Fact check: Will Uber, Lyft drivers get paid less than minimum wage under Proposition 22?
Proposition 22 proposes that gig drivers for companies such as Uber, Lyft and Doordash will get paid 120% of the area’s minimum wage for the time they spend picking up and driving goods or passengers, plus 30 cents a mile.
Proponents of the proposition argue under its calculation, the drivers will get paid closer to $25 an hour after expenses, much more than the state’s minimum wage. But the initiative’s opponents cite a much-published study from the UC Berkeley Labor Center, whose researchers said Proposition 22 will guarantee only $5.64 an hour.
Amid an onslaught of advertisements, Proposition 22 still has a fundamental question to answer: How much will the gig drivers get under the initiative?
A Sacramento Bee review found that the answer depends on how expenses and time at work are defined. But it is possible that workers would earn less than minimum wage under the measure.
‘$5.64 an hour’
In 2019, Ken Jacobs and Michael Reich at the UC Berkeley Labor Center published a report saying the gig drivers using Uber or Lyft will only be guaranteed a pay of $5.64 an hour under Proposition 22. They still stand by the number.
Under Proposition 22, drivers could get a pay cut from what they are paid now, Jacobs said.
“The guarantee they claim to have,” he said of the gig companies. “is a false guarantee.”
Under Proposition 22, drivers will not be paid for the time they are waiting to give a ride, nor the time they spend preparing and cleaning their cars. That time accounts for some 33% of the drivers’ working time, Jacobs said, citing a 2019 study that looked at Lyft and Uber rides in six metropolitan areas across the country, including Los Angeles and San Francisco.
“It’s impossible to do the work without having the time waiting for work,” Jacobs said.
Another report, “Rigging the Gig,” by the National Employment Law Project and the Partnership for Working Families found that drivers working 50 hours a week will be paid $175 to $210 less a week under Proposition 22 compared to the current minimum wage.
Furthermore, drivers will not be reimbursed for the miles they drive waiting for a ride, Jacobs said.
Not objective?
“They don’t approach this objectively,” Director of UC Riverside School of Business Center for Economic Forecasting and Development Christopher Thornberg said of the Jacobs and Reich’s study. “The point is what people will make under Proposition 22, not what the base floor is. The base floor is just not relevant. What’s relevant is how much they’re going to earn.”
Thornberg, using the data of Uber and Lyft drivers’ earnings in Seattle as analyzed by Cornell University researchers, found that the workers in California will be paid anywhere from $25.61 to $27.58 an hour on average under Proposition 22 after accounting for expenses and wait time.
Thornberg acknowledged his study was financed by Lyft, but he said the money has had no influence on his report.
Furthermore, AAA found that drivers spend 20.54 cents a mile on average in fuel, maintenance and repair costs for their cars, Thornberg said.
Jacobs noted AAA found that drivers spend 53 to 79 cents a mile on average, once accounting for the full ownership costs such as depreciation, insurance, license and taxes. Given some people drive full-time for Uber and Lyft, some even renting cars from the companies, those costs should be accounted for as well, he said.
And 30 cents per mile reimbursement under Proposition 22 is below 57.5 cents a mile, which is the IRS’s estimate of per mile costs of owning and driving a car, Jacobs said.
But on the contrary, the drivers can get both 30 cents a mile reimbursement and a 57.5 cent a mile tax deduction, noted Geoff Vetter, a spokesman for the Yes on 22 campaign. And paying drivers for the time they spend waiting would mean the loss of flexibility for them, he said.
“If you are to compensate for all of the time, companies would have to force drivers to accept a specific ride or delivery, because companies can’t pay workers for the time they choose not to work.”
What others say
Not many studies show how much drivers will make under Proposition 22, but they do show a range of how much drivers make now.
On the low end, Jacobs cited Alison Stein, an economist at Uber who calculated converting drivers to employees could lead to prices increased by 25 to 111%.
Under the employee model, drivers should get paid at least $31 an hour to cover the state’s minimum wage, benefits and expenses, Jacobs said. Therefore, Stein is saying California drivers are making about $23 an hour on average before expenses now, Jacobs said.
Catherine Tucker, a MIT professor who spoke in support of Lyft to stop the state from forcing the company to classify its drivers as employees, testified that drivers made over $20 an hour in 2019, after expenses but not accounting for the wait time.
Under those two calculations, California drivers could already be making around or below the state’s minimum wage now after accounting for the wait time and expenses, especially if accounting for the full ownership cost of a car. Prop. 22 will not change that, Jacobs said; in fact, the drivers could get paid less under Prop. 22, he said.
In contrast, Thornberg cited the Cornell study that found the drivers in Seattle earn $17.40 to $23.25 an hour on average after accounting for expenses and wait time, depending on factors such as whether to qualify the cost of the car as an expense or not.
Thornberg said looking at how much drivers make now is more important – saying he does not see Uber and Lyft cutting pays for their drivers under Proposition 22, saying those companies still must attract the workers by paying them competitively.
“The concept that those folks would work for some paltry amount of money when there are clearly other opportunities available, it just doesn’t make sense,” he said.
But Jacobs said the labor standard is about setting the floor, not the ceiling. That’s why it’s important to look at how much drivers could get paid under Proposition 22, he said.
“If Bill Gates walks into a room, average of us is a billionaire, but it doesn’t change what we earn,” Jacobs said. “If we look at average earning, that masks a huge variation.”
This story was originally published September 24, 2020 at 5:00 AM with the headline "Fact check: Will Uber, Lyft drivers get paid less than minimum wage under Proposition 22?."
