Have you taken an Uber or a Lyft lately? What do you know about these two app-based ride-sharing giants and the gig drivers who are only a click away to take us wherever we want to go?
Well as you may – or may not – have expected, the companies are making a killing; the drivers not so much.
Uber cleared $1.1 billion in 2023 and its second quarter growth in 2024 “continues to hum, delivering our sixth consecutive quarter of trip growth above 20 percent, alongside record profitability,” according to the company CEO. Lyft’s growth was somewhat slower, but still nothing to sneeze at. And the drivers? Well, let’s dig into that.
Some Background
Uber and Lyft drivers are considered independent contractors; and as they are not considered employees, they are not covered by most employment and labor laws, including the Fair Labor and Standards Act (FLSA).
They are not typically eligible for employee benefits, such as health insurance, retirement plans, paid time off, or sick leave. They are responsible for securing and funding their own benefits. Nor do they have access to unemployment or traditional workers’ compensation insurance.
The Gridwise Gig Mobility 2024 Report contains lots of interesting data about gig drivers and drivers across different platforms (e.g., rideshare, food, grocery, and package delivery). Here are a couple of tidbits to whet your appetite:
- A significant portion of gig drivers are relatively new to this type of work.
- Men outnumber women as rideshare drivers, with women twice as likely to note “concerns about safety” as their most disliked aspect of gig-driving.
- In the past year, there has been a marked decrease in the monthly average gross earnings of drivers, with Uber drivers seeing the sharpest year-over-year decline (-17.1%). Uber drivers also log more hours.
- Breaking the record for the most rideshare trips in a day, on February 11, 2024 a Lawrence, Kansas Uber driver completed 22 rides between midnight and 5am before taking a break, then completing another 50 trips from 11am to midnight. That’s exhausting to even think about.
- The year’s priciest rideshare journey covered a whopping 275 miles, stretching from Los Angeles to Las Vegas. At a price tag of $1,277.45.
Some History in Massachusetts
In July 2020, Massachusetts Attorney General Maura Healey filed suit against Uber and Lyft in the Suffolk Superior Court– basically stating that under Massachusetts Wage and Hour Laws, the drivers are employees of Uber and Lyft, not independent contractors. And that the companies misclassify their drivers as independent contractors, rather than employees, in order to realize significant cost savings.
The trial was ongoing until June of this year when Attorney General Andrea Campbell settled the lawsuit with a deal that provides rideshare drivers with a guaranteed minimum wage of at least $32.50 per hour, covers a portion of their health insurance premiums, and gives them a chance to earn sick time. It also levied $175 million in penalties for the two companies.
Uber and Lyft got what they most wanted – no admission that their drivers are, in fact, employees. The two companies also agreed to withdraw a ballot question that would have enshrined drivers’ status in state law as independent contractors.
And for the drivers: $32.50 an hour may sound good at first glance, but it is only in effect when drivers are ferrying passengers, not the estimated 25 percent of time between rides. And much of the money is used for gas and maintenance costs. In the end, actual pay can drop down around the state minimum wage of $15.00 per hour.
Flash Forward to November 2024
Next week, Massachusetts voters will decide on two ballot initiatives affecting workers: 1) increasing the minimum wage for tipped workers (see my previous post on this here) and 2) giving Uber and Lyft drivers the right to organize a union as independent contractors, which I discuss in this post.
Under federal law, independent contractors comprise a category of workers that is not allowed to form a collective bargaining unit, in other words, a union. But proponents of the Massachusetts ballot initiative maintain that these gig drivers are actually employees according to Massachusetts law, given how much control the companies have and how essential drivers are to their business.
Ballot Question #3, Unionization for Transportation Network Drivers, is all about the health, safety, and well-being of Uber and Lyft drivers. It explicitly states that “These persons often suffer poor pay, inadequate health coverage, and irregular or inadequate working hours” and that the point of unionization is to “raise standards for the terms and conditions of work in this industry.” The measure would provide transportation network drivers “the opportunity to self-organize and designate representatives of their own choosing, and to bargain collectively in order to obtain sustainable wages, benefits, and working conditions.”
The ballot measure includes provisions that will facilitate sector-based bargaining by exempting drivers and the companies from federal and commonwealth antitrust laws. (Sector-based bargaining is negotiation between workers and employers across an entire industry or sector, rather than at the more traditional individual company level).
The exemption means that drivers – who are officially independent contractors – can work and negotiate together and Uber, Lyft, and other rideshare businesses can negotiate as a bloc on the other side of the bargaining table.
On its face, i.e., giving more workers the right to unionize, seems like it should be a slam dunk for workers, unions, and labor advocates. And successful passage of the ballot initiative would make Massachusetts the first state in the country to create a framework for organizing rideshare workers and perhaps others in the growing gig economy.
Two unions are actively backing the measure – Service Employees International Union 32BJ and the International Association of Machinists – and a host of advocacy groups have also endorsed it. The Editorial Board of the Boston Globe endorsed the measure and urged readers to vote Yes on Question 3.
But others in organized labor are not supportive. The Executive Council of the Massachusetts AFL-CIO voted to remain neutral And many drivers don’t want to be classified as employees, as they believe it would result in losing the flexibility to work whenever they want. Read more here and here.
Mark Erlich, retired head of the New England Carpenters Union. and a fellow at Harvard Law School’s Center for Labor and a Just Economy, believes the independent contractor issue is “an existential fight for what the future of work is going to look like.” In a recent piece on the Attorney General’s settlement with Uber and Lyft, Erlich writes:
“Beyond the clear economic competitive advantage, many gig employers have developed an ideological aversion to business models that presume a sense of accountability, obligation, and liability for the workers who produce their products and services. While misclassification predates the gig economy, these employers have transformed the practice from a straightforward avoidance of business responsibilities into a celebration of supposed individual entrepreneurialism.”
The Pros, The Cons, The Views on the Massachusetts Ballot Question
According to a fact sheet produced by the Tufts Center for State Policy Analysis, Question 3 would create a novel path to unionization for rideshare drivers. Sector-based bargaining is largely untested in the U.S. (though more common in other countries) and is likely to face serious legal challenge.
Arguments for a YES vote on the ballot measure:
- It would give rideshare drivers new leverage to improve their working conditions.
- A union would help ensure that companies honor the previous agreement.
- A union could allow workers to push for further gains.
- The measure could potentially transform the gig economy, making sector-based bargaining the new standard for states that want to support gig workers.
Arguments for a NO vote on the ballot measure:
- There is sure to be high profile legal wrangling whatever the vote, and by the time the courts reach a resolution, the whole industry could look different.
- Questions about how rideshare unionization might affect prices, consumers, and the health of the sector, which has reduced the incidence of drunk driving and improved mobility options.
- Raising prices for consumers may be especially sharp in poorer and more rural areas of the state.
- The low threshold for choosing a bargaining representative (just 25 percent of active drivers, or roughly 12.5 percent of all drivers) may undermine union legitimacy by risking the emergence of an unpopular union with limited driver support. And some drivers may not have a say in the collective bargaining process at all if they’re not active drivers or if they drove less than 100 trips in the previous quarter.
Bottom Line
I’m a frequent consumer of rideshare services, especially at night or when weather conditions are challenging – like torrential rain or snow and ice (a frequent occurrence in Boston, though becoming less frequent with climate change). Or when I just don’t feel like driving. I’m proud of the actions my state has already taken to support ridesharing drivers.
Although I believe that Uber, Lyft, and other rideshare drivers should be considered employees, I voted YES. As Harris Gruman, executive director of SEIU Massachusetts State Council, said in this piece, “It is better to be an independent contractor with a union than an employee without one.”
Share your views in the comment section.