November’s Prop 22, the most deep-pocketed Proposition in California’s rich referendum history (with a war chest of $184 million on the ‘yes’ side alone; about $10 million for the ‘nos’), seeks to carve out a peculiar, special niche in employment law for app-drivers engaged by Uber, Lyft and others.
Why, you might reasonably ask, would these tech giants underwrite this idea so heavily? The obvious answer, remarkably, is that it’s worth a Lot more than that to them if they win. It’s an investment. As historians are fond of saying: “every empire was built on the backs of SOMEbody.” In the gig economy, those empires are the Prop sponsors, and the backs belong to their drivers. They are hoping you’ll be fooled into protecting those fiefdoms, and making that investment pay-out like a Trumpian casino.*
There are actually two different brilliant ideas that form the ride-sharing industry’s economic foundation. First, they’ve revolutionized urban transportation by replacing taxicab dispatchers with The Web. Second, they’ve con-vinced individual drivers to work for them while bearing the great majority of the companies’ direct operating costs.
Expenses of car ownership, registration, insurance, gas, oil, tires, maintenance and repairs, potential liability – all these are borne by the drivers, workers whom the Techsters classify as Independent Contractors. Legally, they are treated the same as your kitchen remodeler or plumber – except in this case, the kitchen guy would be supplying those cabinets and appliances for free.
Economists call this “marginal cost pricing” of the drivers’ services, and it is found on the road to ruin for those workers. As a ‘side-hustle’ (what a ‘with-it’ term for such a servitude!), they are tempted to ignore all those “fixed” and other costs they are bearing, and focus on the pocket change they collect for the work. ‘But here’s the deal,’ marginal cost pricing Never works out – according to a recent Economic Policy Institute study, the average actual pay (net of expenses) of app-drivers is $10.87/hour. That’s less than 90% of earners nationwide; the state-wide minimum wage in our fair California is currently $13/hour – headed for $15 in 2022 and higher now in many cities.
It should also be mentioned that only employees, and not contractors, are protected by important “safety net” items like traditional unemployment compensation, workers comp if they are injured on the job**, anti-discrimination laws, and overtime pay. Those drivers can’t even legally organize themselves to seek better wages – only “employees” may unionize.
So, why Prop 22? It seeks to overwhelm both the CA Supreme Court, the state legislature and tax base by legitimizing the Tech Titans’ practice of scoff-lawing the CA Labor Code. Because of the unanimous, 2018 ruling of the CA Supremes in the Dynamex appeal, it is blindingly obvious that these driver/workers are properly treated as employees under the so-called ABC test announced in that case.
But Court rulings are not self-enforcing, so the legislature ‘codified’ the ABC test in 2019, passing Assembly Bill 5 (AB5) despite a tech/gig lobbying onslaught in opposition. Uber and Lyft, though, are still stuck in ‘Park’ – refusing to re-classify, and running-up gargantuan Labor Code liabilities under lawsuits brought by the State to force compliance. Those fines alone could easily swamp the Prop 22 war chest.
Giving these devils their due, Prop 22’s Emperors do seek to convey a weakened menu of employment-type ‘benefits’ to their indentured serfs. But those part-way measures are pregnant with an admission – if you’ll go part way, it’s an acknowledgement that those bennies are legitimate. And if so, why not go all the way to treating these workers as what they certainly are: employees.
The move-fast/break-things crowd makes much of two arguments: 1 – that ‘flexible’ shift work is not possible under CA law, and 2 – the drivers prefer the current regime.
As to 1, that conclusion is clearly false under the Labor Code. Flexible shifts are nowhere forbidden, and are not uncommon. What may become more difficult is so-called “double-heading” – driving for both companies simultaneously, which some drivers do. Those difficulties are manageable, though – after all, each trip will only be for one company except in vanishingly unique circumstances.
As to 2, the companies are relying on internal surveys, using biased questions, after seeding the workers with argument 1. The media commercials are rife with cherry-picked workers – it’s a good bet that those folks were paid much better for their testimonials than for their driving.
Moreover, in the Big Picture, Uber and Lyft are just buying time until they need no drivers – at all. Self-driving cars are their future – if they can just keep bending their drivers’ backs for a few more years, they will be able to discard them by the road, all together – just so much litter.
And in the Very Big Picture, this Proposition is one more brick in the wall that has separated American workers from raises in inflation-adjusted ‘real’ wages and living standards for the past forty years. The hollowing-out of the American middle class is a well-documented phenomenon – this Prop only deepens the pot hole we’re in.
If the Prop fails, will Uber rides cost more? Yes indeedy, although many factors will determine the increase, and such Lyfts will still cost comfortably less than taxis. Innovation is a Good Thing, but every business must pay its way – complying with law in every application. Neither are these behemoths tiny start-ups in need of a temporary, uh, lift – they are $multi-billion global Caesars convinced that their lucre can forestall any day-of-reckoning.
Vote NO on 22 – let the Tech Bros know that you won’t be bought, and that nobody rides for free.
* Any regular readers of this irregular blog will know that I could never complete an entire tome without heaping scorn on the incumbent – whose several bankrupted casinos seem to have rewarded their gamblers (if not their creditors) only too well.
** Of course, Your employer pays handsomely into those central ‘kitties’, out of which out-of-work/injured workers draw compensation. Uber and Lyft – not a farthing for their drivers.
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