Why I’m Worried About The Gig Economy & Why You Should Be Too

We all have one of those days: staring aimlessly into a full but somehow completely empty fridge, coming to the conclusion you don’t really want to put any effort into cooking, and wondering what to do next, especially when you don’t want to walk or drive. There is one common solution: DoorDash, Instacart, or any of the other highly prevalent companies that deliver food directly to your door. If this situation sounds familiar, then you have been interacting with the gig-marketplace without even knowing. The gig economy, for those who aren’t familiar, is a market place characterized by freelance or short contract jobs, without the promise of full-time employment. Although user experience for app-based driver delivery services has remained largely unchanged, there have been massive legislative decisions in the past six months in California and England about the employment status or workers in the gig-marketplace, with huge national and international labor rights implications.

What Happened?

In January 2020 California Assembly Bill AB5 came into effect, declaring contractors in the gig economy as employees who would be entitled to unemployment, health insurance, workers comp, paid sick and family leave, as well as other benefits (Lake 2021). AB5 impacted companies such as Instacart, DoorDash, Uber, and Lyft, threatening to cost them each hundreds of millions of dollars in benefits every year as well as over $7 billion in taxes to the state of California annually (Izenberg 2019). Uber and Lyft refused to follow AB5, and in September 2020 the San Francisco Superior Court system mandated that they comply with AB5 (Lake 2021; Beam 2020). In response, Lyft and Uber along with other gig-economy-based apps such as Postmates, Doordash, and Instacart, poured money into Proposition 22, which declared app-based drivers to be independent contractors and not employees (Meyers 2021). Prop 22 was given unprecedented funding (over $200 million in support) with Uber, DoorDash, Lyft, and InstaCart donating $58 million, $52 million, $49 million, and $31 million respectively (Meyers 2021). In November 2020, voters passed Prop 22 with 58% in support, allowing California app-based drivers to be considered independent contractors (Lake 2021).

On February 19, the UK Supreme Court declared appbased drivers as workers, an employment status unique to the UK and in-between employees and contractors (Skelton 2021; Marshall 2021). This decision allowed workers to be entitled to some, but not all, of the benefits of employee status (Marshall 2021). This ruling was years in the making; Uber was first sued in 2016 and the case was only just decided this past February (Penman and Peyton 2021).

Although both of these decisions guarantee app-based drivers increased benefits, such as a minimum wage, there are big caveats hidden in these legislative changes. The biggest of these is that drivers in both California and the UK will only be compensated for when they are driving to pick up a passenger and while they are taking them to their destination (Marshall 2021). This excludes the time when drivers are logged into the app and driving around to find new passengers, which is estimated to be anywhere between 36-50% of their time while on the app (Marshall 2021). In California, this distinction is entrenched in the legal language, while in the UK it is different: though the UK Supreme Court decided that drivers are workers the moment they log into the app and remain working until they log off, regardless of whether or not they have a passenger, Uber has not been complying with the ruling; instead they have only been paying workers when driving to and carrying passengers (Skelton 2021). Though not an uncommon practice depending on an individual’s field of employment, prevalence is not an indication of just compensation. It is inhumane to only pay employees for the time they are actively interfacing with customers or completing tasks, only compensating them for a portion of the total time they are mandated to be ostensibly ‘at work’. This is a ludicrous definition of what it means to be ‘on the clock’, and merely serves as a loophole for massive companies, like Lyft and Uber, to continue to underpay their workers.

Especially for those living in the US, this should be a cause of concern. Not only does Proposition 22 limit the time in which drivers are being paid for working, but it drastically underpays workers in a slough of areas. The UC Berkeley Labor Center estimates that although the Proposition promises to pay workers 120% of minimum wage, which in California would equate to $15.60 an hour, drivers would only average $5.64 an hour (Jacobs and Reich 2019). This dramatic difference in income is linked to two aspects of the Proposition: the first being the aforementioned redefinition of time ‘worked’ and the other being the unreimbursement of drivers while driving when the apps don’t see them as on the job. This is reflected in the fact that these companies pay their drivers 28 cents less per mile driven than the cost the IRS estimates for both driving and owning a vehicle (Jacobs and Reich 2019). Although Proposition 22 promised to secure increased benefits for drivers, it actually lessened the benefits that they would have seen under AB5.

This is not merely affecting current workers at these companies— many other corporations are firing their employees and hiring these non-employees, saving them money but costing us jobs that pay people fairly (Holmes 2021). The ripple effect is not limited to just people living in California or the UK; Uber and Lyft are planning to propose legislation similar to Proposition 22 in several other states, and in February the European Commission began working with appbased driving companies to improve working conditions for their drivers (Marshall 2021; Meyers, 2021). With the most funding for any proposition in California state history, Proposition 22 lobbied against the rights of drivers and won, showing that nowhere is safe (Sammon 2021; Bensinger 2020).

Both as consumers and voters, we can control who gets paid and how their companies pay them. What is a government without its citizens? What is a company without its consumers? Powerless. I might worry about the gig economy—and so should you—but that doesn’t mean there’s nothing we can do. We all deserve to be paid a fair wage for our full time while at work, and yet many people: our friends, family, and favorite DoorDash driver, are not entitled to these worker rights. So the next time you reach for your phone when you’re in search of a meal or a ride, think about all the dynamic systems at play, and the power we all have in shaping them.

Sources

Beam, Adam. 2020. “California judge rules Uber, Lyft drivers are employees.” The Washington Post, August 10, 2020. https://www.washingtonpost.com/business/california-judge-rules-uber-lyft-drivers-are-employees/2020/08/10/a563636c-db64-11ea-b4f1-25b762cdbbf4_story. html

Bensinger, Greg. 2020. “Other States Should Worry About What Happened in California.” The New York Times, November 6, 2020. https:// www.nytimes.com/2020/11/06/opinion/prop-22-california-labor-law.html

Holmes, Mona. 2021. “Prop 22 Passed, So Now Hundreds of LA Grocery Stores Are Firing Employees.” Eater, January 5, 2021. https://la.eater.com/2021/1/5/22215351/prop-22-socal-grocers-layoff-unionized-delivery-app-drivers-california-law-ab5

Izenberg, Rob. 2019. “How Will CA AB5 Effect Rideshare and Delivery Drivers?.” HyreCar, July 8, 2019. https://www.hyrecar.com/blog/ how-will-ca-ab5-effect-rideshare-and-delivery-drivers/

Jacobs, Ken, and Michael Reich. 2019. “The Uber/Lyft Ballot Initiative Guarantees only $5.64 an Hour.” UC Berkeley Labor Center, October 31, 2019. https://laborcenter.berkeley.edu/the-uber-lyft-ballot-initiative-guarantees-only-5-64-an-hour-2/

Lake, Rebecca. 2021. “California Assembly Bill 5 (AB5).” Investopedia, January 4, 2021. https://www.investopedia.com/california-assembly-bill-5-ab5-4773201

Marshall, Aarian. 2021. “Uber Says Its UK Drivers Are ‘Workers,’ but Not Employees.” WIRED, March 17, 2021. https://www.wired.com/ story/uber-uk-drivers-workers-not-employees/

Meyers, David. 2021. “Gig economy: Europe tells companies to negotiate with workers or face new laws.” Fortune, February 24, 2021. https://fortune.com/2021/02/24/gig-economy-europe-worker-rights-eu/

Penman, Adam and Peyton, Daniel. 2021. “UK Supreme Court Ruling: Uber Drivers Are “Workers”.” JDSUPRA, February 23, 2021. https:// www.jdsupra.com/legalnews/uk-supreme-court-ruling-uber-drivers-5251635/

Sammon, Alexander. 2021. “Prop 22 Is Here, and It’s Already Worse Than Expected.” The American Prospect, January 15, 2021. https://prospect.org/labor/prop-22-is-here-already-worse-than-expected-california-gig-workers/