The Great Wage Theft

Uber, Lyft and DoorDash have spent $47.5 million each on Prop. 22. It’s a cheap price compared to what they owe

Uber’s CEO Dara Khosrowshahi was paid a total of $42.4 million in cash and stock in 2019. That’s not bad for a company that’s never shown a profit since going public. Of that, just $1 million was called “base salary,” while $2 million was “reimbursement for work-related expenses.”

That’s a far cry from what Uber drivers and other gig workers receive, which is absolutely nothing.

That lack of reimbursements is the reason why a 2018 study from the Economic Policy Institute found that “Uber driver ‘no benefits’ hourly wage or discretionary

compensation … falls below the mandated minimum wage in nine of 20 major markets, including the three largest (Chicago, Los Angeles and New York).” That’s a far cry from Uber’s claims that its drivers make an average of $25 an hour.

Uber and Lyft are trying to preserve their subminimum-wage business model via a high-priced campaign to exempt themselves from California labor law via Proposition 22 on the Nov. 3 ballot. Their lead argument is to preserve the illusion of drivers as independent business owners with “flexibility” and “freedom.”

But there’s just one problem.

“Freedom doesn’t pay the bills. Flexibility doesn’t pay the bills. A minimum wage pays the bills. A living wage pays the bills,” says Torrancebased Jerome Gage, an organizer with the Mobile Workers Alliance. “This is something I could see myself doing for the next few decades,” he told Random Lengths, “In order to do this, I need better working conditions, I need a minimum wage, I need health insurance, I need sick leave. Those basic, basic things are things I’m asking for. And that’s what’s at stake this November.”

“The entire gig economy is essentially based on a scam … designed to minimize pay for labor — often below minimum wage and sometimes so deceptive that workers don’t notice that they lose money rather than earn money,” Edan Alva, a driver, leader and organizer with Gig Workers Rising told Random Lengths. “At the same time all the costs and expenses are being put on the workers, and the risks that are associated with the work.”

“In the beginning, sort of a honeymoon phase, I really didn’t see the flaws in the business model,” Gage said.

But that changed after he became a full-time Lyft driver in 2016.

“I realized that I was being given the short end of the stick,” he said. “I was in charge of so many expenses for operating the vehicle, and Lyft was not taking responsibility for any of it.

“When the pandemic started, it made all of the shortcomings worse. I found myself without work, without unemployment insurance, without healthcare, and all this stems from Uber and Lyft’s refusal to properly classify [its] drivers as employees.”

As with port truckers, their condition could well be described as “sharecropping on wheels”: doing piecework with the illusion of ownership and the reality of political powerlessness, along with limited earnings and the possibility of going into debt.

“You will definitely see that pattern in this industry as well,” Gage said. “Drivers are responsible for everything that costs money, while Uber and Lyft control how drivers make money.”

“Gig corporations are machines to convert labor’s work into profit for billionaires, while leaving the worker with almost nothing: no protections, no ability to advance, no ability to save, barely the minimum they need to exist,” said Alva, who’s driven for Lyft since 2014. “If there’s any unexpected expense, that immediately puts the worker at a potential financial ruin, potentially losing the roof over their head. And, I’m talking about little things that most people could cope with very easily — like a flat tire, a cracked windshield — things that happen a lot; a mechanical failure in the car, things happen a lot when you drive that much. Any one of these, when you earn that little, can derail people’s life.”

The divide between Uber’s $25 per hour

Lyft driver and Mobile Workers Alliance organizer, Jerome Gage. Photo by Raphael Richardson

fantasy and the grim reality Alva describes is typical of today’s gig economy. A recent UC Santa Cruz study of San Francisco gig workers found that “as much as 20% [of them] might be earning nothing when all expenses are accounted for,” while 15% rely on some form of public assistance and over one-fifth have no health insurance.

But if Uber and its corporate allies — Lyft Instacart, DoorDash and Postmates — have their way and Prop. 22 becomes law this November, that vast divide will only deepen, become permanent and spread to encompass more and more workers in the years ahead.

In addition, a study from the UC Berkeley Labor Center found that if their drivers had been treated as employees, Uber and Lyft would owe $413 million in unemployment benefits from 2014 to 2019. As a result of this non-payment, tens of thousands of drivers who lost work because of the pandemic were ineligible for unemployment insurance.

Uber and Lyft claim that Prop. 22 benefits workers, but there’s nothing to back that up, said Barbara Smith, of the National Employment Law Project, a co-author of the recent report, Rigging the Gig: How Uber, Lyft, and DoorDash’s Ballot Initiative Would Put Corporations Above the Law and Steal Wages, Benefits, and Protections from California Workers.

Gig Workers Rising organizer and leader, Edan Alva. Photo by Hanna Spongberg

Uber and Lyft both initially invested $30 “What people need to know first about Prop. million in trying to pass Prop. 22, which is 22 is that this is an initiative that was bought and peanuts compared to the $630 million in back paid for by the gig companies and it is entirely wage claims filed by more than 2,500 Uber and written in their interests, not in the interests of Lyft drivers as of April 16. The number of claims workers or consumers or even the government,” had doubled by the time the California Labor Smith told Random Lengths. “They in fact have Commissioner Lilia García-Brower stepped in to written into the initiative that they will more sue on their behalf on Aug. 5. or less never have to bargain with a workers

“The Uber and Lyft business model rests on organization. They can just write their own the misclassification of drivers as independent ticket. For the state to pass anything that looks contractors,” she said in a press release. “This like collective bargaining they would need an leaves workers without protections such as paid impossible 7/8 majority. So, the companies are sick leave and reimbursement of drivers’ expenses, not listening to workers and they have not written as well as overtime and minimum wages.”

this in the interest of workers.”

This stands in stark contrast to past claims, she noted.

“Last year when gig companies were trying to get an exemption from AB-5, the CEOs of Uber and Lyft wrote an op-ed in the San Francisco Chronicle saying that they wanted there to be a workers organization to negotiate on behalf of workers,” Smith recalled. “So, the initiative shows what they really want.”

The disconnect was even deeper than Smith indicated.

“I absolutely hope that a lot of the conversations about more aggressive [wealth] distribution will become more than discussion and become reality,” Uber CEO Dara Khosrowshahi said at the Concordia Summit in New York City in September 2019, as reported by the Observer. “It is up to society and governments to correct it.”

But now, Khosrowshahi’s company has spent $47.5 million (through Sept 4) and counting to ensure that never happens. Most egregiously, the company pays nothing into Social Security or Medicare — the nation’s two largest social insurance programs — and Prop. 22 would ensure that it never will.

The second thing people need to know is how little it offers.

“The initiative is either a collection of things that are one, totally absent, two, things that are already obligations under law — like background checks — or three, promises that are wholly or partly illusory,” Smith said.

Their banner headline promise, for example, is 120% of the applicable minimum wage.

“It would not pay workers for the time that they spend waiting for a ride, which in a couple of the studies can be 20 minutes out of every hour or more,” Smith said. “That’s how they degrade labor standards and we calculated that workers could lose up to $500 a week in pay just because they’re not being paid for all hours worked.”

“I’ve had hours at a time where I didn’t have a passenger in the car,” Alva confirmed. “So basically, no pay for that.”

In fact, a recently-completed UC Berkeley Labor Center study found that “After considering multiple loopholes in the initiative, we estimate that the pay guarantee for Uber and Lyft drivers is actually the equivalent of a wage of $5.64 per hour,” according to the press release, reflecting unpaid hidden costs, including unpaid waiting time, underpayment for driving expenses and unpaid payroll taxes and employee benefits.

It went on to note: “Harry Truman was president the last time the inflation-adjusted value of the minimum wage was that low. Indeed, the real level of the pay guarantee is about one third of the required minimum pay for drivers under New York City’s new driver pay standard.”

The linchpin of the pro-Prop. 22 argument is that making gig workers employees would eliminate flexibility. But flexibility is “largely illusory,” Smith said.

“Most of the work on the platform is done by full-time workers,” Smith said. “So, there’s nothing flexible, or any more flexible about that than there is for any other full-time workers.”

In fact, the UC Santa Cruz study found that 50% of workers worked more than 40 hours — meaning they worked overtime hours without overtime pay, yet another form of wage theft that Prop. 22 would legalize. And 30% work more than 50 hours.

“[Part-timers] already — in order to make money — are working peak hours and are in fact harassed with in-app messages, even when they have the app off warning them to work when the company wants them to work. So they have in reality what becomes very little flexibility,” Smith said. “There is no law on earth that prevents them from offering flexibility to workers. They can, and should, and likely will offer flexibility to workers [if Pro. 22 fails], because they’ll be asking for part-time workers during peak hours, and at the same time, workers can have baseline labor standards and core benefits.”

“Lyft and Uber benefit from flooding the market with drivers because that increases the availability for the clients to get used to the fact that Uber/Lyft means immediate service,” Alva said. “That means that there are all these hundreds of thousands of drivers out there who are sitting in a car and not having work because there are simply too many drivers on the road compared to the demand and all these people are not being paid yet Lyft and Uber are definitely benefiting from their existence. And that is outright labor theft, what these companies are doing.”

As Alva describes, unpaid driver wait time is central to the Uber/Lyft business model. And, the companies know it. In its initial public offering documents, Uber even said so.

“The fact that they are portraying themselves as protecting drivers in any way, shape or form is ridiculous,” Alva said. “All they’re doing is thinking of their bottom line. They invested $200 million [a recently reported figure — official figures topped $180 million through Sept. 4] to protect their bottom line, to prevent drivers from having any rights and to prevent drivers from organizing. And, no company that cares about people in any way would do all that. It’s such a predatory, obnoxious, exploitative business model — it sort of almost hurts me to call it a business model, it’s just theft. It’s theft on a grand scale.”

But the gig companies behind Prop. 22 aren’t just stealing from several hundred thousand workers.

“Over time whole communities are affected by this,” Alva pointed out. “It’s not just the worker, it’s their families, as they face financially the cost of homelessness, where they live, the cost of unpaid hospital bills where they live. Workers like me — I actually had that situation — when they get sick have a choice between literally losing the roof over their head or continue to drive while being sick, which was my choiceless choice when it happened to me. And, that means it also puts the public at risk. So, it’s a horrible public health policy to allow it to happen.”