Automotive Blogs

CA Prop 22: Vote 'No' on Greed

by Roger Lanctot | Oct 07, 2020

Uber, Lyft, DoorDash, Postmates, and Instacart are financing a $180M advertising blitz in California to support a ballot measure – Proposition 22 – which will override a bill – AB 5 – passed by the California Assembly that was intended to force app-based employers to treat their “contract” workers as employees. AB 5 has wide-ranging impacts beyond the so-called gig economy. It is expected to affect all forms of freelance work. But the primary target of the bill was ride hailing operators such as Uber and Lyft, which are dependent upon a freelance workforce. Proposition 22 is their way of fighting back.

The Proposition 22 effort, in many ways led by Uber, has all the earmarks of an Orwellian effort to undermine workers’ rights and rewrite the rules of employment. With Proposition 22, gig employers in California would have their contract employees and customers buy into the newspeak notion that freedom is slavery and ignorance is strength.

Uber and Lyft have built highly profitable businesses around contract workers willing to provide rides on demand in their own cars on their own time. The app-based proposition allows these operators, and their equivalents around the world, to undercut transportation alternatives ranging from taxis, to rental cars, to public transit.

What has made these operators profitable is the fact that the service – ride hailing – has created a new form of luxury service: inexpensive on-demand transportation. This new service is enormously pleasing and empowering to both the customers and the drivers. Both participants in this proposition enjoy an endorphin inducing feeling of control emanating from the app in a smartphone.

The endorphin rush is sufficient to override the customers’ safety concerns and the drivers’ financial survival instincts. The net result, at least prior to the arrival of the COVID-19 pandemic, was parabolic growth and substantial disruption of transportation networks worldwide, including the taxi and rental car industries.

Uber and Lyft were able to ride a tidal wave of investment amounting to billions of dollars which allowed both companies (and global rivals) to expand rapidly, both geographically and into new markets including self-driving car development. The rapid growth and investments created a false narrative that the companies were not profitable.

The reality is that the companies are indeed unprofitable, but not because of a flawed model. The lack of profit derives from operational priorities motivated by a monopolistic drive to seize control of the reins of transportation decision-making.  By now, it is clear that the fundamental proposition of delivering a ride hailing service with contract workers is a very profitable model.

The fact that the model is so profitable explains the willingness of the leading service providers to “invest” $180M in the campaign to pass Proposition 22. Ballotpedia.org describes the stakes facing voters as follows:

“Proposition 22 would consider app-based drivers to be independent contractors and not employees or agents. Therefore, the ballot measure would override Assumbly Bill 5 AB5, signed in September 2019, on the question of whether app-based drivers are employees or independent contractors.

“The ballot initiative would define app-based drivers as workers who (a) provide delivery services on an on-demand basis through a business’s online-enabled application or platform or (b) use a personal vehicle to provide prearranged transportation services for compensation via a business’s online-enabled application or platform. Examples of companies that hire app-based drivers include Uber, Lyft, and DoorDash. The ballot measure would not affect how AB 5 is applied to other types of workers.”

https://ballotpedia.org/California_Proposition_22,_App-Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_(2020)

AB 5 was passed by the California Assembly as a means to protect freelance and gig workers of all kinds and is controversial in its own right. But the impact within the ride hailing segment is clearly one of protecting the rights of transportation gig workers to healthcare and other benefits.

The opposition of Uber and others to AB 5 expressed in Proposition 22 is a grotesque effort to paint the operators as aggrieved and the California legislature as over-reaching in its efforts to protect workers. It’s pretty clear, though, that it is the abusive employment practices of Uber and Lyft – where slavery is empowerment – that brought about AB 5.

The strangest thing of all, though, is that the matter got this far at all and led to the passage of AB 5. With the economy at near full unemployment prior to the onset of COVID-19, Uber and Lyft were able to get away with their business proposition – essentially leveraging regulatory loopholes to under-compensate and overwork drivers who were happy to have the opportunity.

With unemployment spiking in the wake of the pandemic, AB 5 is more relevant than ever as workers are more vulnerable than before. One contextual point has not changed and that is that the top executives leading these companies and early investors have been able to milk the riding hailing operators for hundreds of millions in compensation while drivers struggle to make ends meet.

Uber, Lyft and the rest can spend $180M on a pro Proposition 22 advertising campaign, but can’t provide in-vehicle partitions to protect drivers and passengers in the midst of a deadly pandemic. Nothing less than greed is on the ballot in California in November and it should be rejected in the interest of ride hailing drivers and in the broader interest of workers throughout the economy rendered financially and physically vulnerable by the pandemic.

It’s up to California voters to reject Proposition 22 as a show of support for Uber and Lyft drivers who are entitled to appropriate compensation and protections. If AB 5 is flawed, then modifications should be pursued through engagement with the California Assembly.

Uber and Lyft have threatened to leave the state if Proposition 22 is rejected by voters. Should that happen there is no shortage of competitors prepared to take their place and deliver a superior service for both drivers and passengers. What is by-now clear is that working for Uber will not make you free.

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