Hailing controversy: Rideshare apps pour $188m into CA campaign

Los Angeles, California – These days, anyone hailing a rideshare service in California is likely to hop in with someone like Mostafa Maklad behind the wheel. Maklad, a 36-year-old Egyptian emigre living in Oakland, spends 10 to 12 hours per day – every day – driving for up to six different app-based United States companies. Switching between Uber, Lyft, DoorDash, Grubhub, Postmates and Amazon, he scratches out a living by delivering people, packages and food all over the San Francisco Bay Area.

Maklad said it wasn’t always like this. When he started driving for Uber three years ago, he worked 10 to 12 hours per week while going to school to become a cybersecurity specialist.

“Back then, we used to make money, because the rates were higher and there were much fewer drivers than now,” Maklad told Al Jazeera. But since the coronavirus pandemic began, the wait times between rides are harder to bear, so he bounces from app to app on a merry-go-round he can’t escape.

Uber and Lyft rely heavily on a churn-and-burn workforce, and those drivers likely won’t fight for an employee classification.

by Tia Koonse, UCLA Labor Center

In the gig economy, app-based workers prize their independence and flexibility. But those things sometimes come at a cost, including the lack of a safety net when business slows down or workers fall ill. That is partly why there is an ongoing fight in California – the most populous state in the US – over how workers like Maklad should be categorised.

A 2018 California Supreme Court case led to a contentious labour law known as AB5, which required dozens of industries to reclassify their freelance workers as employees with benefits and job protections. There was an immediate backlash, and the state legislature responded by creating exemptions for a slew of freelance occupations. But legislators would not exempt rideshare companies like the ones for which Maklad drives.

There’s nothing flexible about not having benefits or sick leave, especially during a pandemic.

by Cherri Murphy, former Lyft driver

Enter California’s Proposition 22, a November 3 ballot measure created by transportation network companies (TNCs) to counteract AB5. Its primary bankrollers – Uber, Lyft, and DoorDash – have spent an unprecedented $188.9m to get it passed – and counting. The rideshare and food-delivery giants are outspending the No Campaign – backed by labour unions – 20 to one. The measure is designed to keep drivers categorised as independent contractors, but with some modest new benefits.

Those include an earning guarantee of 120 percent of the local minimum wage for drivers while they are engaged in rides, a subsidy for health insurance if they drive at least 15 hours per week, reimbursement of 30 cents per mile for gasoline and some additional expenses, and reimbursement for some medical costs if they are injured on the job. Critics say these changes do not go far enough: there’s no pay for overtime or time drivers spend waiting for fares, no sick leave and no unionisation, among other standard protections.

But if Prop 22 fails, the big tech companies behind it predict upheaval: 80 to 90 percent of drivers could lose work and labour costs could increase by 30 percent, leading to higher fares for passengers and reduced service in suburban and rural areas. Uber and Lyft have also threatened to leave California altogether.

Prop 22 is also challenging politically progressive rideshare passengers to walk the walk. Will they choose supporting workers’ rights over the apps that make their lives more convenient?

Flexibility v stability

Rideshare or TNC companies maintain that their drivers don’t want to be tied down as employees and that the majority still work part time. Lyft told Al Jazeera that 86 percent of its California drivers still work less than 20 hours per week on their own schedules, and full-time drivers account for 17 percent of Lyft’s passenger hours. Uber declined to participate in this story.

“More than 70 percent of drivers want to remain independent contractors,” Geoff Vetter, a Yes on 22 campaign spokesperson, told Al Jazeera, voicing the key pitch of the TNCs’ ad blitz.

Jan Krueger, a retired California state employee known as “MomLyft,” started driving for Lyft seven years ago.

“Instead of coming home and sitting on the couch, you go out and make money and meet people,” Krueger told Al Jazeera. She has since appeared in ads supporting Prop 22 and said drivers are adamant about maintaining their own flexible work hours.

But other drivers say rideshare companies are taking advantage of gig economy loopholes that let people work full-time hours without any of the full-time benefits. Cherri Murphy is a former Lyft driver who worked for the company for 10 to 12 hours per day for three years.

“There’s nothing flexible about not having benefits or sick leave, especially during a pandemic,” Murphy told Al Jazeera.

Murphy ultimately decided the wages weren’t worth the trade-off to her safety and quit driving for Lyft in mid-March.

“The bonuses were decreasing,” she explained. “We feel beholden to surge rates. And it was becoming clear that the cost of gas, supplies and wear on the car were not adding up.”

But Krueger said she sees this work as a financial stopgap.

“You can’t make a career of this; it’s only a gig,” she said.  “When people quit their jobs to drive, I tell them they’re crazy.”

Churn-and-burn workforce

A study of online platforms by economist Dmitri Koustas found that most gig workers start out in these types of jobs after experiencing a significant income loss, but do not stay with app-based businesses for long. That transient nature of the workforce also makes labour organising harder, experts say.

“Uber and Lyft rely heavily on a churn-and-burn workforce, and those drivers likely won’t fight for an employee classification,” said Tia Koonse of the UCLA Labor Center, who co-authored studies on the nature of gig labour in Los Angeles County and California more broadly.

Koonse’s research shows that an increasing number of drivers are sliding into full-time work for an average of 13 months, and those workers tend to be older, immigrants and people of colour supporting their families. But full-time hours don’t necessarily come with a living wage, and UCLA’s latest survey found 80 percent of gig workers could not meet their household expenses.

University of California at Berkeley labour economist Michael Reich crunched the numbers on Prop 22 and found that the proposed benefits do not amount to much for drivers – a mere $5.64 per hour when factoring in expenses and unpaid waits for fares. That falls far short of the state’s minimum wage of $13 per hour, according to Reich’s analyses, produced through UC Berkeley’s Institute for Research on Labor and Employment.

Setting a precedent

Reich also said what happens with Prop 22 has implications for other gig economy industries, states and countries.

“This is a really important battle. We’ll see it spread to other industries,” Reich told Al Jazeera. “It’s not just an issue in California. It has huge implications for labour – more of a race to the bottom by taking away worker protections through outsourcing and subcontracting.”

A recent study by the Berkeley Research Group, funded by Uber and Lyft, argues that drivers in California actually earn an average of $19.55 per hour. Lyft told Al Jazeera that “wait times” allow drivers to earn more by working for multiple companies – a prospect that met with no enthusiasm from the drivers who spoke with Al Jazeera.

The impact on passengers is also up for debate. The Berkeley Research Group study posits that if Prop 22 fails, ride prices would increase by 25 to 111 percent, and an Uber analysis claims ride demand would drop 23 to 59 percent, mainly in less densely populated areas.

But Reich’s latest industry research at UC Berkeley predicts only a 10 percent rate increase if drivers are made employees – and an up to two percent reduction in passengers. Reich argues that the increase in labour costs would be borne industry wide, resulting in more revenue for the big rideshare companies themselves. Greater efficiencies in labour management would also absorb some of the increased costs, Reich said.

An embattled and evolving industry

Meanwhile, Uber and Lyft are fighting two California lawsuits brought against them for noncompliance with AB5. Earlier this month, the companies lost their appeal with a ruling that they must reclassify drivers as employees.

Last week, a new lawsuit brought by a group of gig workers against Uber is seeking $260m in penalties for aggressive in-app messaging urging them to support Prop 22.

It’s not just an issue in California. It has huge implications for labour - more of a race to the bottom by taking away worker protections through outsourcing and subcontracting.

by Michael Reich, UC Berkeley labour economist

Now, just a week before elections in California and the rest of the US, Uber and Lyft are hoping voters side with them even if judges won’t. A recent UC Berkeley poll shows 39 percent of voters in favour of Prop 22, 36 percent against and 25 percent undecided. The measure must cross a 50 percent threshold to pass, and requires a seven-eighths majority of the California legislature to overturn it.

Regardless of Prop 22’s outcome, UCLA labour researcher Koonse believes the rideshare industry is primed for a shift. A California legislative proposal called the Cooperative Economy Act would introduce worker-owned cooperatives, restructuring the relationship between gig workers and various platforms.

Koonse also points out that behemoths like Uber and Lyft could offer drivers flexibility any time they want.

“That’s an okay thing to want as a worker and it can be the norm,” she said. “Why should it be a zero-sum game?”