Do you want to earn less than minimum wage? Drive for a ride-sharing company in California

The California Supreme Court recently heard oral arguments in a case that could invalidate all or part of Proposition 22, the 2020 ballot measure that addressed the working conditions of rideshare drivers in the state who are part of the new “gig” economy. “. The court’s decision, expected in late summer, could reopen heated political debates over fair wages and benefits for California’s hundreds of thousands of ride-hailing and delivery drivers.

These types of debates require reliable data. We recently published an analysis of more than 52,000 delivery and passenger trips taken by more than 1,000 drivers in the San Francisco, Los Angeles, Boston, Seattle, and Chicago metropolitan areas. It is the most comprehensive independent study of working conditions yet to be conducted in this industry.

Our evidence shows that drivers earn well below the applicable minimum wage in each of these urban areas. Many California voters thought they were improving the situation for drivers by passing Proposition 22. They were wrong and possibly misled.

Opinion

Our research takes into account all drivers’ working time and all their expenses. In every metropolitan area we studied, drivers earn well below the minimum wage. In California, for example, rideshare drivers for companies like Uber and Lyft take home $7.12 per hour in average net hourly earnings before tips, a fraction of California’s $16 minimum wage. Tips only add another $2 per hour. By comparison, drivers in the other regions we studied earned an average of $10.62 per hour (better, but still not a living wage in any major U.S. city) and below the minimum wage in each of the cities we study.

When we take into account all the employee benefits and taxes that drivers, as independent contractors, must pay for themselves, California Uber and Lyft drivers took home an average of $5.97 per hour before tips . Pay for delivery service drivers for companies like DoorDash was even lower.

When voters approved Proposition 22, no such data was available. In the intervening years, other approaches to raising driver pay, such as the minimum compensation policies of New York City and Seattle and a law enacted in Minnesota just this week, show that the industry can indeed pay drivers a higher salary when required by law.

The story continues

App companies claim that drivers should not be paid when they are between trips. But when drivers return to hubs from outlying areas and wait for deals, they are providing an important service for businesses: They are available at very short notice for a ride or delivery. They should be paid for all the time they work.

App companies also claim that most drivers work only a few hours a week, so their expenses consist only of refilling the tank. But most trips are made by drivers who work 20 hours or more per week and drive more than 10,000 or 20,000 miles per year. Your vehicles are suffering from wear and tear and will need to be replaced. These drivers’ expenses include the cost of replacing their cars, as the Internal Revenue Service recognizes when it sets standard employee reimbursement rates for the business use of personal vehicles.

Our study suggests a course correction is necessary for drivers to enjoy the protections California has enacted for all workers in the state. Unfortunately, Proposition 22 requires a 7/8 majority of the California legislature to make changes to its provisions. This is, by design, too high a hurdle to overcome.

The industry is currently pursuing Proposition 22-type ballot initiatives in several other states. California’s example should serve as a warning to voters here and elsewhere about the dangers of allowing corporations to write the laws that govern their industries. Workers are losing and the government can no longer intervene to help them.

Ken Jacobs is co-president of the Center for Labor Research and Education at the University of California, Berkeley. Michael Reich is a professor of economics at UC Berkeley and co-chair of its Center on Wage and Employment Dynamics.