Uber and Lyft drivers earn less than $7 an hour after California law passed, driver-led study finds

By Levi Sumagaysay

Taxi drivers in California make about $6.20 an hour under a law approved by voters in the state a few years ago, according to a report released Wednesday.

Proposition 22, which is in legal limbo after a court ruled it unconstitutional last year, promised gig workers 120% of the state minimum wage, among other things. But according to the report compiled by the National Equity Atlas and Rideshare Drivers United, which the groups say is the first driver-led study using directly collected income and working conditions data to assess the impact of Prop . 22, the reality falls far short of this promise.

“The ride-sharing companies and DoorDash were throwing millions of dollars at it, but not at me,” Dominique Smith, a driver for Uber and Lyft in the Bay Area, said at a press conference Tuesday. “I definitely wasn’t a Prop. 22 fan to begin with, and I’m definitely not a fan after that.”

The effects of the California law backed by Uber Technologies Inc. (UBER), Lyft Inc. (LYFT) and other gig companies like DoorDash Inc. (DASH) are significant and potentially far-reaching as companies attempt to expand the Prop. 22 or something similar — what Uber has dubbed the “independent contractor-plus” model — to other states and countries. In addition, the report cites data from the Bureau of Labor Statistics which showed that in 2019, the number of American adults who worked as taxi drivers or drivers for their main job had tripled over the past decade, coinciding with the rise of Uber and Lyft.

The report is based on data from nearly 12,500 rides made by 55 drivers for Uber and Lyft, the two major ride-sharing companies, over more than a month in 2021, although the revenue analysis is based on a sample. even smaller of 21 drivers for whom the researchers had enough data. The median gross pay for drivers, including bonuses and tips, was $26.30 an hour, according to the report. To arrive at the median net hourly wage, the authors of the report took into account the hours worked by the drivers, as well as the benefits they would be entitled to if they were considered employees, such as reimbursement of driving expenses, l unemployment insurance, leave and workers’ compensation. Because some, but not all, drivers are eligible for health insurance benefits under Prop. 22, this has been excluded from the calculation. “Drivers are losing about $20.10 an hour because of Prop. 22,” the report’s authors wrote.

Uber and Lyft criticized the report and offered numbers from studies they supported.

“This is a flawed survey that is unrelated to the experience of drivers in California,” a spokeswoman for Lyft said. “With record unemployment and over a million unfilled traditional job openings in California, drivers wouldn’t continue to choose this job if there was any truth to these findings.”

Lyft’s own economic impact report reveals that 92% of Lyft drivers support “a policy proposal under which drivers would remain independent contractors” and receive some benefits, but not all benefits.

An Uber spokesperson also called the survey “flawed” and added, “Looking at the same dates in 2021, across the tens of thousands of active drivers on the platform, the median gross earnings on Uber in California were over $30 an hour for all time spent online, significantly higher than they claim.”

The period covered by the driver-led report was from Nov. 1 to Dec. 12, 2021, in a quarter in which Uber and Lyft saw revenue increases and said their businesses had recovered from highs linked to the coronavirus pandemic. Additionally, carpooling fees per mile increased more than 35% year-over-year during this time, according to YipitData inbound data.

Lyft’s spokeswoman mentioned the benefits construction workers are entitled to under Proposition 22, such as quarterly health care benefits and workers’ compensation insurance. Uber’s spokesperson and spokesperson for the coalition that represents gig businesses, Protect App-Based Drivers + Services, cited an industry-backed survey by UC Riverside’s Center for Economic Forecasting & Development , which found that drivers made an average of more than $34 a year. hour.

Smith, the Bay Area driver, said that despite driving full-time or nearly full-time, he “doesn’t have the capacity to make the strict quotas to receive the allowance.” In an interview after the press conference, he said “only a certain group of drivers can qualify. They have the bar high.”

But Chris Hoytt, a Sacramento driver who has carpooled in the Bay Area and elsewhere in California for the past eight years and was on Lyft’s driver advisory board, said if Lyft drivers work on average at least 15 hours per week, they are entitled to a partial allowance.

Hoytt, who said he voted for Prop. 22, also said he drove for Uber on Tuesday for about 3.5 hours and made $130.

“The money is there to be made,” he said. “How you do it and how you go about it is really important.” He acknowledged, however, that each driver has different circumstances. For example, he said “some people rent cars. How much do they pay for it?”

The report also found that ride-sharing work has become “less flexible and more controlled” by ride-sharing companies under Prop. 22. This is partly because of the changes companies have made since Prop. 22, like Uber changing the compensation formula. for surges, according to the report. Drivers interviewed for the report said that to try to earn as much as before, they had to work irregular or longer hours, take on more rides and rely more on tips and bonuses.

“It’s not about flexibility,” Nicole Moore, president of Rideshare Drivers United, said at Tuesday’s press conference. “It’s about allowing companies to pay less than the minimum wage.”

The report’s authors also pointed out that their findings show that Prop. 22, which was approved by 58% of California voters in 2020, contributes to racial inequality due to the demographics of rideshare drivers. Of the 55 drivers whose data was collected for the report, 71% were people of color and immigrants, said PolicyLink’s Eliza McCullough, who was one of the report’s authors.

The National Equity Atlas is a research partnership between PolicyLink and the University of Southern California Equity Research Institute. Rideshare Drivers United is a workers’ group that says it has more than 20,000 members in California.

Also: Uber and Lyft drivers say new California law doesn’t solve their health care needs

-Levi Sumagaysay


(END) Dow Jones Newswire

09-24-22 1240ET

Copyright (c) 2022 Dow Jones & Company, Inc.

Comments are closed.