California voted for cheaper Uber and Lyft rides. It may have injured drivers

2020 California Voters passed Proposition 22, a law that app-based companies like Uber, Lyft and DoorDash said would improve working conditions while keeping rides and deliveries cheap and plentiful for consumers. However, a report released today suggests that rideshare drivers in the state have instead seen their effective hourly wages drop compared to what they were before the law went into effect.

The study by PolicyLink, a progressive research and advocacy organization, and Rideshare Drivers United, a California driver advocacy group, found that rideshare drivers in the state pay the costs associated with doing business — including gas and vehicle wear and tear — at an hourly rate of $6.20, wide below the California minimum wage of $15 an hour. The researchers calculate that if drivers were employees and not independent contractors, they could make an additional $11 an hour.

“Driving has only gotten harder since Proposition 22 was passed,” said Vitali Konstantinov, who started driving for rideshare companies in the San Diego area in 2018 and is a member of Rideshare Drivers United. “Although we are described as independent contractors, we have no way of negotiating our contracts and companies can change our terms at any time. We need labor rights extended to app workers.”

Uber spokesman Zahid Arab wrote in a statement that the study was “deeply flawed,” saying the company’s own data shows tens of thousands of California drivers made $30 an hour on the days studied by the research team, despite Uber’s figure this does not take into account driver costs. Lyft spokesman Shadawn Reddick-Smith said the report was “not tied to the experiences of drivers in California.”

In 2020, Uber, Lyft, and other app-based delivery companies promoted Proposition 22 as a way for California consumers and workers to have their cake and eat it, too. Back then, a new state law targeting the gig economy, AB5, aimed to turn app-based workers from independent contractors into employees, with all the worker rights that come with that status — health care, workers’ compensation, unemployment insurance. The law was based on the idea that companies had too much control over workers, their wages, and their relationships with customers to consider them independent contractors.

But for the big gig companies, that change would have cost hundreds of millions of dollars a year, per estimate. The companies argued that if they were forced to treat drivers as employees, they would struggle to keep operations running, that drivers would lose the ability to set their own schedules, and that trips would become scarce and expensive. The companies, including Uber, Lyft, Instacart and DoorDash, created Prop 22 to create an exemption for workers who drive and deliver on app-based platforms.

Under Proposition 22, which went into effect in 2021, rideshare drivers continue to be independent contractors. They get a guaranteed rate of 30 cents a mile and at least 120 percent of the local minimum wage, excluding the time and miles driven between trips while drivers wait for their next fares, which Uber says account for 30 percent of driver-miles during you are in the app. Drivers receive some accident insurance and workers’ compensation insurance, and they may also qualify for a health care subsidy, although previous PolicyLink research suggests that only 10 percent of California drivers have claimed the subsidy, in some cases because they don’t have enough Hours qualify for work.

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