The battle for the future of “gig” work
Ride-sharing companies are pushing to make a third category of “independent” worker the law of the land. Drivers say the notion of independence is little more than a mirage.
Kailey Whitman for Vox
Erica Mighetto has been a driver for ride-hail platforms for four years, and has stories, she says, that span the spectrum “from being solicited for sex to meeting some great people that are still my friends to this day.”
When she got started, she expected it to be a transitional thing, a gig between more permanent jobs. She’d worked in accounting for 15 years and was employed by a property management company where, she says, “a lot of my role became evicting people from their homes, and I just wasn’t happy there.” But she actually liked being a driver more than she’d thought, and at first, with Lyft, she was making decent money — an average of $40 an hour.
“I really enjoyed getting away from the cubicle and into the world and sharing people’s experiences,” she says. “I always said that I really loved having the word on the street. You find out not just the best places to eat but the best person to do your taxes, everything that’s going on in your community. You have a real finger on the pulse.”
Mighetto, 39, is from Sacramento, California, and she used to drive to the Bay Area every now and then to work for a long weekend and make more money; she could bring in as much as $80 an hour on a holiday or during a big event. The company offered bonuses for many things: a hot streak — say, $15 for three rides in a row in a prescribed time frame, or sign-on bonuses if they referred another driver, or weekly bonuses for a certain number of rides. But as time went on, she says, echoing many drivers from both Lyft and Uber, she found that her bonuses were lower, and suddenly, she was making the hour-and-a-half drive every weekend just to get by. “They kept moving the goalposts,” she says.
The experience was much the same for Seydou Ouattara, a driver for Uber in New York. When he began driving in 2016, he was doing pretty well, but over the years, he says, “I was working more hours for Uber, but I was making less money.”
Mighetto’s and Ouattara’s experiences — of both promised freedom and frustration — are increasingly common in the United States as the “gig economy” grows. Companies like Uber and Lyft have argued that gig workers need to be excluded from employee status to preserve their flexibility, and that most of their drivers are part-time hustlers, not full-time professional drivers.
Since Uber launched in 2011 as “UberCab” with the aim of “disrupting” the taxi industry, the gig economy has exploded into a variety of fields and classified swaths of workers as independent contractors rather than employees. That allows companies to avoid minimum wage and overtime laws as well as unemployment insurance, workers’ compensation, and payroll taxes.
This is billed as innovation, but it’s actually a tactic that goes back more than a century. US labor law history is rife with different groups of workers being carved out of protections because their work wasn’t really seen as work.
Modern-day gig workers such as Mighetto and Ouattara have been pushing back, arguing that the amount of control the apps exercise over them (not to mention the big money they make for the gig companies) means that the work they do should come with the benefits of being an employee.
Last November, California passed a ballot initiative called Proposition 22, cementing Mighetto and her colleagues in semi-employee status. They still don’t get state unemployment, discrimination protections, sick leave, or collective bargaining rights, though they do have some bare-minimum guarantees of pay while actually carrying a passenger. The minimums were sold as a baseline that increased driver rights, but one study by University of California Berkeley researchers found that the guarantee could actually only be “the equivalent of a wage of $5.64 per hour.”
An iPhone with the Lyft ride-hailing app on it shows cars in the area.
Timothy A. Clary/AFP/Getty Images
“I’m a driver,” Mighetto says, “and that doesn’t give anyone license to treat me like a third-class citizen.”
In response to requests from Vox for comment, representatives for Uber and Lyft defended their model and practices, offering surveys and articles they contend show that drivers prefer their independent contractor status. “Driver earnings are currently at an all-time high in many of our markets,” a spokesperson for Lyft wrote in an email.
Workers across the country are now worried that the effects of Prop 22 will spread, institutionalizing a “third category” of workers well beyond Uber and Lyft drivers who have fewer rights than regular employees but also lack the real autonomy of actual freelancers — and that it might happen under a Democratic administration, and with the sign-off of some labor unions.
In other words, we’re at an inflection point, potentially for the entire American working class. Will labor figure out how to organize workers in dire conditions across the broad spectrum of “tech”-enabled jobs, from Amazon to Uber? Or are workers going to continue to see their conditions deteriorate, even as executives at the top just get richer?
In 2019, the clutch went out on Mighetto’s car, so she was driving for Lyft in a rental car to make the $1,500 she needed for the repair. (Lyft, she explains, has a rental partnership so drivers can get rentals to use for work.) Mighetto thought she could offset the cost of the rental with a particular bonus, but the number of rides she needed to do to get that bonus seemed to keep creeping upward.
“I had six rides left, and I thought, ‘I’m sacrificing my own safety and the safety of my passenger. I just can’t do it. I’m exhausted.’ I was so infuriated that I took to the internet, looking for other people who were as outraged as I was. And there was this action the following day. I took it as a sign I needed to be there.”
It happened to be the night before Uber’s initial public offering, and drivers around the world had organized a day of protest. Mighetto had found her people.
“I’d never, never done anything like that,” she says of the protest. “In our cars, we’re really isolated, and we don’t have a lot of interaction with our fellow workers. So it was really wonderful to be in a community and to realize that I wasn’t the only one out there that was feeling mistreated.”
As Mighetto got involved in driver organizing and eventually became a member of Rideshare Drivers United, an organization of Uber and Lyft drivers fighting for legal rights and unionization, California’s Assembly Bill 5 (AB 5) was moving through the legislature. An attempt to expand protections for gig workers that predated Prop 22, the bill codified the three-part “ABC test” that the state supreme court had recently laid out, making it harder for gig economy companies to classify workers as independent contractors.
The ABC test laid out three requirements that must be met in order for a worker to qualify as an independent contractor. Labor lawyer Brandon Magner explains it as a three-pronged test: “The A prong is that you have to be free from the company’s control. The B prong says you have to be doing work that isn’t central to the company’s business. And the C prong says you’re an independent business in that industry.”
For Mighetto and other drivers, who have their rates set and rides assigned by an Uber- or Lyft-controlled app and who are carrying out the company’s main — indeed, only — service, the ABC test meant that they’d be seen as employees under wage and hour laws, eligible for minimum wage and overtime protections. So Mighetto took to organizing. She even made her own flyers explaining what AB 5 would do for drivers.
When AB 5 became law in 2019, Mighetto says, “It was a huge victory for workers.” And she began to see changes — she switched to driving for Uber after the company added new features in its app. “They would tell you where you were going all of a sudden; you were able to see how much you stood to make on a particular ride. At that point, you have the ability to choose whether or not you wanted to take that ride.”
Uber was trying to prove that the drivers were truly independent. But at the same time, Mighetto says, the companies were also ramping up campaigning against the law, telling drivers that they would lose their independence if they became employees.
When the Covid-19 pandemic hit, Mighetto was able, because of AB 5, to get unemployment benefits. She has a heart condition, and between fears for her safety and the drop in traffic, she needed to stop working. Even then, getting unemployment was complicated — the federal expansion of unemployment benefits lapsed, and she and her partner, also a driver, struggled to pay the bills as benefits waxed and waned. “We don’t have basic protections,” she says. “And that’s a glaring reality during a pandemic.” (A Lyft spokesperson tells Vox, “The pandemic is an unprecedented situation for all industries and communities, and our focus has been on helping keep our drivers, riders, and team members safe. Drivers do quality for Pandemic Unemployment Assistance, which we advocated for.”)
A “caravan protest” by Uber and Lyft drivers with Rideshare Drivers United and the Transport Workers Union of America in April 2020 called on California to enforce the AB 5 law so that they could qualify for unemployment insurance during Covid-19.
Mario Tama/Getty Images
And then came Prop 22, an effort funded by Uber and Lyft, along with the delivery service DoorDash, which together poured $200 million into the project of exempting themselves from regulation. Prop 22 was the most expensive initiative in state history, and when it passed last fall just as the pandemic began its ferocious second wave, it carved the gig companies out of the protections of AB 5 and threw Mighetto back into limbo, with drastically shrunken protections against sexual harassment, wondering whether she’d get her unemployment and which rules the companies would change next.
Uber yanked back the control it had given drivers in the app. An Uber spokesperson tells Vox, “While these changes gave drivers more freedom than any other ride-share app provides, they also led to a third of drivers declining more than 80 percent of trip requests, making Uber very unreliable in the state. As the recovery from the pandemic picks up steam, we want to make sure riders can get a ride when they need one, and all drivers get more trips on a regular basis.”
When we spoke the first week of April, Mighetto and her partner were in Mexico because they’d effectively been homeless. “We spend every week looking to make sure that we have a roof over our heads and something to eat,” she says. “I’ve been three weeks without pay. And in three weeks, I don’t know where I’m going to be sleeping. We’re glad to hear that the weather is turning in California because we’re going to be going back to camping soon.”
Uber and Lyft executives have long argued that regulations hold them back. Current Uber CEO Dara Khosrowshahi told an audience at Bloomberg’s Global Business Forum that regulations are “tougher on startups” and could stifle innovation; previous CEO and founder Travis Kalanick once argued that he was a “trustbuster” and the trust in question was the taxi industry. In Lyft’s IPO filing, it claimed “Lyft has the opportunity to deliver one of the most significant shifts to society since the advent of the car.”
But the model “is not innovative or exciting at all,” argues Veena Dubal, a professor at the University of California Hastings College of the Law, who researches gig economy work.
To Dubal, the work conditions for Mighetto and others like her are, rather than innovations, a throwback to old models of labor exploitation like piecework and sharecropping. “Drivers are living in a scenario where they cannot predict how much they’re going to make, because how much they’re going to make is determined by algorithmic allocation, which often becomes personalized and then becomes a form of punishment,” she says. “Although [the companies] applied algorithmic science to allocating fares and rides, it is piecework that ultimately only pays when [drivers] are allocated work.”
In the 19th and 20th century, she says, immigrant women who sewed shirts at home and were paid by the shirt “at least knew how many pieces they were going to work, and they knew how much they were going to be paid per piece.” With algorithms, she says, it’s completely unpredictable.
The algorithms are designed, she explains, to “figure out what your income goal is and will push you to work longer to reach that income goal to keep more demand out there on the streets for consumers.” It recalls sharecropping because the drivers have to shoulder all the costs of car upkeep; Dubal points to a $20 million settlement Uber paid in 2017 to the Federal Trade Commission after the FTC found that the company had exaggerated the money drivers could make and steered drivers into financing options for buying or leasing cars that were worse than they might have received otherwise.
Prop 22 locks this model in place — and the companies are now looking to scale up the legislation. They’re calling it “IC+,” for “independent contractor-plus,” and Khosrowshahi has said he intends “to advocate for the IC+ model not only around the nation but also the world.”
In order to head off more Prop 22s, there’s been talk recently from companies, researchers, and some within the labor movement of a sort of grand bargain with Lyft and Uber, whereby drivers would accept that third-category worker status and, in return, be granted what’s known as “sectoral bargaining.” Workers would be granted the right to organize and bargain with the companies — something that, legally, independent contractors cannot do. But Dubal and labor economist Marshall Steinbaum of the University of Utah worry that the unions have latched onto sectoral bargaining as a quick fix in a moment where the labor movement is weak, hoping that a deal can bring numbers and ward off total war.
Sectoral bargaining, Steinbaum explains, is the idea that all workers across a given sector could be represented by a collective agreement, regardless of who their employer is. Labor historian Nelson Lichtenstein described it in 2019 as “social bargaining with the state on behalf of all workers,” where some public institution is created to bring together stakeholders in a given industry to bargain.
The gig economy, Steinbaum notes, is less a sector and more the part of the economy that is outside of labor relations. And what makes sectoral bargaining actually a terrible fit for gig companies, he explains, is that “where sectoral bargaining has a lot to offer, it’s exactly where you have a fragmented sector.” It works when it raises the floor for lots of different companies at the same time. In Germany, for instance, unions primarily negotiate with employers’ associations across many firms in a sector. But even there, the model has atrophied.
A car marked with Uber’s insignia, left, keeps pace with a yellow cab in New York’s Times Square in November 2020. Drivers for ride-hail services are organizing with taxi workers in the state.
Eduardo MunozAlvarez/VIEWpress/Getty Images
With Uber and Lyft, it’s the opposite situation: The two companies make up, essentially, a duopoly, and have used that power to avoid any kind of regulation. Without real worker power behind that bargaining regime, he says, it would simply solidify and legalize the existing lopsided power relationship between the companies and the drivers.
Locking the drivers into a third category — not really employees, not really independent — would wind up, Dubal says, replicating old patterns of inequality. “When they say that we need a third category of work for a new economy,” she says, “what they’re really saying is that they just don’t want to have to provide these basic protections and rights and safety nets and they think that people now should be willing to survive without all of these protections that we’ve long come to understand as being normal and necessary.”
It’s precisely the most marginalized workers that minimum wage laws were designed to protect, and according to Lyft’s own economic impact report for 2021, 69 percent of its drivers are members of racial or ethnic minority groups — drivers like Ouattara, who came to the US from the Ivory Coast. “We’re talking about a majority people-of-color workforce,” Dubal says, “and saying that this workforce shouldn’t have the same rights and benefits of other workforces of people is really a recipe for entrenched racial inequality.”
Prop 22 played up the idea that workers needed to be excluded from employee status in order to have flexibility, and the companies often argue that most of their drivers are part-timers doing it for a little extra on the side. According to that same Lyft economic impact report, 95 percent of drivers work fewer than 20 hours per week. But, Steinbaum notes, this argument also goes back well before the supposed innovation of the apps.
The companies will say it’s not real work — something, he says, that echoes the debates around minimum wage that trot out teenagers at part-time jobs to argue that the minimum wage shouldn’t be raised. This, Steinbaum points out, is the origin of exclusion of much service and caring work from the National Labor Relations Act in the first place, and though the law has been expanded over the decades to include some of those it originally left out, others — like Mighetto and Ouattara — are still excluded.
And, Dubal adds, the companies might say that most of the drivers work just a few hours, but the reality, according to her research, is that “most of the work is done by people who are working more than full-time.” A Seattle study, for example, found that 55 percent of trips were done by the 33 percent of drivers who worked more than 32 hours a week. The companies contest this but are notoriously unwilling to make their data public, sharing it only with particularly chosen researchers, meaning it’s hard to verify study results.
So who wants such a deal? Unions such as the Teamsters and the Service Employees International Union have signaled that they’d be open to it.
Bloomberg’s Josh Eidelson wrote, “Unions that are trying to head off more Prop 22 scenarios and also expand their ranks will have to weigh the uncertain potential for better treatment from President Biden against the risk of losing or being cut out of the conversation entirely. If they play things wrong, traditional employment could end for millions more Americans.” Uber, he notes, has already backed a compromise with unions when it agreed to support the creation of the Independent Drivers Guild by the International Association of Machinists and Aerospace Workers.
But any dealmaking frustrates many drivers because, well, those unions don’t yet represent these workers. They would, in essence, be making a decision to support legislation that workers like Mighetto themselves don’t want. And such high-handed behavior is exactly what employers point to when they run anti-union campaigns. If all that workers get out of a deal is nominal union membership but no material changes to their circumstances, it’s only going to make them angry — at the union. “And that’s damaging for the broader labor movement, not just the sector,” Dubal notes.
Even unions sometimes seem to forget that what makes unions powerful is not dues money but people acting together to challenge unjust power. It is not the ability to file a grievance but the implicit understanding that behind that grievance lies the principle of “an injury to one is an injury to all,” which Uber and Lyft have countered with a story of individual independence and flexibility. But that story of flexibility is pitting drivers against one another; to defeat it, drivers must be united.
Ouattara started driving for Uber in July 2016 in New York City. When New York put new rules into effect guaranteeing a minimum wage for drivers — drivers must make at least $17.22 an hour — Ouattara says the app changed how drivers worked, exerting more control over their hours while still asserting that workers like him were independent contractors.
Ouattara explains that he must put in a request for the time he wants to work a week in advance in order to get in the queue for a work assignment. Drivers have different ratings in the app, and the drivers who are “platinum” rated get first crack at the hours, then “gold” drivers, and so on.
Because the wage must be paid for the time the driver is active on the app, not just the time that they have a fare, Uber moved to tighten its control over New York workers to avoid paying them for idle time. “They just drastically limited the length of their queue by deciding who’s in and who’s out,” Steinbaum says.
It’s a system not that different, though automated, from the “shape-up” that longshore workers faced for decades on the docks, where the number of workers needed would vary based on how many ships came in and what they carried. When the longshore workers on the West Coast organized with the radical International Longshore and Warehouse Union, they divided up the crews into “A-men” and “B-men”; A-men were full-timers who were assigned work first, and B-men got a crack at the work when all the A-men were employed. The difference was that the union, not the boss, decided who got which rating, and the assignments.
With Uber, Ouattara says, there are all sorts of arbitrary rules that go into your rating. There are the ratings customers give drivers, but there are also things the app tracks, such as the driver’s speed and braking. “They sent you a report based on how many times you had to brake hard. But they don’t know why you brake hard. It might be because someone was about to run in front of your car and then you have to brake hard not to hit that person,” he says. “If you stop to prevent an accident, that would make you a bad driver.”
The worst part, he says, is that the rules aren’t transparent. “Every year there’s some new regulation in place to stress drivers out.”
When the pandemic hit, Ouattara, too, stopped work for a time. He had a newborn child at home and didn’t want to bring the virus home, so he applied for unemployment. But he was denied. So he reached out to the New York Taxi Workers Alliance, a labor organization that started organizing yellow cab drivers and has since expanded to include ride-hail drivers like him.
He’d heard about NYTWA when he first became a driver as a place that drivers could go to get help, and he wound up one of the lead plaintiffs in a lawsuit demanding the state give the drivers regular unemployment insurance rather than the lower payments associated with the Pandemic Unemployment Assistance plan for independent workers. In July, a judge ruled that Ouattara and other drivers were eligible for unemployment.
One of the reasons for the holdup, Ouattara says, was that Uber and Lyft were not submitting the required data on drivers to the state. Without that data, he and others were denied. “I did my best when I had to work at Uber,” he says. “It’s not like I’m going to work at different things. It’s at Uber every day, 70 hours a week. How would you tell me I’m not your employee when it comes to helping me out when we have a pandemic?”
So far, no sectoral bargaining deal has been forthcoming. In Connecticut, a proposed bill, spearheaded by the Independent Drivers Guild, was shelved when neither labor nor Uber, Lyft, or DoorDash supported it. Lyft said the bill would risk “the flexibility and control that drivers currently enjoy,” and a Lyft spokesperson notes to Vox, “The Connecticut Department of Labor testified against that proposal, citing its incompatibility with the [National Labor Relations Act].”
“The companies opposed it because it was too independent even for them,” Steinbaum says. “They didn’t exert total control, and I think that reflects the absence of middle ground here that such a compromise would have to be able to inhabit were it to take shape.”
The bill would have established a sectoral bargaining system in which representatives of the companies and of the workers would negotiate over rules for the industry, while agreeing that the workers were not employees. And in New York, negotiations have stalled. The taxi workers’ union, Ouattara’s organization, is advocating for something similar to AB 5 that would apply the ABC test to workers. He says, “You have to look at the control Uber has over drivers. It’s absolutely control of the relationship of employee and employer. Everything you’re doing is under their control.”
Seattle was the first city, in 2015, to attempt to put a bargaining regime in place for ride-hail drivers. Steinbaum, who briefly consulted for the city of Seattle on litigation that followed from the attempt, describes it as “an agency that the city government recognized as the bargaining agent for ride-sharing drivers in the city, and then that agent would be empowered to essentially collectively bargain on their behalf with ride-sharing firms under the auspices of the city.”
But the companies — and the US Chamber of Commerce, a business lobbying organization — fought it, using antitrust laws (arguing that the drivers would be unfairly colluding because they were not employees). Eventually, the city shifted gears, passing a law closer to New York’s, allowing drivers to be covered by minimum wage protections, and the city to establish a Driver Resolution Center to arbitrate disputes between the companies and the workers.
Thus far, the Biden administration seems to be uninterested in federal grand bargains. Just recently, prominent Uber critic David Weil was nominated to resume his Obama-era post at the Labor Department’s Wage and Hour Division, and the Labor Department withdrew a Trump-era rule around independent contractors that made it harder to classify drivers like Mighetto and Ouattara as employees.
Rebecca Dixon, executive director of the National Employment Law Project, points out that in its statement, the department “skewers” the argument from gig companies around flexibility, saying, “[F]lexible work schedules can be made available to employees as well as independent contractors, so any determination of or shift in worker classification need not affect flexibility in scheduling.”
And the president is backing the PRO Act, which includes the ABC test for the purposes of collective bargaining (though notably not for wage and hour law, as AB 5 did). While passing anything through the Senate is a tall order, labor has unsurprisingly made it a top priority to pass the act, a top-to-bottom reform of existing labor law that would, for example, include penalties for the kind of anti-union behavior demonstrated recently by Amazon in Bessemer, Alabama.
With the PRO Act, Dubal thinks that both Rideshare Drivers United and the taxi workers’ group could potentially form a real union of ride-hail workers. Rideshare Drivers United, she says, “want to be a bargaining unit for Lyft and for Uber and the potential is 100 percent there.” There’s currently organizing taking place across the gig economy, including drivers figuring out how to “strike” on the apps; she points to DoorDash drivers using Facebook to organize and selectively declining cheap orders in order to push up their wages.
Unsurprisingly, Uber and Lyft, alongside other gig companies DoorDash and Instacart, are pouring money into fighting to stop PRO. The Intercept reported that the companies spent “at least $1,190,000 on 32 lobbyists to persuade members of Congress on the PRO Act” in 2021 so far. Uber itself spent $540,000, and its annual SEC filing notes, “If a significant number of Drivers were to become unionized and collective bargaining agreement terms were to deviate significantly from our business model, our business, financial condition, operating results and cash flows could be materially adversely affected.”
A union for ride-hail drivers, Steinbaum notes, could look something like the longshore workers’ model. Rather than the app mysteriously assigning work and tweaking algorithms, drivers could set rules themselves while maintaining flexibility — longshore workers famously treasured the ability to work or not depending on their needs on a given day — and without giving up their power.
The drivers could agree on seniority or another system of deciding who gets offered work first, which, Steinbaum says, “would enhance labor power because the most experienced workers would be the ones that get the work and the dynamic where the casual workers are the ones that the company wants to bring in and undermine the power of the workers on the job would be counteracted.”
The other outcome is that more industries start to move to the Uber model of on-demand workers not classified as employees, and more people’s conditions start to look like those of Mighetto and Ouattara. Shortly after Prop 22 took effect in California, delivery drivers for grocery stores under the umbrella of Albertsons were told they would be fired and replaced with app-based “independent” drivers. Based on what venture capitalists have signaled after Prop 22, Dubal says, “I think what is going to happen now is that they’re going to start trying to gig-ify other sectors. And that’s where this stuff becomes more about the broader labor movement.”
“One thing that is gratifying about [this moment] is that what I consider to be primary concerns about control, power, and autonomy are back in the forefront,” Steinbaum says. Back in 1950, when Walter Reuther, legendary head of the United Auto Workers, negotiated what became known as the “Treaty of Detroit,” labor agreed to stop fighting to dismantle the capitalist economy and build something else. Instead, the union agreed — and most of labor followed suit — to limit bargaining to getting their particular slice of the pie. But, Steinbaum notes, employers never really held up their end of the bargain, and in this moment they’ve abandoned any commitment to their workers’ well-being. “Now these larger questions are back on the table.”
To Ouattara, the pandemic was a clarifying moment, proving that Uber wasn’t interested in helping the drivers. And to Mighetto, Prop 22 undid 100 years of progress. “It rolls back the New Deal; it rolls back all the work that’s been done to get us worker’s compensation. For me, it rolls back the Me Too movement.” The only choice, she says, is to keep fighting, because the amount the companies spent on Prop 22 is a reminder that they have no intention of changing their model. “If you think about it, $200 million is a small investment if you plan to continue exploiting people indefinitely.”
Sarah Jaffe is an independent journalist and the author of Work Won’t Love You Back: How Devotion to Our Jobs Keeps Us Exploited, Exhausted, and Alone. Her work has appeared in the New York Times, the Nation, the Washington Post, the Atlantic, and elsewhere.
Diana Ejaita for Vox
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Author: Eric Hauch
Published on: 2021-05-18, 1:52 PM UTC