

Jacobs also emphasized that, while much of the public discussion around AB5 describes it as a change for platform companies, “It’s important to note that the Dynamex decision has already been in place for over a year; that’s settled law in California, by supreme court ruling, that they have ignored,” he said.

Uber and/or Lyft have also settled various lawsuits in these areas, and, because of the nature of most drivers’ arbitration agreements, been able to “cabin off” such opposition and “keep their business going, without changing practices,” he said. “There’s a good case to be made that they have always operated by flouting the law ... and continuing the practice of: ignore the law, make money, and build up the power to try to change those laws.” 

“AB5 is one of the first times in the US we’ve seen this turn against them, where they haven’t really been able to get their way politically.” In large part, Jacobs said, that’s because drivers “become angrier and angrier.”

See also: Gigs and AI Are Driving Us Into Digital Servitude

Stacey Wells, speaking on behalf of Protect App-Based Drivers & Services by email, called the Berkeley assessment “a flawed analysis done by researchers who are backed by labor and are routinely discredited.”

When asked for examples of either researcher having been discredited, Wells pointed to two articles by the Employment Policies Institute (not to be confused with the Economic Policy Institute), a somewhat controversial endeavor by prolific lobbyist Rick Berman that’s likely best known for opposing minimum-wage increases.

Wells also commented, “The initiative sets an earnings floor ... not a ceiling, and many drivers will continue to earn far more than 120% of minimum wage.” In addition, Wells argued, "Michael Reich’s appearance at a press event by opponents of the ballot measure shows that the UC Labor Center is not a neutral research group."

On Friday, Uber itself also denounced Jacobs and Reich’s assessment in more detail via a Medium post by their in-house economist. Jacobs commented by phone, “What we produced was our best estimate based on available data, and what any voter should want before making a decision is for the companies to put forward that data, so it can be evaluated.”

In response to an earlier (and less direct) rebuttal to the Berkeley assessment, posted on the Protect Drivers and Services website, Jacobs commented by email, “It does not address any of the loopholes that we discuss in our analysis. They do say: ‘If companies were forced to pay for time not working, they’d be forced to end worker control over when, where, and how the work is happening – which would end flexibility for drivers.’”

“In fact,” Jacobs wrote, “the policy in New York does effectively cover time between rides — which is work time — and drivers still maintain their flexibility.”

Though in fact, both Uber and Lyft recently chose to adopt new methods for regulating when NYC drivers can be active on the platform, causing frustration among some drivers this summer and fall. But the long-term impacts of NYC’s pay and utilization guidelines for ride-hail companies, some of the first of their kind in the country, have yet to be seen.

“To the degree that companies are actually increasing utilization rates, so that drivers spend more time with passengers in their vehicles in Manhattan, [it’d be] a positive thing,” Jacobs said. “Over-saturation of vehicles drives wages down, and drives up waiting times and greenhouse gases.”

But it’d be a bad thing, he said, if it turns out that companies are “forcing people to log off [when] they’re still effectively working – waiting for the next time to log on and get a ride – so that they’re artificially improving utilization rates.”

According to previous research by Reich and his colleagues, the addition of roughly 80,000 ride-hail vehicles per day to NYC roads in recent years (so, not including the uptick in food and parcel delivery vehicles) has increased vehicular greenhouse gases in Manhattan by more than half, not to mention slowed traffic even further [PDF].

See also: The Delivery War Is Reckless And Vain

“In a lot of areas in Queens where I grew up, there have been big benefits to having more access to [for-hire vehicles],” Reich said. “But there need to be some limits to the growth.”

Regarding platform companies’ reliance on (and frequent reference to) part-timers, in addition to workers who drive and deliver throughout the week, he also noted, “We’re developing a system in which people are somewhat dependent on their side-hustle, which is really a privitization of the safety net – they have to create a cushion themselves, rather than through employment insurance, for example.”

“That’s the way that a lot of workers now are being forced to act, and it creates downward pressure on wages for their primary jobs,” Reich said. “To me, that’s a negative social outcome, and a good reason to make sure that one job is enough.”

In the mean time, California app-based drivers and delivery workers still seem mostly in favor of seeing what changes AB5 will bring to their industry. Platform companies have disputed this point, but also had difficulty proving it.

Fast Company reported, “When asked [for] evidence it had support from drivers, a spokesperson for the Uber, Lyft, and DoorDash-backed group said it ‘had about 50 drivers in attendance at the press launch [for the proposed ballot measure], many of whom were losing drive time and money to be there,’ [adding that] ‘today was the first day of a year-long campaign.’”

Both Uber and Lyft also have a demonstrated history of aggressively lobbying to change or prevent laws they don’t like, whether state-level or municipal, including through attempts to influence their drivers.

For its part, DoorDash is currently facing a class action lawsuit over a years-long practice of skimming delivery workers’ tips. Regarding the potential impact of AB5 for California DoorDash workers, or ‘Dashers,’ the Rideshare Guy reflected earlier this year that some aspects of their work, and the orders they fill, will likely remain the same, and others may not.

For example, he wrote, the “those forgettable ‘filler’ orders we all get, [the] 8-mile, $16 orders of 4 ice cream sandwiches delivered to kids in the nice part of town? The ones that make you think, ‘Technology is incredible!’ ... [then] ‘Oh, collectively we probably melted a square meter of Arctic Ice doing it.’ These orders will be even less profitable than before, and will likely incur restrictions or additional delivery fees to make the numbers work.”

According to Caille Miller of the San Francisco Chronicle, it’s very probable that soon the numbers similarly won’t add up for many of the services that platform-based, logistics-focused companies provide (or, if they didn’t add up already, that investors and users will finally say enough’s enough).

But as the companies themselves have argued on numerous occasions, of course, it was never really about transportation.

See also: After NYC Suicides, Drivers Urge Lawmakers To End Uber's Exploitative Ways [UPDATED]

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As a rule, firms like Uber, Lyft, and DoorDash seem unwilling to cede ground without a showdown. In California, one of platform workers’ biggest strongholds, the companies continue pushing back against the soon-to-be-implemented law known as AB5, which creates a new state framework to classify workers as employees or independent contractors, for the sake of allotting unemployment insurance, workers’ comp, and other benefits.

In October, as part of a reported commitment to spend $90 million or more opposing AB5, platform companies announced a proposed ballot measure that would exempt drivers from AB5 in exchange for certain wage, benefit, and support guarantees. In order to get the proposal on California ballots in 2020, proponents will need to gather more than 600,000 signatures.

According to the newly launched Protect App-Based Drivers & Services coalition, which receives major funding from Uber, Lyft, and DoorDash, the measure would ensure that app-based drivers earn at least 120% of California’s minimum wage during rides, establish a reimbursement rate of $0.30 per mile for vehicle expenses, and provide drivers with healthcare subsidies from the companies if they work above a certain amount per week, among other things.

Critics have been quick to question the aims of the proposal, and how these factors would really add up for California’s app-based workers.

According to The Verge, the proposed ballot measure represents “a new spin on the failed proposal that Uber and Lyft [previously] presented to state officials as a compromise to prevent the passage of AB5 ... [promising] to pay their drivers $21 an hour (but only while on a trip), provide them with sick leave, and ‘empower’ them to ‘have a collective voice’ — a nod toward drivers forming a union.”

UC Berkeley labor researchers Ken Jacobs and Michael Reich and colleagues performed their own assessment of the proposal, and concluded that – after expenses and unpaid time, which add up quickly – drivers’ average pay could be significantly lower than the guarantee suggests.

In a blog post entitled “The Uber/Lyft Ballot Initiative Guarantees only $5.64 an Hour,” Jacobs and Reich weighed the costs of gas and wear-and-tear per mile, the amount of that time that drivers spend carrying passengers vs. returning from or looking for their fares, the cost and quality of California insurance, and how many drivers would actually qualify for minor or major healthcare subsidies under the proposal, among other factors.

They concluded that California drivers could end up pocketing less than half of the state’s minimum wage per hour, which rises to $13.00 in 2020, after all these factors are accounted for.

See also: As Dairy Workers Fight For Better Conditions, Will Chobani Help Lead The Way?

“We decided to write this piece because we’re consulted [about] pay standards by many people, including policymakers, and we’ve both worked on the question of pay standards, especially state and local ones, for a couple of decades,” Reich said in a phone interview. “I’ve been very concerned that [ride-hail] companies have not been wanting to pay for, for lack of better term, cruising or waiting time.”

“Even in states like Massachusetts and New Jersey that already have the equivalent of AB5, the companies have been fighting any lawsuits which could warrant individual arbitration,” he continued. “They have been claiming they’re not a transportation company, that they’re just a platform that connects drivers and passengers; they’ve gone even further, saying they’re just a third-party payment system, but their fee is [usually] 10 times what that kind of service takes.”

Reich added, “Our study in NYC showed that companies are actually making quite a bit of money on each ride, and while it’s true that they’re losing a lot of money corporation-wide, I think it holds across the country that they’re making good profits in urban markets. They can afford to pay drivers more, and take lower commissions.”

Jacobs echoed that point, referencing Uber’s recent comments to investors on their latest earnings statement, essentially telling them that the NYC market is still resilient and growing despite new city-wide pay and utilization rules. “All the while they’re telling drivers there’s no way to continue to have flexible work periods while also being paid for waiting periods.”

“If you were to ask, who are they being honest with – drivers or investors – my guess would be investors. And the premise that there’s no way for drivers to continue having flexibility while also having basic labor protections is demonstrably false.”

Jacobs also emphasized that, while much of the public discussion around AB5 describes it as a change for platform companies, “It’s important to note that the Dynamex decision has already been in place for over a year; that’s settled law in California, by supreme court ruling, that they have ignored,” he said.

Uber and/or Lyft have also settled various lawsuits in these areas, and, because of the nature of most drivers’ arbitration agreements, been able to “cabin off” such opposition and “keep their business going, without changing practices,” he said. “There’s a good case to be made that they have always operated by flouting the law ... and continuing the practice of: ignore the law, make money, and build up the power to try to change those laws.” 

“AB5 is one of the first times in the US we’ve seen this turn against them, where they haven’t really been able to get their way politically.” In large part, Jacobs said, that’s because drivers “become angrier and angrier.”

See also: Gigs and AI Are Driving Us Into Digital Servitude

Stacey Wells, speaking on behalf of Protect App-Based Drivers & Services by email, called the Berkeley assessment “a flawed analysis done by researchers who are backed by labor and are routinely discredited.”

When asked for examples of either researcher having been discredited, Wells pointed to two articles by the Employment Policies Institute (not to be confused with the Economic Policy Institute), a somewhat controversial endeavor by prolific lobbyist Rick Berman that’s likely best known for opposing minimum-wage increases.

Wells also commented, “The initiative sets an earnings floor ... not a ceiling, and many drivers will continue to earn far more than 120% of minimum wage.” In addition, Wells argued, "Michael Reich’s appearance at a press event by opponents of the ballot measure shows that the UC Labor Center is not a neutral research group."

On Friday, Uber itself also denounced Jacobs and Reich’s assessment in more detail via a Medium post by their in-house economist. Jacobs commented by phone, “What we produced was our best estimate based on available data, and what any voter should want before making a decision is for the companies to put forward that data, so it can be evaluated.”

In response to an earlier (and less direct) rebuttal to the Berkeley assessment, posted on the Protect Drivers and Services website, Jacobs commented by email, “It does not address any of the loopholes that we discuss in our analysis. They do say: ‘If companies were forced to pay for time not working, they’d be forced to end worker control over when, where, and how the work is happening – which would end flexibility for drivers.’”

“In fact,” Jacobs wrote, “the policy in New York does effectively cover time between rides — which is work time — and drivers still maintain their flexibility.”

Though in fact, both Uber and Lyft recently chose to adopt new methods for regulating when NYC drivers can be active on the platform, causing frustration among some drivers this summer and fall. But the long-term impacts of NYC’s pay and utilization guidelines for ride-hail companies, some of the first of their kind in the country, have yet to be seen.

“To the degree that companies are actually increasing utilization rates, so that drivers spend more time with passengers in their vehicles in Manhattan, [it’d be] a positive thing,” Jacobs said. “Over-saturation of vehicles drives wages down, and drives up waiting times and greenhouse gases.”

But it’d be a bad thing, he said, if it turns out that companies are “forcing people to log off [when] they’re still effectively working – waiting for the next time to log on and get a ride – so that they’re artificially improving utilization rates.”

According to previous research by Reich and his colleagues, the addition of roughly 80,000 ride-hail vehicles per day to NYC roads in recent years (so, not including the uptick in food and parcel delivery vehicles) has increased vehicular greenhouse gases in Manhattan by more than half, not to mention slowed traffic even further [PDF].

See also: The Delivery War Is Reckless And Vain

“In a lot of areas in Queens where I grew up, there have been big benefits to having more access to [for-hire vehicles],” Reich said. “But there need to be some limits to the growth.”

Regarding platform companies’ reliance on (and frequent reference to) part-timers, in addition to workers who drive and deliver throughout the week, he also noted, “We’re developing a system in which people are somewhat dependent on their side-hustle, which is really a privitization of the safety net – they have to create a cushion themselves, rather than through employment insurance, for example.”

“That’s the way that a lot of workers now are being forced to act, and it creates downward pressure on wages for their primary jobs,” Reich said. “To me, that’s a negative social outcome, and a good reason to make sure that one job is enough.”

In the mean time, California app-based drivers and delivery workers still seem mostly in favor of seeing what changes AB5 will bring to their industry. Platform companies have disputed this point, but also had difficulty proving it.

Fast Company reported, “When asked [for] evidence it had support from drivers, a spokesperson for the Uber, Lyft, and DoorDash-backed group said it ‘had about 50 drivers in attendance at the press launch [for the proposed ballot measure], many of whom were losing drive time and money to be there,’ [adding that] ‘today was the first day of a year-long campaign.’”

Both Uber and Lyft also have a demonstrated history of aggressively lobbying to change or prevent laws they don’t like, whether state-level or municipal, including through attempts to influence their drivers.

For its part, DoorDash is currently facing a class action lawsuit over a years-long practice of skimming delivery workers’ tips. Regarding the potential impact of AB5 for California DoorDash workers, or ‘Dashers,’ the Rideshare Guy reflected earlier this year that some aspects of their work, and the orders they fill, will likely remain the same, and others may not.

For example, he wrote, the “those forgettable ‘filler’ orders we all get, [the] 8-mile, $16 orders of 4 ice cream sandwiches delivered to kids in the nice part of town? The ones that make you think, ‘Technology is incredible!’ ... [then] ‘Oh, collectively we probably melted a square meter of Arctic Ice doing it.’ These orders will be even less profitable than before, and will likely incur restrictions or additional delivery fees to make the numbers work.”

According to Caille Miller of the San Francisco Chronicle, it’s very probable that soon the numbers similarly won’t add up for many of the services that platform-based, logistics-focused companies provide (or, if they didn’t add up already, that investors and users will finally say enough’s enough).

But as the companies themselves have argued on numerous occasions, of course, it was never really about transportation.

See also: After NYC Suicides, Drivers Urge Lawmakers To End Uber's Exploitative Ways [UPDATED]

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