By Eliza McCullough, Brian Dolber,* Justin Scoggins, Edward-Michael Muña, and Sarah Treuhaft
September 2022
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.
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