I tried The Drivers Cooperative, a new ride-share app available in New York City. Unlike Uber, Lyft, and other ride-hailing companies, drivers own and have control over The Drivers Cooperative.
The Drivers Cooperative launched in opposition to high commissions Uber and Lyft take from drivers, according to the app’s website. The company hopes to provide drivers with higher wages in the short-term and a “just, green transition of the industry” in the long-term.
To sign up, I downloaded the app and plugged in personal information like my name and phone number. The process to sign up was easy and I was ready to start ordering cars within a few minutes.
I first tried to find a driver to pick me up in Queens.
Before I ordered the car, The Drivers Cooperative had a breakdown of the fees and where exactly my money went. I noticed the price was slightly more expensive than what I’d pay for a similar trip on Uber and Lyft, but still pretty comparable.
Unfortunately there weren’t enough cars in the area, so it took about 10 minutes to find a driver. And when the app had selected a driver, the car ended up going the wrong way and I had to cancel.
But The Drivers Cooperative acknowledged that the company was just starting and there might be “bumps in the road” as it acquires more users. I decided to try again in Manhattan, where I figured there’d be more cars.
Getting a car in Manhattan took about a minute or two. The driver arrived within five minutes.
My driver, Tarsem Singh, said he was not part of the group of drivers who founded the app – but enjoys The Drivers Cooperative more than Uber and Lyft.
Singh said Uber and Lyft do not listen to drivers. When he drove for Uber, he said a teenage passenger complained about him going too slow. In reality, Singh said he went the speed limit and the passenger wanted him to go faster.
Uber suspended his account after the passenger complained about him. Singh said he tried to appeal his suspension but failed.
Singh said he’s been happy with the passengers using The Drivers Cooperative. He said he urges New Yorkers to use this app because it “gives drivers much more money.”
Despite some hurdles I faced in ordering a car, I’d encourage more people to use the app. The cost is similar enough to Uber and Lyft, and I feel better knowing my money is helping keep Singh and other drivers happily employed.
In 2014, as Uber was on its way to becoming the world’s most valuable startup. It boasted that drivers in New York City working at least 40 hours per week earned a median income of more than $90,000 per year, while San Francisco drivers earned more than $74,000.
For drivers working 52 weeks per year, that would average out to more than $44 and $35 per hour, respectively.
“Uber’s remarkable growth could end the era of poorly paid cab drivers,” read a 2014 headline from The Washington Post. Insider first reported Uber’s claims in a similarly unskeptical fashion. But those claims soon began to fall apart, with drivers telling Insider they were actually making between $5 and $20 per hour.
The Federal Trade Commission eventually accused Uber of misleading drivers by exaggerating their earnings potential by as much as 50%, alleging the median income was just $61,000 ($29 per hour) in New York and $53,000 ($25 per hour) in San Francisco. Uber agreed to pay $20 million, and not make false or misleading claims about driver pay, in order to settle the charges, the FTC announced in 2017.
Since then, Uber and Lyft have both been dogged by the question of how much they pay drivers, and despite the efforts of independent researchers, regulators, and reporters, the answer has remained elusive.
That’s because Uber and Lyft rarely share detailed data about driver earnings, and when they do, it’s usually presented in ways that overestimate what drivers are actually pocketing, according to some researchers who spoke to Insider.
As the companies try to get wary drivers back on the road, Uber told Insider drivers’ median earnings are nearly $42 per hour in San Diego and Austin, and more than $35 in other major cities. Lyft cofounder and president John Zimmer said last month drivers in the company’s top 25 markets are making $30 per hour.
Lyft did not respond to multiple requests for comment on this story. Uber provided median earnings for six US cities.
“We believe this is the best and most straightforward way to communicate earnings on Uber, which vary by when, how, and where drivers choose to drive. To suggest that the figures we have provided aren’t accurate is both unfounded and unfair,” Uber spokesperson Kayla Whaling told Insider.
But researchers told Insider it’s the numbers Uber and Lyft haven’t provided that make it difficult to verify what drivers actually make.
“If Uber is touting a certain hourly pay, they need to make clear what that’s based on,” James Parrott, director of economic and fiscal policies at The New School’s Center for New York City Affairs, told Insider
“If the data really would show that the drivers are earning a pretty decent pay per hour, you would think that they would make that data available because it would certainly help their case, their pitch to drivers to come back to the platform,” he added.
Pay raise or temporary pandemic surge?
From a strictly economic perspective, it makes sense that hourly earnings would go up during a driver shortage, Michael Reich, an economics professor at the University of California, Berkeley’s Institute for Research on Labor and Employment, told Insider.
“Drivers get more trips per hour, there’s less waiting time,” Reich said.
Uber and Lyft don’t pay drivers for the time they spend waiting for the companies to find them a ride, or 33% of the hours that drivers are active on the platform before the pandemic, according Reich’s research. That waiting time skyrocketed when the pandemic hit, as drivers competed for fewer passengers, and has likely dropped again as passengers return.
In other words, a driver in Austin making $42 per hour by Uber’s calculation may just be benefiting from less unpaid time between rides.
But Uber explicitly said these higher earnings will likely be temporary and will drop again if, and when, more drivers return.
The bigger question is “whether the companies are paying [drivers] more per trip,” Reich said, adding: “They’re not giving the answer and there’s really no way to come up with independent data to let us know.”
Even though Uber and Lyft have been charging passengers more, The Washington Post reported drivers don’t necessarily get a larger cut. That’s because they’re paid based on the time and distance of the trip, not what the customer pays.
Uber spokesperson Matt Wing told The Post Uber’s cut of each fare has stayed the same, but CEO Dara Khosrowshahi argued that decoupling driver pay from fares actually led to drivers taking home a larger share, implying Uber took less. Industry blogger Harry Campbell called Uber’s responses a contradiction that highlighted the company’s “lack of transparency” about pay rates. (Lyft also told The Post its cut has stayed the same).
“It’s very hard to take what the companies say at face value”
Khosrowshahi’s claim that drivers are getting more of the pie follows years of Uber and Lyft cutting rates as they’ve experimented with different pay structures.
Uber dropped rates from $2.15 to $1.75 per mile in 2017, and in 2019 from 80 cents to 60 cents per mile for California drivers (per-mile rates vary by location). Lyft followed with rate cuts of its own, and recently cut veteran drivers’ rates, with The Rideshare Guy reporting a Boston driver got their rates cut to as low as 66 cents per mile.
When making these cuts, Uber and Lyft have often claimed other changes in their pay structures offset drivers’ losses. Because of the multiple levers the companies can pull when adjusting pay, researchers need data beyond per-mile or per-minute rates or cherry-picked median earnings.
Last year, Reich and Parrott hoped to get that data when conducting a study on behalf of the city of Seattle to determine whether Uber and Lyft were paying drivers the minimum wage. Both researchers told Insider that, for such a study, they’d at a minimum want company data showing: how long drivers logged onto the apps, their total earnings, how many miles they drove (to determine drivers’ vehicle expenses), and what percentage of each fare the companies and drivers are pocketing.
But when Seattle asked the companies for that and other data, Lyft refused and Uber provided only limited summary data. Reich and Parrott had to rely on their own survey of 6,500 drivers, and concluded they made $9.63 per hour after earnings.
Parrott called Hyman’s study a “sleight of hand” that used Uber and Lyft’s preferred methodology of not counting the time drivers spend waiting and estimating vehicle costs at 30 cents per mile, even though the IRS estimates such costs at 57.5 cents per mile. Hyman declined to comment.
“It’s very hard to take what the companies say at face value, given that they have been very insistent all along that drivers only get paid when they have a passenger in the car” or on their way to pick up a passenger, Parrott said.
“Every labor economist I know who looks at this says that the drivers should be paid for their working time,” he added.
Uber and Lyft have argued they shouldn’t have to pay for waiting time because drivers could have multiple companies’ apps open in those times. But Parrott said agreements with local regulators, like the minimum pay law that went into effect in New York City in 2019, could allow companies to avoid this.
“Regulators really need to know”
Ultimately, regulators are the only ones with the ability to force Uber and Lyft to hand over driver pay data. But they are also hamstrung by the companies’ decision to classify drivers as contractors.
Unlike contractors, if an employee claims they’re being underpaid, labor regulators can demand data from the employer about that employee, and in some cases, all employees, Reich said.
“Regulators really need to know what the implications are,” he said, not just for driver pay, but also for congestion in cities
“I wish the regulatory agencies would demand that they be given the data, and so far, they don’t have a way to compel the data and that’s the problem,” Reich said.
Side gigs can be a lucrative way to earn extra cash or expand your horizons – but is it worth the extra stress to have a side hustle and a full-time job?
Although the last decade has seen “the gig economy” blossom and prosper like never before, the concept of the side gig has existed for ages. Anyone looking to earn more money has found that an additional job of some sort is the quickest and easiest way to gain additional financial security.
With the pandemic, millions of Americans began picking up extra “gigs” working for companies including Instacart, Amazon, Uber, and countless other businesses that filled an important niche during COVID. Women were already at the heart of the gig economy long before the pandemic, and many more found themselves starting new side jobs over this last year and a half – perhaps while also holding down full-time positions and caring for loved ones … But working a full-time job and side hustle can be incredibly time consuming, and not always doable with everyone’s schedule. Here’s how to know if doing both may be right for you.
Working “second shift”
Before COVID, many women were likely already working a “second shift” as the primary caregiver for loved ones (such as children and aging parents) and were acting as the caretaker of their home. Once the pandemic hit, millions of women added “teacher” to their list of jobs, and the lines between work life and home life became particularly blurred … Even if your partner worked from home, you most likely continued to do a majority of the domestic work. As a result, it might not be possible to put extra time and energy into a side hustle right now.
And even if you have time for a side gig, taking it on might not be the healthiest option. Over time, it can become just one more ball to juggle rather than a financial relief or a place to put your passion and energy. Finding the elusive “work-life balance” – which, by the way, is a misnomer – becomes even more of a challenge and can take a toll on your mental and physical wellness. In fact, research shows that people who work more than 55 hours a week develop depression and anxiety at a higher rate than those who work standard hours.
We all need to give ourselves a little more grace and realize that working a full-time job, a side hustle, and taking care of a household isn’t always the right choice.
Is the side gig economy right for you?
If you’re deciding whether adding a side gig to your plate is the right move, consider the following:
1. Do you have an emergency fund?
If you have an emergency fund that can cover at least three to six months of non-discretionary expenses, that’s great! And it might mean that you don’t need to take on a side gig for the sole purpose of gaining extra income.
If you don’t currently have an emergency fund – or if it’s not enough to cover the essentials for a few months – then a side gig could be beneficial. Regardless, consider putting your emergency fund in an online account that generally pays higher interest.
2. How much do you have saved for retirement?
Ideally, you should save at least 15% of your net income for retirement. If you have access to a 401(k) through your full-time job and your employer offers a match, try to contribute enough to reach your match – and don’t forget that whatever your employer is contributing counts toward your savings target!
If you don’t have a retirement plan or can’t save 15% right now, that’s okay, too. We’re all at different places with our careers and savings goals. A side job that helps you bring in extra money can help boost your savings.
3. Can you devote energy to a side gig?
Extra money is certainly nice to have, but that is only one piece to consider. A side gig takes a lot of energy, resources, and time. Make sure it’s something you’re passionate about because there will be setbacks and days when you don’t feel like you’re making progress. Research and network with people who have similar side jobs to determine what it will take to add the job to your current load. If it seems like the side gig will add too much stress or unhappiness to your life – and take away from what you’re already doing – it might not be right for you.
Ultimately, it’s important to determine whether the financial rewards of a full-time job and side hustle outweigh the potential downsides. Burnout is real and very prevalent right now as people take on too many responsibilities. It’s important to make sure you have the time and energy not just for work and home life, but for yourself as well. If your side gig becomes successful enough, however, it might just be your ticket to pursuing your passion full time.
Last year, Uber, Lyft, DoorDash, Instacart, and Uber-owned Postmates spent a record $203 million to convince California voters to pass Proposition 22, a company-authored ballot measure that let them avoid paying for new benefits the state had recently extended to their workers.
The companies said Prop 22, which created a new class of workers subject to different labor laws, would be a boon for workers of color and immigrants, who make up the vast majority of their drivers and delivery people.
But a forthcoming research paper by UC Hastings law professor and gig economy expert Veena Dubal argues that, despite the companies’ promises that Prop 22 would help achieve racial and economic justice for their workers, the law has had the exact opposite effect.
The new category of workers created by Prop 22, Dubal wrote, “is best understood as a new form of legalized racial subordination-lower wages and benefits for a people of color and immigrant workforce.”
Ride-hailing and food-delivery companies have pitched this hybrid employment status as an innovative “third way” to classify workers that offers the independence of being a contractor and some of the benefits that come with being an employee.
According to Dubal, such proposals are hardly innovative, and in fact look strikingly like discriminatory “wage codes” passed in the 1930s at the request of racist industrialists and plantation owners.
While those laws weren’t explicitly racist, their effects were. By exempting employers with mostly Black workforces, wage codes denied those workers minimum wage, workers’ compensation, unemployment insurance, and unionization rights enjoyed by workers in majority white industries.
Dubal argues that Prop 22 is a recycled version of those racialized wage codes, and that this time around, companies used social justice arguments to persuade people it would have the opposite result.
Uber, Lyft, DoorDash, Instacart, and Postmates did not respond to requests for comment on this story.
“There is a long history of systemic racism in traditional hiring practices, which is one of the reasons app-based work and the open access to earning opportunities it provides is valued by so many Californians,” Geoff Vetter, a spokesperson for the Protect App-Based Drivers & Services Coalition, told Insider. (PADS, formerly called Yes on 22, was created and funded by the above companies to generate public support for Prop 22).
Co-opting racial justice language
Last August, Uber plastered 13 major cities with billboards that read: “If you tolerate racism, delete Uber,” timed to its sponsorship of a march commemorating the 1963 March on Washington, where Martin Luther King Jr. gave his famous “I Have a Dream” speech.
In September, Lyft aired a commercial featuring Maya Angelou reading her poem “On the Pulse of Morning” to announce its plan to provide subsidized rides to underserved communities during the pandemic.
“NAACP California, California State National Action Network, Hispanic 100, Si Se Puede Foundation, Black Women Organized for Political Action, and other trusted social justice leaders and civil rights organizations” supported Prop 22, Vetter told Insider.
The PR campaigns came amid a summer of uprising against police brutality and systemic racism, which in turn put pressure on companies to address racism within their own walls.
But the campaigns faced swift backlash from drivers and driver advocates who called them “gaslighting” and hypocritical.
The “delete Uber” language originally came from angry customers boycotting Uber for sending drivers to JFK airport during a taxi driver strike in protest of Donald Trump’s Muslim travel ban. Lyft cherry-picked Angelou’s words, omitting her lines critiquing exploitative labor practices (while research shows that Uber and Lyft reduce revenue for public transit, on which communities of color disproportionately rely).
But the bigger hypocrisy, Dubal argues, is that the companies were “highlighting particular forms of racial subjugation, while ignoring and profiting from others” – namely, the racial subjugation of their own workers.
“New racial wage code”
During the Great Depression, Congress established the first federal minimum wage law, social security benefits, and union rights in a major win for workers.
But “racist demands” from industrialists and plantation owners led Congress to exclude agricultural and domestic workers – the majority of whom were Black – from those laws, subjecting them to seperate and unequal workplace conditions, according to Dubal.
Those exemptions let companies pay primarily Black workforces 20% to 40% less than the minimum wage, Dubal found, citing research by historian Donna Hamilton, “undermining the economic stability of Black communities for decades to come.”
Prop 22 isn’t much different, Dubal argues, but this time, companies are masking their arguments in racial justice arguments and confusing legalese rather than openly racist terms.
In 2019, California passed AB-5, extending long-standing minimum wage, unemployment insurance, workers’ compensation, and other protections to gig workers. After regulators and courts rejected claims by Uber and Lyft that AB-5 didn’t apply to them, the industry banded together to pass Prop 22, touting it as a boon to workers.
“Prop 22 guaranteed all drivers would earn at least 120% of minimum wage plus 30 cents per mile compensation toward expenses,” Vetter told Insider, pointing to claims by Uber, DoorDash, and Instacart that drivers are making more under the new law. (Companies’ earnings claims are difficult to evaluate because they refuse to share detailed pay data with the media, regulators, and independent researchers).
Dubal argues the bigger issue is that Prop 22 provides far less than what those workers should already have been receiving as employees under AB-5.
Under Prop 22, companies can: pay workers for only some of the hours they work; refuse to offer overtime pay, sick leave, family leave, and paid time off; cover just a fraction of healthcare costs; reimburse vehicle costs at barely 50% of the rate guaranteed to employees; provide bare-bones insurance that can leave drivers hanging out to dry; and avoid paying into unemployment and disability programs, shifting the burden to taxpayers.
These “second-class” labor protections, as Dubal describes them, become more problematic given the demographics of the workers subject to them. Lyft estimates that 69% of its drivers are people of color; one study estimates that, among all ride-hailing and food delivery workers in San Francisco, 78% are people of color and 56% are immigrants.
Ultimately, with Prop 22, Dubal wrote, Uber, Lyft, DoorDash, Instacart, and Postmates “obscured the way in which the law created a new racial wage code, claiming instead to offer economic opportunities for people of color and concealing the exploitative conditions endemic to those ‘opportunities.'”
Around a quarter of Americans say they work mostly in the gig economy, and 62% of those workers say that they’d rather not, according to a survey published Wednesday by McKinsey and Ipsos.
“Gig workers would overwhelmingly prefer permanent employment,” the survey found.
That preference is even stronger among immigrants and workers of color, who disproportionately make up the gig workforce.
Among those groups, 72% of Hispanic and Latino gig workers, 71% of Asian American gig workers, and 68% of Black gig workers said they’d rather be permanent or non-contract employees, as did 76% and 73% of first- and second-generation immigrants, respectively.
McKinsey and Ipsos surveyed 25,000 Americans over the spring of 2021, and 27% percent of those surveyed said their primary job at the time was as a contract, freelance, or temporary work.
But their resounding preference for the security, benefits, and legal protections that come with employee status could encounter some tough resistance: their bosses.
Globally, 70% of executives – mostly from large US firms – said they plan to ramp up their reliance on contract and temporary workers, according to a McKinsey study from September.
Corporate America has aggressively opposed efforts to reclassify contractors as employees, in many cases arguing that workers prefer the flexibility that gig work claim to offer. But McKinsey’s latest findings suggest that executives – often citing surveys that their own companies funded – may not be as in touch with workers’ needs and wants.
While companies like Uber, Lyft, DoorDash, Grubhub, Amazon, Facebook, and Google have played leading roles in familiarizing American consumers with the gig-based business model, they’re far from the only ones who have leveraged contractors to skirt labor laws and minimize their costs. (Insider has contacted the above companies for comment, and will update this story if they respond.)
Executives in the lodging, food service, healthcare, and social assistance sectors, are especially keen on relying more heavily on contractors, according to McKinsey.
That model also hit taxpayers hard, as they subsidized unemployment benefits for contractors laid off by multibillion-dollar corporations that, despite record profits, hadn’t contributed a dime to those funds on behalf of their workers. Taxpayers coughed up $80 million in pandemic assistance for around 27,000 Uber and Lyft drivers who lost their incomes.
State and federal lawmakers are increasingly considering ways to secure better pay, working conditions, and legal protections for contractors, from California’s AB-5 to recent talks between unions and app companies in New York, though experts say more wide-reaching labor law reforms are needed.
Shortly before 9 p.m. on March 2, in Lakewood, Colorado, Drew Wajnert was rear-ended by a drunk driver who was going 85 mph, sending his car slamming into the median and fracturing his spine.
“When he came up to me and asked me how I was,” Wajnert told Insider, “What he may have not seen was, not only did he rear-end me at 85 miles an hour, but I spun into the concrete divider at 50 miles an hour, and then spun to the shoulder to a dead stop.”
Emergency services arrived on the scene within minutes, taking Wajnert to nearby St. Anthony’s Hospital, where doctors performed surgery to install a titanium plate and four screws in his neck. Months after the accident, Wajnert – now in a special spinal-cord injury rehab center at Craig Hospital – still has braces on his neck as well as both hands and knees, and while he has regained some feeling, there is no guarantee he’ll ever walk again.
As a full-time Lyft driver, Wajnert spent much of his time helping keep drunk drivers off the road. Now he’s trying to prepare for the many physical and financial challenges ahead.
“I’m fighting as best as I can, but I am hospitalized and Lyft really isn’t doing anything for me,” he said.
“We are deeply saddened by this accident and our thoughts are with Drew and his loved ones during this difficult time. We’ve reached out to Drew and a member of his family to offer our support and stand ready to assist law enforcement in any way we can,” a Lyft spokesperson told Insider. (Wajnert’s attorney, Kurt Zaner, said Lyft reached out after Wajnert began contacting media outlets to share his story).
Zaner said Lyft dropped a driver insurance policy when the pandemic hit that he believes may have covered Wajnert’s medical bills. Those bills could amount to hundreds of thousands of dollars.
Wajnert is planning to sue the driver, Alexander Marakas, who has been charged with vehicular assault, and possibly any bars that served Marakas, which could also be found liable for damages under Colorado’s “dram shop” laws. Marakas, through his attorney, declined to comment.
Lyft told Insider that, in Colorado last year, it didn’t make any changes to the insurance policies that cover drivers when they’re waiting for Lyft’s algorithm to find them a passenger (the phase Wajnert said he was in at the time of the accident).
But regardless of whether that specific pre-pandemic policy would have covered Wajnert’s accident, his situation reveals the glaring gaps in driver protections that are a direct result of Lyft classifying drivers as independent contractors. That strategy allows companies like Lyft and Uber to provide minimal worker protections, and helps them avoid legal and financial liability when drivers like Wajnert get hurt on the job.
A patchwork of policies
For Wajnert, who drove taxi cabs for 10 years in New Jersey, Lyft wasn’t a casual, part-time side hustle. Lyft has been his only source of income since signing up in January 2020, and he typically drove between 40 and 70 hours per week throughout the entire pandemic, completing 4,135 rides last year.
Wajnert leased his car, a 2019 Hyundai Santa Fe, through Lyft’s Express Drive program, costing him roughly $240 per week. Lyft charged Wajnert $500 after his accident, the deductible for the insurance policy on the vehicle. (The company told Insider it has since refunded that charge as well as the deposit Wajnert initially paid to rent the vehicle).
When it comes to drivers, transportation companies carry a variety of insurance policies, and Wajnert said he was under the impression Lyft’s insurance policy would be sufficient in the event of an accident, so he didn’t take out his own policy on top of that. In reality, Lyft has a complicated three-tiered policy that only kicks in when drivers turn on their app, and only provides limited coverage if its algorithm hasn’t yet found them a passenger.
Many companies also carry what are called uninsured/underinsured motorist bodily injury policies (UM/UIM). These policies help pay for an injured driver’s medical bills and other expenses in the event that the driver who hit them doesn’t have enough insurance to cover those costs.
Before the pandemic, Lyft had UM/UIM policies that covered drivers. But on March 31, 2020, Lyft dropped those policies in Colorado and nearly every state where they weren’t required by law, according to documents seen by Insider, leaving drivers in a majority of states with no such coverage.
Wajnert said Lyft never told him about that change, however, or at least not in a clear way, and that he “absolutely” would have bought additional coverage on his own if he had known.
“There was no grand email or reachout, no phone call from the [Lyft] Hub or anything like that,” he said. “I can’t understand why Lyft would carry insurance for people that we injure, but not insurance for its drivers when a reckless drunk driver hurts us.”
Lyft’s website still advertises that it provides UM/UIM coverage for drivers, in certain cases, with a small footnote indicating “coverage, where provided, may be modified to the extent allowed by law.”
Wajnert said he only found out about Lyft’s lack of coverage through his attorney, Zaner, after the accident.
“If this happened a year and a half ago, Drew would be able to make a claim with Lyft’s underinsured policy, most likely,” Zaner said. “Lyft carried $500,000 to $1,000,000 of underinsured coverage. It was a nice benefit that was pretty much expected in that industry; taxi cabs have the same kind of coverage, and they still do.”
Lyft said it carries third-party liability insurance in Colorado, a requirement of laws governing rideshare companies, as well as Medical Payments insurance, which it says results in faster payouts.
But the fact that Wajnert may still be left to foot the bill despite working for Lyft when he was hurt is ultimately a consequence of the company’s core business model.
The precarity of independence
As Uber and Lyft face growing calls from regulators and driver advocacy groups to pass laws reclassifying drivers as employees, the companies frequently defend their current business model by pointing to surveys saying the majority of drivers want to keep the flexibility they enjoy as independent contractors.
When employees are hurt on the job, they’re entitled to workers’ compensation, funded partly by their employer, which pays them for wages they missed out on because of their injury, and covers all of their medical bills. They can also qualify for occupational therapy to help them get back to work or, in cases like Wajnert’s, permanent disability if their injury prevents them from working.
“Workers’ compensation laws were written with automobile workers in mind,” Veena Dubal, a law professor at the University of California, San Francisco Hastings School of Law, who focuses on the intersection of technology and dangerous jobs, told Insider.
These laws emerged in the 1930s directly as a result of “widespread industrial injury and fatality, but particularly on railroads and as a result of automobiles,” she said, adding that they were written “precisely” to protect people like Wajnert who work in especially dangerous industries.
“It’s so incredibly tragic that he, and many, many, many hundreds of workers in this country … are in this situation where they essentially will no longer be able to work or support themselves as a result of how the companies choose to classify them,” Dubal said.
Companies face substantially more legal and financial liability for work-related accidents involving their employees than they do for contractors. For example, Amazon has relied on this model to minimize liability when its delivery drivers are injured (or injure others).
As a result, companies like Lyft and Uber have the legal flexibility and financial incentive to carry less extensive insurance.
If Lyft drivers were employees, according to Dubal, the company would likely have commercial insurance covering “all the time” drivers spend working, not just when they have riders in the car, which she said may be only 40-60% of the time drivers are on the road. Instead, Dubal said, what Lyft offers currently is “minuscule” compared what’s required of companies subject to commercial insurance laws.
And for drivers like Wajnert who come from jobs where their employers have more robust policies, the gaps in Lyft’s coverage can come as a surprise – and something they don’t realize until its too late.
“It’s horrible. I want to get the word out to Lyft drivers who are currently driving to be aware that they’re not covered [by UM/UIM policies],” Wajnert said, adding: “I basically was a full-time employee for them.”
Lyft does not classify its drivers as employees.
Wajnert is hospital-bound for at least another month, joined by his sister, Melissa, who had to move from North Carolina to stay with him due to Craig Hospital’s requirement that rehab patients have a caregiver with them.
While he’s trying to stay positive and his friends have started a GoFundMe campaign to help him make ends meet, Wajnert said it’s going to be a long road to recovery.
Shares of rideshare and delivery companies including Uber, Lyft, Doordash, and Grubhub all fell on Thursday after reports out of Reuters said US labor secretary Marty Walsh believes most gig workers should be classified as employees.
“We are looking at it but in a lot of cases gig workers should be classified as employees,” Walsh said in his interview with Reuters on Thursday.
“These companies are making profits and revenue and I’m not (going to) begrudge anyone for that because that’s what we are about in America… but we also want to make sure that success trickles down to the worker,” Walsh added.
The US labor secretary also said that the Department of Labor will have conversations with companies that employ gig workers in the coming months to ensure they have access to “all of the things that an average employee in America can access,” Reuters reported.
Gig workers are independent contractors who enter into contracts with on-demand companies to provide services to clients.
The last decade has seen an explosion in the so-called “gig economy” with companies like Uber and Lyft fighting to maintain the independent contractor status of their workers.
In March, California voters approved a ballot measure that exempts companies that utilize the “gig economy” from having to treat workers as employees.
The measure freed companies like Uber and Lyft from a 2019 state law that entitled workers to overtime pay, sick leave, and unemployment benefits.
Now, these new comments from the US secretary of labor again call into question the longevity of the gig worker business model.
Walsh noted in his interview that if the federal government didn’t cover gig economy workers during the pandemic, they would “not only have lost their job, but they wouldn’t have had any unemployment benefits to keep their family moving forward.”
Gig workers received a reported $80 million in benefits from the US government during the pandemic, according to an analysis of government data by The Washington Post.
Shares of Uber and Lyft fell as much as 8.34% and 13.67% on Thursday after the news broke, while DoorDash and Grubhub saw their shares fall as much as 11.05% and 4%, respectively.
The International Brotherhood of Teamsters General Fund, an investor in Uber, sent a letter to other Uber shareholders Thursday urging them to vote for a proposal that would force the company to disclose more details each year about its lobbying efforts.
“Uber’s lobbying is not only substantial, geographically extensive and highly innovative, but is profoundly controversial and raises critical questions over the sustainability of the company’s business model,” Ken Hall, the fund’s general secretary-treasurer, wrote in the letter.
“It may be tempting to view Uber’s current disclosures as a good-faith effort to address concerns over the transparency of its lobbying activities; but this would be a mistake,” Hall added.
Uber investors will vote on the proposal – which would require Uber to publish an annual report disclosing its lobbying policies, how much it spent on direct, indirect, and grassroots lobbying, and which groups the money went to – during the company’s annual shareholder meeting on May 11.
Uber has urged investors to vote against the proposal, citing its “existing risk management practices and current high level of transparency and accountability around political and lobbying activities and expenditures.”
The ride-hailing company did not respond to a request for comment on this story.
Uber and other companies that depend heavily on cheap contract labor have ramped up their lobbying efforts over the past few years as federal and state regulators look to crack down on “gig” economy businesses that have for years operated in a regulatory gray area.
Uber spent a record $2.6 million lobbying the federal government in 2020, according to OpenSecrets. The company also contributed $30 million to a $200 million campaign to persuade California voters to pass Proposition 22, exempting it from a major state labor law, AB-5, and making Prop 22 the most heavily lobbied ballot measure in the state’s history.
A key aspect of that campaign was Uber’s indirect and “grassroots” lobbying through groups that helped the company broadcast its message to voters without telling them who the messenger was. In one case, an Uber-funded group sent mailers to California residents designed to trick them into believing progressive groups were supportive of Prop 22 (many prominent progressives actually opposed the measure).
In December, the Teamsters Union filed shareholder proposals at both Uber and Lyft, arguing both companies have failed to provide investors with sufficient information about the money they spend on lobbying – particularly grassroots lobbying, which is subject to less stringent disclosure requirements and often requires investors to dig through complicated and incomplete disclosures for each individual state.
The fund argued in its letter Thursday that Uber investors should push for more transparency so they can understand how much the company’s business model depends on its lobbying efforts being successful, and whether its reputation could suffer because of the positions it’s taking.
“Transparency is vital to understanding how Uber is navigating the acute reputational risks that come with lobbying around matters as emotive as wage theft and workers’ rights,” it wrote, adding: “But perhaps most crucially, disclosure is key to any evaluation of the long-term sustainability of a business model built around the heavy and controversial use of independent contractors.”
Uber announced Wednesday it plans to spend an additional $250 million on “boosted incentives and guarantees” to persuade drivers to get back on the road amid a shortage during the COVID-19 pandemic.
“In 2020, many drivers stopped driving because they couldn’t count on getting enough trips to make it worth their time. In 2021, there are more riders requesting trips than there are drivers available to give them-making it a great time to be a driver,” Dennis Cinelli, the head of Uber’s US and Canada ride-hailing business, said in a blog post.
But Uber also warned the increased pay won’t last forever.
“We want drivers to take advantage of higher earnings now because this is likely a temporary situation. As the recovery continues, we expect more drivers will be hitting the road, which means that over time earnings will come back to pre-Covid levels,” Cinelli said.
Uber claimed in the blog post drivers in Philadelphia, Chicago, Austin, Miami, and Phoenix are currently earning pre-tip median incomes between roughly $26 and $31 per hour.
But during the pandemic, many ride-hailing and food delivery drivers have seen their pay dramatically increase, due to the way Uber’s business model works.
Uber’s ability to provide on-demand rides at low prices depends on having lots of drivers active when passengers are looking for a ride. If only one driver is competing for a passenger, that driver can refuse the job until Uber’s algorithm jacks up the pay – which is esssentially what some DoorDash drivers are doing to boost their pay for food-delivery gigs.
If 100 drivers are competing for that same job, Uber can offer much lower pay and one of them will still probably do it, and therefore Uber can charge the consumer less and still make more money itself.
But the pandemic caused a massive drop in the demand for rides, and has kept many drivers – who are especially concerned about getting sick because Uber doesn’t provide healthcare or sick pay – off the road, even as rider demand returns.
That’s a bad situation for Uber, which doesn’t want riders returning to the app only to find no drivers are online and that they’re waiting 20 minutes for a ride and still paying surge pricing.
So, Uber is effectively bribing drivers to get back on the platform until there’s enough competing for those returning passengers that Uber can start whittling down driver pay again.
In late 2019, California lawmakers passed AB-5, hoping to make it harder for companies like Uber to skirt labor laws and offload healthcare and unemployment insurance costs to taxpayers by misclassifying workers as contractors.
But Uber refused to comply, arguing that AB-5 didn’t apply to its drivers because they aren’t core to its business and that drivers really are independent because they’re “free from the control and direction” of Uber.
In an attempt to prove its independence argument, in January 2020, Uber gave California drivers more control by allowing them to set their own prices for rides and see passengers’ destinations before picking them up.
Regulators and courts didn’t buy it. But fortunately for Uber, a $200 million PR campaign around Proposition 22 successfully persuaded California voters to exempt it from AB-5, saving the company as much as $500 million per year, according to a 2019 estimate by Barclays analysts.
Now that Uber no longer needs to convince California authorities that its drivers are independent, the company plans to reclaim control, revoking the price-setting and passenger destination features it gave drivers barely a year ago, the San Francisco Chronicle reported Monday.
Uber’s reason for the reversal?
Too many drivers took advantage of the control Uber gave them, picking the most profitable rides while declining others, making it harder for customers to get rides and hurting Uber’s business, the company said. According to the Chronicle, one-third of drivers turned down 80% of rides.
Industry observers said the move is hardly surprising but it undermines Uber’s claim that the changes were ever about anything more than dodging regulation.
Uber did not respond to a request for comment on this story.
“It really shouldn’t be a shock to anyone,” Harry Campbell, who runs The Rideshare Guy, a popular blog among drivers, told Insider. “Since they passed Prop 22… there’s nothing holding them accountable for these changes.”
Campbell said that drivers likely won’t be happy given the popularity of the price-setting and passenger destination features, but added, “It’s kind of, unfortunately, a bit of a pattern that Uber specifically often gives drivers some things that they want and then ends up taking them away.”
“Is there a single Prop 22 promise that Uber hasn’t broken?’ Gig Workers Rising, which advocates on behalf of ride-hailing and food delivery drivers, tweeted in response to the Chronicle’s reporting, alluding to Uber’s history of misleading claims during its Prop 22 campaign.
But by revoking some driver-friendly features, Uber – which has yet to turn a profit – also revealed some of its post-pandemic priorities.
Companies like Uber and Lyft rely on flooding the market with drivers, who then face pressure to accept lower-paying rides and risk another driver getting the job or getting penalized themselves for turning down too many rides, even if those rides are unprofitable.
But during the pandemic, there has been a massive shortage of Uber and Lyft drivers, due to a drop in demand for rides and a concern among drivers about getting sick (the companies don’t provide healthcare or sick pay). And even as rider demand returns, many drivers are still staying home.
With fewer drivers on the road and Uber drivers able to freely reject unprofitable rides, they’re driving up their wages. That means higher prices and longer wait times for passengers, which Uber isn’t happy about.
“The companies, strangely, they care more about reliability than profitability at this moment in time,” Campbell said. “They want to make sure that the platform is working like everyone expects and if drivers are ignoring 80% of requests, that means that it literally is going to take longer for you to get matched with a driver.”
Campbell said Uber, Lyft, DoorDash, and other platforms are offering huge incentives to drivers – like a $250 bonus for completing 20 rides – as they struggle to get them back on the road.
As with past promises, those incentives and other driver-friendly features could just as easily disappear if the market becomes saturated with drivers again and companies regain the upper hand, but Campbell said that there needs to be a middle ground.
“If Uber is going to be able to get away with paying drivers like independent contractors, I think that’s kind of some of the control that they have to give up and find a way to make work.”