Uber and Lyft Just Lost a Big Fight in a Blow to the Gig Economy
Like most Silicon Valley innovations, the "gig economy" isn't new. Freelance and contract workers, people who perform work for a boss or company without being a full employee, have been around for a long time now. But in the past 15 years, so many people have started making money through companies like Uber, Airbnb, Etsy, and TaskRabbit that the gig economy was dubbed "the future of work." The Gig Economy Data Hub estimates that between 25 and 30 percent of American workers are involved in the gig economy, and more than one out of every ten workers relies on it as their primary income. The Harvard Business Review estimates that between North America and Western Europe, as many as 150 million people "have left the relatively stable confines of organizational life—sometimes by choice, sometimes not—to work as independent contractors."
Working for a gig-reliant business like the ride-sharing apps Uber or Lyft provides flexibility and freedom for workers to set their own schedule, which is a big part of their sales pitch. But it also offers no labor protections at all—a driver for Uber or Lyft is a contract worker, not an employee, meaning they have no benefits, little stability, and very few rights as workers. A new bill in California is likely to change that.
On Tuesday night, the California legislature passed AB 5, a bill requiring app-based companies to classify contract workers as employees, a move that completely upends the business models of companies like Uber and Lyft. The legislation will go into effect January 1 if Governor Gavin Newsom signs it as expected, and it forces companies to designate their workers as employees if the company relies on their work as part of its regular business.
That means that for the first time, contract workers will be eligible for a minimum wage, time off, the right to organize, and possibly health care. Uber and Lyft fought hard to negotiate exemptions from AB 5 but ultimately failed. The potential effects of the legislation are far-reaching and would likely touch many more people than just drivers for ride-sharing apps. Per The New York Times:
In California, the legislation will affect at least one million workers who have been on the receiving end of a decades-long trend of outsourcing and franchising work, making employer-worker relationships more arm’s-length. Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees.
This is a blow to the entire gig-economy model, which has come to represent perpetual economic instability for workers. Start-ups have been able to undercut the prices of their traditional competitors—like Uber did with the taxi industry, for example—by paying their workers what can best be described as a pittance. In March of this year, Uber announced that it would be cutting driver pay from 80 cents a mile to 60, which doesn't even cover the cost of basic vehicle maintenance. Two months later, Uber and Lyft drivers across the country staged rush-hour strikes to protest what they called unfair labor practices.
For consumers, this likely means an increase in prices. A Lyft spokesperson told Vox, "The fact that there were more than 50 industries carved out of AB 5 is very telling. We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need." Vox also reports that Uber, Lyft, and DoorDash have announced that they're prepared to spend a combined $90 million to get AB 5 overturned.
News and Politics
Last week, as America’s top national security experts convened in Aspen, a strangely inquisitive Uber driver showed up, too. And caused a minor freak-out. Was the mystery woman some kind of covert agent—or simply a figment of these hyper-paranoid times?
Originally Appeared on GQ
