Ronen Tivony/Sipa USA via AP Images
Uber and Lyft drivers hold placards during a protest against the ridesharing companies’ low wages, February 5, 2020, in Los Angeles.
Remember that time when Uber and Lyft bought a new classification for their workers in California? To be precise, the companies spent $224 million, a record for a ballot initiative at the time, to promote Prop 22, which carved out a new classification for rideshare and delivery workers in the Golden State, who would not be employees but would get, according to Uber and Lyft, more wage and benefit guarantees than an independent contractor.
Uber and Lyft made some specific promises in that campaign. They said that drivers would earn 120 percent of the local minimum wage, and 30 cents per mile driven. They promised a heavy stipend for health insurance if drivers worked a certain number of hours. And they vowed to provide occupational accident insurance as a form of workers’ compensation. That—plus $224 million—convinced voters, who approved Prop 22 with nearly 59 percent of the vote.
The subsequent implementation immediately led drivers to have to check the fine print. The guaranteed minimums and the mileage reimbursement were only for “engaged” hours, when a driver was actually taking a ride to a location. Time spent waiting for a ride, which is nearly one-third of a driver’s total work time, doesn’t count. That’s essentially off-the-clock work being done, either to find a fare or to get to the location.
Similarly, the health insurance reimbursement only kicks in with a minimum amount of “engaged” hours. Drivers get 41 percent of their health insurance premium reimbursed after 15 engaged hours per week, and 82 percent after 25 engaged hours. Workers also have to be the primary policyholder on an existing plan, essentially gambling that they will get enough rides to qualify for Uber or Lyft or whoever reimbursing them for the percentage of what they’ve shelled out for their premium payments.
National Equity Atlas, a research group, analyzed data collected a year into the Prop 22 experiment. They released the results this week, finding that on net, a rideshare driver in California makes $6.20 per hour in median take-home earnings, far less than the promise of earning above the local minimum wage (which statewide is $15.50, and higher in some cities). This $6.20 number is similar to estimates made before Prop 22 went into effect, but National Equity Atlas now has the hard data.
They arrive at this figure by subtracting the basic employment benefits that employees in California receive—unemployment insurance, paid leave, reimbursement for all driving expenses (not just the below-market-rate 30 cents per engaged mile), employer contributions to Social Security and Medicare, and workers’ compensation. That takes $20.10 per hour off of the average wage.
The calculation does not include health insurance, which is substantially covered through employer-sponsored insurance at a significant number of companies. According to a separate National Equity Atlas study, only 10 percent of drivers actually receive any health insurance stipend from the company. In this study, one worker notes that she missed out on the full reimbursement by 13 minutes of engaged driving time, likely costing her thousands of dollars. Paying in full even for the cheapest state plan on the Affordable Care Act exchanges would cost rideshare drivers about $2.80 an hour in wages, over 40 percent of their net take-home pay number.
On net, a rideshare driver in California makes $6.20 per hour in median take-home earnings, far less than the promise of earning above the local minimum wage.
If you use Uber and Lyft’s wage guarantees for 120 percent of local minimum wages as a wage floor, and do all the other calculations, you get an effective compensation floor of only $4.10 per hour. The combination of only paying for “engaged” time and denying regular employment benefits to which employees in the state are entitled makes rideshare driving a woefully undercompensated job.
Some might call this an artificial rendering, arguing that workers get the benefit of flexibility, and can spend the gross take-home pay they receive in the way they choose, rather than have it forced into insurance against layoffs or injury, or time off. But the core of the job is driving, and a low reimbursement only on engaged miles is really quite inadequate. Keep in mind that this analysis was taken during November and December 2021, when gas prices were much less than the levels they reached this summer and still less than where they are today. (California prices are actually rising again.) Rideshare driving is also a dangerous profession, so those workers’ comp benefits are often vital.
Moreover, these calculations assess working for Uber and Lyft on the terms they set in Prop 22. They argued that this new classification would make rideshare driving a fulfilling and lucrative job. It’s very clear that it isn’t.
The National Equity Atlas study makes a bunch of policy recommendations for how to improve driver conditions (making them employees, basically, along with more transparent practices to ensure workers aren’t discriminated against, something that they pick up on in the study). But you can throw those out. Because Prop 22 passed at the ballot box, and because a rider in the initiative bars the legislature from making any changes to the law without a seven-eighths vote. That means that changes to the law are virtually impossible without another ballot measure, on which Uber and Lyft would spend another nine-figure sum fighting to block it. (Prop 22 was ruled unconstitutional last year; that’s been appealed and is working its way through the courts.)
Meanwhile, Lyft has returned to the California ballot this year to snag more benefits for itself. This time, Prop 30 looks quite appealing on the surface. It would add a 1.75 percent surtax on income above $2 million, while putting the revenue toward subsidies for purchasing zero-emission vehicles, infrastructure for those vehicles like charging stations, and a smaller portion for wildfire suppression (really, so firefighters can narrate their ads). The tax would phase out after the state meets a threshold of emission reductions or within 20 years.
There’s nothing at all wrong with taxing millionaires to fund electric-vehicle take-up. Lyft is the main sponsor of the measure, though, and with good reason. A law in California requires all rideshare vehicles to be zero-emission by 2030, and this ballot measure gets millionaires across the state to help pay for that, rather than Lyft (or rather Lyft’s drivers, though presumably the company would have to help people in some way acquire the right vehicles if they needed more on the roads).
It’s for this reason that Gov. Gavin Newsom is the public face of the opposition to Prop 30, calling it “a cynical scheme devised by a single corporation to funnel state income tax revenue to their company.” Newsom’s position is a tough sell on the merits, an attempt to offer sympathy to millionaires funding needed climate investments. (The governor says that the state budget already passes along billions for EV take-up.)
But Prop 30 once again shows that a determined corporation can make what for them is a relatively minimal investment and shape California law to their benefit, thanks to our failed experiment with direct democracy. Prop 22 remains the far more egregious example, which immiserates the approximate 1.3 million Californians who drive for rideshare and food delivery companies. They’ve been locked into a substandard job with none of the protections other employees take for granted. “The real costs of Prop 22 are clear,” the authors of the National Equity Atlas study conclude. “Uber and Lyft now legally pay their drivers poverty wages.”
