By Frank Stricker
Well, the company doesn’t quite put
it that way, but that is how much more Uber claims riders would have to pay for
a ride if Uber is forced to treat its de facto employees as employees rather
than as independent contractors. Uber and Lyft are fighting tooth and nail
against AB 5, a California law that went into effect on January 1, 2020. The
law aimed to force companies like Uber to modify their robber-baron business
model and allow their workers the rights and benefits other employees have.
The Uber business model is frosted
in rhetoric about driver flexibility, modern technology, and neighborliness:
the worker chooses when to work, the allocation of rides is facilitated by an app,
and the whole process is sometimes called ride-sharing. (“You were driving
downtown anyway--why not share a little and get paid for adding a rider?”)
But the reality of the Uber business
model is that pay is low and most of the risks of the job and of life itself
are loaded onto the workers. The company contributes nothing to Social
Security, Medicare, workers compensation, tax shelters, health insurance, or state
unemployment insurance funds. The last fact is why, early in the covid plague,
the federal government--ultimately, we the tax payers-- had to pay the whole
bill for giving unemployment benefits to independent contractors, aka gig
workers.
Also, independent contractors are
not normally covered by overtime and minimum wage laws. Their real average pay,
after subtracting the cost to the worker of car insurance, gas, maintenance,
and other things, is sometimes very low--far below legislated minimums in
states like California.
While there is a real convenience
factor for many people who drive for Uber, Lyft, and similar companies, drivers
are generally subsidizing the price of a ride so that it is less than it ought
to be, and they are subsidizing the companies who underpay the people who are,
in key respects, their employees. Yes, some drivers are OK with part-time low-pay
work. Others have organized to demand a better deal. Most drivers don’t drive full-time
or year-round and quite a few start driving after they’ve had a significant
loss of income, due to unemployment, family emergencies, or something else.
That is, they are desperate. In general Uber-type jobs are not the kind you’d
like to have if you want to build a family and buy a home.
California’s AB 5 requires that
companies like Uber and Lyft treat their employees like employees. Uber and
Lyft refused to obey the law. They sued the government. They lost the case and were
ordered to classify their California drivers as employees. The companies are
appealing. Some companies are talking about creating a third way that includes aspects
of the employer-employee relationship. Uber’s chief, Dara Khosrowshahi, who, in
2019, received a $45 million-dollar pay package that included $2 million just for
work-related expenses, has proposed a pool of cash that workers could use for
health insurance, leaves, and other things. New
York Times writer Noam Scheiber notes that if companies go too far in that direction,
they will look more like employers of employees than mere facilitators of the
work of independent contractors.
Some third-way suggestions are on
the California ballot this fall as Proposition 22. Uber, Lyft, Doordash and
other companies have raised over $100,000,000 to support Prop 22. The
proposition exempts transportation company drivers from the regulations in AB 5
and it makes promises about minimum wages and health benefits. These promises
may be iffy in a number of ways, including how many hours drivers must drive to
qualify and whether wait time will count as work time. And in general, new
benefits will have to be small. Otherwise, the Uber model may not endure.
Stricker
is a board member of the National Jobs for All Network, Emeritus Professor of History,
CSUDH, and author of American Unemployment,
Past, Present, and Future (2020).