Prop 22 Depresses Wages and Deepens Inequities for California Workers
September 21, 2022
California rideshare drivers’ net earnings are just $6.20 per hour
By Eliza McCullough, Brian Dolber,* Justin Scoggins, Edward-Michael Muña, and Sarah Treuhaft
Working conditions and compensation in the rideshare industry have significant consequences for millions of California’s workers and their families, who are disproportionately people of color and immigrants. With the advent of Uber and Lyft, the number of adults who work as taxi drivers or chauffeurs for their primary job tripled over the past decade. From 2020 to 2021, 1.3 million Californians drove for rideshare and food delivery companies.
Uber and Lyft dominate the rideshare industry, providing on-demand ride-hailing and delivery services via mobile apps that depend on mass data collection from drivers and consumers. Despite the level of control that these companies exert over their workforce through algorithms, they maintain that their drivers are independent contractors. This is a key element of their business model, allowing them to avoid providing drivers employment benefits like health insurance and paid sick leave, or paying a minimum wage.
In 2019, California passed legislation (Assembly Bill 5) that would have clarified conditions of independent contracting for all California workers and required Uber, Lyft, and food delivery companies to treat drivers as employees. In response, the companies spent a record-shattering $224 million drafting and campaigning for a ballot initiative, Proposition 22, to rewrite labor laws in their favor. The initiative passed in 2020, allowing companies to legally classify their drivers as independent contractors not subject to basic employment protections, despite drivers’ lack of control over setting their own fares, or other conditions traditionally part of independent contractors’ rights. In effect, Prop 22 rewrote labor law for California’s entire app-based transportation and delivery workforce.
To understand the impact of Prop 22 on driver compensation, the National Equity Atlas partnered with Rideshare Drivers United and 55 rideshare drivers working across the state’s major rideshare markets to collect and analyze driver data from November 1, 2021, to December 12, 2021, using the Driver’s Seat Cooperative mobile app. We assessed how compensation under Prop 22 compares with what compensation would be if the drivers were classified as employees. We also conducted interviews with a subset of these drivers to better understand their working conditions under Prop 22, the challenges they face because of the pay and benefits structure, and the extent to which they feel they have control over their work.
This is the first study led by drivers that directly collects earnings and work condition data, with disaggregation by race/ethnicity, to estimate compensation under Prop 22. It builds upon our previous study analyzing driver access to health care and borrows from a methodology developed by the UC Berkeley Center for Labor Research and Education, whose research projected that drivers would earn subminimum wages under Prop 22 and similar legislation.
Key findings include:
- Drivers’ median net take-home earnings are just $6.20 per hour under Prop 22. Drivers who pay for health insurance out of pocket earn nearly half of that.
- The wage floor under Prop 22 is just $4.10 per hour.
- Drivers would earn nearly $11 more per hour if they were classified as employees.
- Rideshare work has become less flexible and more controlled by rideshare companies under Prop 22.
Analysis of this unique dataset reveals that Prop 22 undermines the pay, benefits, and autonomy of millions of California workers and families, weakening the state’s economy and exacerbating inequities.
To improve working conditions for rideshare drivers and build an equitable economy that delivers dignified, family-supporting jobs for all workers, we recommend four policy priorities:
- Ensure all workers are covered by full employment and labor rights and receive comprehensive employment and labor protections, including a living wage and the right to collective bargaining.
- End the widespread abuse of independent contractor status to misclassify workers and deny them full labor rights.
- Require that app-based companies make their algorithms transparent to workers and public agencies to prevent discrimination and other harm to workers.
- Increase worker control and autonomy over personal data collected while on the job.
Broken promises: California’s Proposition 22
In 2019, California passed the landmark legislation (AB5) to ensure workers were not misclassified as independent contractors and therefore not entitled to benefits provided to employees, including wage and hour protections, workers’ compensation, unemployment benefits, anti-discrimination protections, and the right to organize and collectively bargain. AB5 created a mandatory presumption of employment status for California workers. If businesses want to treat their workers as independent contractors, they must meet three conditions: 1) the worker must perform services without control or direction from the company; 2) the worker must complete tasks that are outside the usual course of the company’s activities; and 3) the worker must be in an independently established trade, occupation, or business.1
After the passage of this law, Uber, Lyft, and food delivery companies continued to treat their workers as independent contractors, claiming AB5 did not apply to them. The State Attorney General disagreed and filed a lawsuit in the Superior Court of San Francisco to enforce the law against Uber and Lyft. The Court determined that rideshare drivers do not meet the criteria set out by AB5 to be considered independent contractors, and ordered the companies to treat app-based drivers as employees in the state of California. This meant that the companies had to comply with all state employment laws, including ensuring that drivers had access to unemployment insurance and workers’ compensation, earned the minimum wage, and received overtime protections.
During this period, Uber and Lyft built a coalition of companies in the app-based rideshare and food delivery sector to fight AB5, and the companies launched a ballot initiative—Prop 22—that would allow rideshare companies to classify their drivers as independent contractors not subject to state minimum wage and benefits requirements. After spending a record $224 million campaigning for Prop 22 (outspending the opposition by tenfold), the bill passed in November 2020 with 57 percent of the vote. Its passage demonstrated the ability of the rideshare industry to buy their own set of regulations, exempting themselves from existing California employment law.
In their campaign for Prop 22, Uber and Lyft promised drivers access to the same benefits of employment, like health care and a wage floor, with the flexibility of self-employment. Instead, Prop 22 reduced several key benefits that drivers could receive, compared to what they would have received if they were classified as employees. These include the following:
- Drivers’ total work time does not count toward their wage floor. Under Prop 22, drivers are guaranteed to earn a wage floor. But this wage floor fluctuates depending on consumer demand as it only covers time engaged in rides—from the time they accept a trip request to the time they drop off the rider—rather than their total work time, which includes the time they spend returning from longer trips or waiting between passengers. Drivers in our sample spent nearly a third of their total work time waiting between rides.
- Drivers are not guaranteed health insurance. Drivers can receive a stipend to cover 82 percent of their health insurance premium but only if they average 25 hours engaged in rides per week (not total hours worked per week). They must also already have health insurance. In our previous study, just 10 percent of drivers reported receiving a stipend.
- Drivers lose basic employment benefits. Drivers do not receive driving expense reimbursement, paid leave or rest time, unemployment insurance, overtime, California Employment Training benefits, or employer contributions to social security and Medicare under Prop 22. Drivers also lose workers’ compensation, which is particularly alarming as driving for Uber and Lyft is one of the most dangerous occupations in the US.
The Prop 22 campaign claimed that the bill would promote racial equity by improving working conditions for a majority people of color workforce. However, scholar Veena Dubal has argued that Prop 22 creates “a new racial wage code,” as the bill makes drivers and food delivery workers (the majority of whom are people of color and immigrants) subject to “second-class employment status.” Nicole Moore, a driver and organizer with Rideshare Drivers United, explains that Prop 22 builds on a history of excluding workforces made up primarily of people of color from federal employment protections. “Historically, who else hasn’t been covered by the minimum wage? Domestic workers. Farm workers. And now app-based workers. And just like domestic and farm workers, we’re a majority people of color and immigrant workforce—and somehow people make up lies that it’s okay for us to not have access to the same protections and wage floors as everyone else.”
In August 2021, the Alameda Superior Court of California ruled Prop 22 unconstitutional, citing that the ballot initiative infringes on the power of the California Legislature to regulate workers’ compensation. Rideshare companies have appealed the ruling, and while these companies fight the state in court over its constitutionality, Prop 22 remains in place.
Despite its shaky legal footing, Uber and Lyft have worked to duplicate Prop 22 outside of California, which threatens to undermine job quality for all app-based workers as well as workers in other sectors. Already, Uber and Lyft have begun campaigns to pass propositions and legislation in Massachusetts, Connecticut, and New York.
We undertook this study to understand how California rideshare drivers are faring under Prop 22 and to provide advocates, workers, and policymakers with critical data to push for fair labor standards for low-wage workers nationwide.
Data and Methods
We used a community-based participatory research methodology to collect and analyze demographic, earnings, and location data from 12,494 rides from 55 rideshare drivers in California using the Driver’s Seat Cooperative app. Data was collected from November 1, 2021, to December 12, 2021. Drivers were recruited from Rideshare Drivers United’s more than 20,000 members in California. Drivers informed the study process from start to finish, including the study questions, methodology, data analysis, and writing.
Drivers were recruited in October 2021 through email, text, and phone calls to Rideshare Drivers United membership. Seventy-one percent of participants were people of color and/or born outside of the US. Forty-nine percent of participants self-identified as white,16 percent as Black, 18 percent as Latinx workers, and 11 percent as Asian American. Eighty percent of participants self-identified as men, 16 percent as women, and four percent as non-binary. The average participant age was 48, the youngest driver was 25, and the oldest was 74. Most participants drove for multiple apps: only 13 percent drove for just Uber, and 16 percent drove for just Lyft. Participants lived primarily in Los Angeles, the Bay Area, San Diego, and the Central Valley, which are the state’s major rideshare markets. Drivers completed the highest number of rides in Los Angeles, Santa Clara, and San Diego counties.
For our earnings analysis, we restricted our sample to only Uber and Lyft rideshare work over two-week periods for which we had sufficient data, including at least 60 total work hours. This resulted in a sample of 21 drivers that generated 3,020 trips. This sample included 14 self-identified white drivers and 7 drivers of color. While demographic data about the racial/ethnic composition of all California rideshare drivers is unavailable, we believe our sample underrepresents workers of color. Because of this belief, and our interest in the racial equity impacts of Prop 22, we primarily selected drivers who identified as people of color for our interview sample.
Estimating driver compensation
Below is a summary of our methodology for estimating driver compensation as independent contractors under Prop 22, versus as employees under California labor law. A complete description of our earnings methodology can be found here. Our goal was to estimate net take-home earnings under Prop 22, as compared to a scenario in which workers are classified as employees. The term “net earnings” refers to take-home earnings after payroll taxes and, under Prop 22, contributions necessary to enjoy the same benefits guaranteed to employees by California employment law. With this in mind, we also generated various estimates by including or excluding worker contributions toward health insurance as described below.
Estimating Prop 22 effective wage floor and actual earnings
Under Prop 22, drivers are guaranteed to earn above or equal to a pay “floor” (which we refer to as the Prop 22 Effective Wage Floor). This floor is comprised of two components: 1) 120 percent of the local minimum wage for the driver’s “engaged time,” or the time from which a driver accepts a ride to the time they drop off the passenger, and 2) 30 cents per mile driven during that engaged time. A driver's gross earnings must be greater than or equal to the sum of these two components. Rideshare companies calculate this floor to assess whether drivers are eligible for pay adjustments every two weeks. Since this floor is dependent upon demand, there is no true minimum wage under Prop 22. The floor we identify in this study reflects the demand at the time we collected this data.
We used the following methodology to calculate the base hourly earnings under Prop 22 and drivers’ actual hourly earnings under Prop 22:
- Prop 22 Effective Wage Floor: We first identified the hourly minimum wage in the locality where the driver began their ride. We then multiplied the driver’s total engaged time for the ride by 120 percent of the local minimum wage and added 30 cents for each engaged mile. We completed this calculation for all rides in the sample and summed the results along with the total work hours for each driver across two-week periods. We calculated an average hourly wage for each driver/two-week period and took the median across all drivers/two-week periods as the median hourly wage.
- Prop 22 Actual Earnings: We summed all app-recorded earnings for each driver over each two-week period, including bonuses and tips, along with total work hours. For any two-week period in which the Prop 22 wage floor was higher than gross earnings (excluding tips), the Prop 22 wage floor was substituted in for those gross earnings to reflect the pay adjustment guaranteed to drivers when their gross earnings fall below the Prop 22 wage floor. We calculated an average hourly wage for each driver/two-week period and took the median across all drivers/two-week periods as the median hourly wage.
Estimating net earnings under Prop 22
After calculating drivers’ effective wage floor and actual earnings, we subtracted the costs of employee benefits that drivers do not receive under Prop 22 and therefore must cover out-of-pocket. These include driving cost reimbursements for total work mileage (not just engaged mileage), employer contributions to Social Security and Medicare, California Employment Training taxes, unemployment insurance, workers’ compensation, paid rest time, paid sick time, and employer-sponsored health insurance. Subtracting these costs enables us to estimate drivers’ net earnings under Prop 22, and thereby quantify the true cost to workers of independent contractor classification.
Because health insurance is typically drivers’ largest expense (if they are not covered by Medi-Cal), we place more focus on estimated net earnings excluding health insurance costs throughout this report. We do this to avoid making unrealistic assumptions about whether drivers have health insurance and whether they derive it using their rideshare earnings. For example, some drivers may have public coverage, coverage from another job or their spouse, or they may opt out altogether.
When we report estimates factoring in health insurance, we treat it as a cost subtracted from drivers’ earnings rather than a benefit added to their earnings and provide estimates both with and without health insurance under different assumptions. We do this to ensure that our estimates are easy to interpret and compare—such as the net take-home earnings after any expenses and contributions necessary to achieve the benefits required for employees under California employment law. Some studies have focused on gross earnings without considering the myriad of costs drivers incur as independent contractors. This focus on gross earnings falsely inflates estimates of driver earnings under Prop 22.
Estimating net earnings if drivers were classified as employees
We estimated hourly earnings for drivers in a hypothetical scenario, in the absence of Prop 22, where driver earnings would be determined by California employment law. If drivers were classified as employees, they would be guaranteed a minimum wage for total time worked plus any overtime pay accrued and tips.
Estimated Employee Net Earnings: To estimate drivers’ hourly earnings as employees, we used the minimum wage for the locality where the driver was driving and multiplied it by their total work time. We then added tips and summed the results including total work hours for each driver across two-week periods. We subtracted drivers’ required contributions to Social Security and Medicare taxes, and an estimated contribution to their employer-sponsored health insurance, to estimate drivers’ net earnings if classified as employees (with the latter only applying to estimates that assume health insurance coverage). We concluded by calculating average hourly net earnings for each driver/two-week period and determined the median across all drivers/two-week periods as the median hourly wage. It is important to note that while overtime pay is required by California employment law, we excluded it from our calculations under the assumption that rideshare companies may not allow drivers to work overtime. We also excluded bonuses (a term we use to refer to all bonuses, incentives, and reimbursements for canceled rides reported in our dataset) because we believe that rideshare companies are not likely to offer these payments in a scenario where they are required to pay drivers an hourly wage. Both methodological choices result in more conservative estimates of net earnings when drivers are classified as employees.
We conducted a series of interviews to better understand the experiences of drivers, particularly how they believe their work conditions have been impacted by Prop 22. Nine interviews were conducted via phone between May 2, 2022, and July 19, 2022. Given our interest in the racial equity implications of Prop 22, and concern that our driver sample underrepresented drivers of color, we selected interviewees who identified with a race/ethnicity/nativity other than non-Hispanic white and US-born. Our interviewees included people self-identifying as Black, Native American, Latinx, Asian or Pacific Islander, and a white immigrant. Six identified as male and three identified as female. All interviews were conducted in English.
The typical driver earns just $6.20 per hour under Prop 22
Mae Cee has been a driver for both Lyft and Uber in the Bay Area since 2014.2 She transitioned to part-time driving during the Covid-19 pandemic and found work with a biotech start-up, realizing that she had been losing money driving for the apps full-time with a rental car. “The biggest struggle is the day-to-day,” Mae Cee said. “Having food on the table. Being able to pay rent. And the worst part is when you have something that is small to other people, like a parking ticket or speeding ticket, that can derail you for months, and you go into debt.” Like many California rideshare drivers, Mae Cee’s income is low enough to qualify her for Medi-Cal state-subsidized health insurance.
Mae Cee’s experience emphasizes our finding that drivers are earning poverty wages under Prop 22. While drivers had a median gross pay of $26.30 per hour in ride earnings, tips, and bonuses, this fell to just $6.20 per hour after subtracting the cost of key benefits available to employees but not afforded to drivers under Prop 22 (like unemployment insurance, paid leave, driving expense reimbursement, and worker’s compensation, but not including the cost of health insurance). In other words, drivers are losing out on approximately $20.10 per hour because of Prop 22. Their current net hourly earnings are less than the federal minimum wage, which has not been updated in 13 years.
We estimate that drivers who pay out of pocket for health insurance earn even less than $6.20 per hour. Drivers paying the full monthly premium for a Covered California Bronze Plan (the least expensive Affordable Care Act health insurance plan in the state) earn just $3.40 per hour, while those who receive the 82 percent stipend earn $5.70 per hour and those who receive the 41 percent stipend earn $4.60 per hour.
This tiered system of stipends is dependent upon engaged hours that are evaluated quarterly, and it can create confusion for drivers. Drivers may be unsure about whether they will qualify because attaining the required number of engaged hours depends largely on ride assignment by the apps. Drivers can work 60 hours total, but just a fraction of that time counts towards qualifying for a stipend. This may lead to gaps in coverage or unexpected premiums. Yvette, a Lyft driver in Los Angeles, receives a health insurance stipend to pay for Covered California. She began driving during the pandemic when she lost her job at a pet hotel and her insurance. “I had insurance at work, so I added Covered California,’ Yvette explained, “if something happens, I want to be covered.” The first time she tried to qualify for a stipend in 2022, she was 13 minutes short of qualifying for the 82 percent stipend and received the 41 percent stipend instead. During the second quarter of the year, she did qualify for the 82 percent stipend. “I’m on track to qualify for the 82 percent [stipend] for the third quarter,” she said, but she will still have to cover the remaining 18 percent of her insurance premium.
Only 11 percent of our study participants reported receiving a stipend. Forty-one percent of participants are either uninsured or are on Medi-Cal, which is primarily reserved for people 138 percent below the poverty line. These findings are consistent with our previous health care study.
Rather than seeing Prop 22 as an opportunity for better health care by driving full time, Mae Cee warns new drivers, “This is not worth your time and will suck the life and energy out of you. I talk to new drivers like they are about to jump on a drug addiction.”
The wage floor under Prop 22 is just $4.10 per hour
The Yes on Prop 22 campaign promised to provide drivers with a wage floor comparable to the California minimum wage, which is $15 per hour. But, unlike the minimum wage, the wage floor depends upon consumer demand. Drivers are guaranteed 120 percent of the minimum wage only for their engaged time, rather than total work time. Drivers have no control over this amount of engaged time, which is determined by the platforms’ algorithms and rider demand. As a result, drivers spend a lot of time waiting. Drivers in our sample spent 27 percent of their total work time waiting between rides—and none of this time counts toward the Prop 22 wage floor. If drivers had been paid for wait time at the rate assigned under Prop 22 (120 percent of the minimum wage), their estimated net earnings would be $3.70 more per hour.
We found that drivers have an effective wage floor of just $4.10 per hour after accounting for most of the costs they accrue as independent contractors (excluding the cost of health care). For drivers who purchase their own health insurance, this floor falls to just $2.60 per hour. How does this work? Imagine that an uninsured Los Angeles driver worked for 9 hours total, but just 6 hours of engaged time, and drove 90 miles during that engaged time plus another 25 miles to get from their home to an area with more riders, and back to that area after completing each ride. Their gross pay floor would equal 120 percent of the LA minimum wage, or $19.25, for all engaged time (six hours) plus the reimbursement rate for miles driven during the engaged time (90 miles times $0.30). This totals about $142.50 in gross wages for the day or $15.80 per hour for the nine-hour day. To determine their net compensation, we must subtract the costs of independent contractor classification—not having paid sick time, workers’ compensation, full driving cost reimbursement, or unemployment insurance—along with self-employment taxes which add up to $11.70 per hour in expenses on average. The resulting median net pay floor of $4.10 per hour under Prop 22 is dramatically lower than California’s minimum wage in part because drivers are only compensated for engaged time, and in part because they are excluded from basic employment benefits.
Consistent with news accounts, several long-time drivers we interviewed noted a decline in pay since Prop 22 went into effect. Vitali, a San Diego driver since 2017, reported earning $90,000 in gross income while driving between 40 and 50 hours per week in 2018. Since Covid, he says his annual gross income is “dramatically lower,” at about $35,000 or $40,000. Even as demand has recovered with vaccinations, Prop 22 has locked drivers into low pay. “After Proposition 22, they started acting really bad and treating drivers really bad,” he explained.
The Prop 22 standards are so low that drivers rarely, if ever, receive a bump in their pay to bring them up to the floor. Within our dataset, we observed only four instances in which a driver earned below the wage floor set by Prop 22 and received a pay adjustment. J.K. Wong, a driver for Lyft and Uber in the Los Angeles area, said, “It’s so low that what they are paying you, [your earnings] are always over that amount. There’s no way with Lyft I will ever get a [pay adjustment].”
Drivers would earn nearly $11 more per hour if they were classified as employees
Under Prop 22, drivers miss out on employment benefits like a minimum wage for total work time, paid sick time, driving expense reimbursements, unemployment insurance, employer-sponsored health insurance, and worker’s compensation. Even if we do not account for the cost of health insurance, these lost earnings and benefits cost drivers about $10.50 per hour. In other words, a typical driver would earn up to three times more if classified as an employee. These losses add up over time: a driver working 40 hours per week would earn up to $21,840 more in earnings annually if classified as an employee, even if they do not purchase health insurance.
Drivers who purchase health insurance through Covered California, and do not receive a health care stipend from Uber or Lyft, lose $12.30 per hour in missed wages and benefits compared to earnings for a driver classified as an employee who receives employer-sponsored health insurance. A full-time driver who currently purchases health insurance through Covered California would take home up to $25,670 more per year in net earnings as an employee.
Drivers in our study would take home $15.70 per hour in net earnings (including tips) if they were classified as employees and purchased employer-sponsored health insurance. Drivers classified as employees who do not have employer-sponsored health insurance would earn $16.70 per hour in net earnings. If drivers continued to receive bonuses as employees, they would take home $21.90 per hour in net earnings (excluding health care costs). The minimum wage in California ranges from $15.00 per hour to $17.68 per hour.
While this wage is dramatically more than drivers currently earn under Prop 22 and compares to the California minimum wage, it is not necessarily sufficient to ensure economic security. Participants in our study reported having difficulty making ends meet even when working in jobs with similar or higher wages. Eustace, a driver in the Central Valley, had been earning $22 per hour as a school bus driver. Still, he began driving for Uber and Lyft in 2016 to supplement his income and help pay bills.
Although properly classifying drivers as employees entitled to California’s minimum wage will not ensure economic security for all workers, it is a necessary step to achieving that goal. In addition to repealing Prop 22 to provide basic employment rights to drivers, their collective bargaining rights must also be recognized at the federal level, allowing them a voice in setting wages high enough to provide for themselves and their families without needing to work multiple jobs.
Rideshare work has become less flexible and more controlled by rideshare companies under Prop 22
The messaging of the Prop 22 campaign asserted that being classified as employees limited workers’ flexibility and that a “yes” vote would allow app-based workers to maintain their own schedules and “be their own boss.” Under California law (AB5), workers can only be classified as independent contractors if they "[perform] services without control or direction from the company.” But following the Prop 22 vote, app-based companies rescinded many of the features that previously offered drivers some control over the services they perform (like the ability to filter out low-paying rides or to see destinations before accepting).
Our interviews identified three critical ways that Prop 22 diminished drivers’ control over their work:
1. Drivers must work irregular or longer hours to make equivalent earnings
Flexibility is “definitely what’s communicated,” according to Josiah, a driver in Los Angeles. “But in order [to scrape] by, you have to work when there are bonuses late at night, early morning, or very busy traffic hours.”
Serhii, a driver in the Bay Area, stated, “I was driving less in 2020, five hours per day. Now I drive eight to 10 per day, 40 or 50 a week, sometimes more if it’s busy. I need money right now to pay off bills…The money I make is really little, and with the gas prices I don’t feel it is worth it.”
2. Drivers must accept more rides
Serhii noted that during the pandemic in 2020 he was able to make $1,000 or $1,500 per week by driving a few hours and waiting for rides. After Prop 22 passed, Uber changed its pay formula on surges. While the platform originally would offer drivers double, triple, or quadruple the base rate for picking up fares in “surge” zones based on customer demand, they moved to offering flat bonuses, adding one, two, or three dollars to the driver’s earnings. The company also stopped providing information about trips before drivers accept rides. “I have to [accept] at least five out of 10 [rides] in order to see [the trip destination],” explained Serhii. “Before I didn’t care, I could make three times more and now I have to work eight to 10 hours a day.”
While the low wage floor compels drivers to filter for rides that will pay more, the algorithm that determines ride assignment seems to discourage drivers from being selective. J. Gaeta, a driver and delivery worker in Los Angeles, notes, “They say you have a choice about what trips to accept but, if you don’t accept, they start giving you less lucrative rides.”
J.K. Wong explained that Lyft now requires drivers to accept a certain number of rides to attain a premium status. With that status comes improved information about the passenger’s destination and expected earnings for the trip. “Up until April,” J.K. said, “driver status was evaluated every three months. Now it’s monthly. They increased the points [you must have to earn premium status] and limited the hours you can drive [to earn those points].”
3. Drivers depend more on tips and bonuses to supplement their earnings, which can fluctuate dramatically depending on demand
Yvette said that during the pandemic, “There [were] not enough drivers so we were getting bonuses but, now that we have more drivers, we’re not getting bonuses. After Prop 22 they were doing bonuses but, now that we have a lot of drivers, I notice it’s not as busy anymore.”
Javonne, a driver in Los Angeles, works approximately 55 hours per week. Since gas prices have gone up, she works either early morning or late evening to avoid sitting in traffic. But during these hours she says, “It’s hard to get the bonus. Sometimes there isn’t any out there. I get frustrated sitting in traffic on the 405 or 101. Some people have probably mastered it, but I just want to pay my bills.”
Prop 22 deepens racial inequities
Across California’s overall workforce, workers of color earn just 63 percent of the wages earned by their white counterparts—largely caused by “occupational segregation” or being crowded into jobs that pay less and are undervalued economically. Prop 22 depresses the earnings of all rideshare drivers regardless of their race/ethnicity. But because more workers of color are rideshare drivers and thus disproportionately subjected to Prop 22’s “new racial wage code,” Prop 22 is increasing racial inequities in earnings in California.
Some drivers we interviewed suggested that they may face racial discrimination on the job as well. For example, J.K. Wong believes he has faced ride cancellations because of anti-Asian discrimination. He says passengers will cancel, and then ping him again repeatedly. Although he knows the passenger will continue to cancel the ride, he feels forced to repeatedly accept rides from the same passenger to maintain his status and access bonuses.
Racial disparities are well documented in other professions that receive subminimum wages and rely on tipping and bonuses to supplement their income. Black women restaurant workers, for example, earn up to $5 less per hour than their white male counterparts.
Uber and Lyft have refused to make public their algorithms for determining ride assignment and commission. This severely limits independent investigation into the causes and severity of racial inequities, and their remedies.
Lost access to employment benefits, like health care, under Prop 22 may also increase racial disparities: Latinx driver participants in our previous study were most likely to be uninsured. Twenty-five percent of Black respondents lacked health insurance compared to 13 percent of white respondents.
Javonne, who is Black, is among the uninsured. She became an app-based driver during the pandemic when she was laid off from her job as a public bus driver for the City of Gardena, which is near Los Angeles. To make do, she said, “I just take vitamins and be cautious of who is out there.”
“When you go in fear you create stress,” explained Javonne. She had to emphasize the importance of masking to her passengers. “I expressed to riders that…if we catch something [in the car] we can’t find each other.”
Employee classification would promote racial equity by requiring that Uber and Lyft pay their workforce a higher wage. We estimate that white rideshare drivers in our sample would earn $17.00 per hour while drivers of color would earn $16.60 per hour, excluding health care costs.
The path forward: toward equitable app-based work
Prop 22 threatens to set a dangerous precedent by allowing corporations to write and pass legislation that protects their profits, at the expense of workers and consumers, while undermining the creation and sustenance of the quality jobs that are critical to delivering economic security and prosperity. Allowing Prop 22 to stand in California, and to be replicated in other states and economic sectors, would worsen labor conditions and weaken labor power for workers across the economy. It also contributes to racial inequities, given the demographics of rideshare drivers. Advocates have deemed the law, “the most radical undoing of labor legislation since Taft-Hartley,” which dramatically restricted workers from unionizing.
However, the precedent has not yet been set. Current legal challenges against Prop 22 and duplicate legislation in other states are pushing back against the erosion of worker protections. To improve working conditions for rideshare drivers and build an equitable labor market in which all workers have access to the resources they need to thrive, we recommend four broad policy priorities:
- Ensure all workers, including app-based workers, are covered by full labor and employment rights and protections, including a living wage, the right to organize their own unions, and the right to collective bargaining. Such provisions should be included in any labor-related legislative proposals, such as the Protecting the Right to Organize Act, and should impose strict penalties for union-busting efforts. These changes will improve job quality and increase worker power for app-based workers and workers across all sectors.
- End the widespread abuse of independent contractor status to misclassify workers and deny them full labor rights. Workers need legislative action that prevents employers from using misclassification to deny access to minimum wage, health insurance, paid sick leave, family leave, and other key employment rights. In California, this requires the immediate repeal of Prop 22. As this study demonstrates, the promise of Prop 22 to make up for lost employment benefits has failed workers. The federal government should also pass legislation to protect against misclassification. The “ABC test” described in California’s AB5 Bill, and a standard for many states across the country, could serve as a model.
- Require app-based companies to make their algorithms transparent to workers and public agencies to prevent discrimination and other harm to workers. Drivers and public agencies are entitled to know how rides are assigned and other app-based decisions are made (like bonus assignment) to ensure fairness in ride assignment and compensation as well as prevent discriminatory impacts for protected classes of workers. Public agencies should also have regular access to anonymized trip datasets to ensure effective regulation, similar to requirements passed in New York City.
- Increase worker control and autonomy over personal data collected while on the job. Policies should be enacted that give app-based workers more control over how their personal data may be used and grants them access to the data that companies collect from them while they are on the job. Drivers should also have increased access to crucial, real-time data that affects their work, like passenger destinations and fares.
Two years after spending record amounts of money on a campaign to exempt themselves from California employment law, the real costs of Prop 22 are clear: Uber and Lyft now legally pay their drivers poverty wages. Rather than offering flexibility, Prop 22 allowed the companies to exercise greater control over their workforce, which compels drivers to spend more time on the road while earning less. This exacerbates racial inequities by compensating a workforce, that is disproportionately comprised of people of color and immigrants, with subminimum wages and second-class employment rights.
Employee classification would require rideshare companies to follow minimum wage laws and provide health insurance, overtime, expense reimbursement, unemployment insurance, and other employment benefits. Drivers would be able to voice their concerns about how their industry operates, with the ability to form unions and bargain collectively for a living wage and improved conditions.
Laws and regulations demanding greater transparency in transportation platforms’ collection of data, and how that data is used, would further empower drivers, protect against discrimination, and help regulators to ensure that app-based transportation companies meet public needs.
It has been said, “As California goes, so goes the nation.” In the case of Prop 22, policymakers across the country must ensure that this does not happen. As Uber and Lyft attempt to pass duplicate legislation at the state and federal levels, policymakers must protect full labor rights for all workers, including rideshare drivers. This must also include regulations around data collection that promote democracy in the workplace. Our responsibility is to end the current tiered and racially unjust labor system and create legal frameworks that give all workers the resources they need to thrive.
The authors thank Michelle Huang of PolicyLink, Nicole Moore and Tyler Sandness of Rideshare Drivers United, Hays Witt and Matt Schumwinger of Driver’s Seat Cooperative, Ken Jacobs of the UC Berkeley Center for Labor Research and Education, and the 55 drivers who participated in this study for their extensive contributions to this research. The authors also thank Gabriel Charles Tyler of PolicyLink and Claire Comiskey for their communications support as well as Diamela Cutiño for providing photography to bolster the report and its release.
*Brian Dolber is an associate professor of communication at California State University San Marcos, and an organizer with Rideshare Drivers United. Rideshare Drivers United is an independent association of US rideshare drivers who’ve come together to demand higher pay and workplace rights for all rideshare drivers.
1 This is known as the ABC test, which is used to determine whether a worker is an independent contractor or an employee in 27 other states. The test is not new.