Uber, Lyft, DoorDash and other gig companies said California’s Prop 22 would create opportunity for workers of color. A new study says it ‘legalized racial subordination.’

uber lyft protest drivers LOS ANGELES, CALIFORNIA - APRIL 16: A protestor displays a sign as Uber and Lyft drivers with Rideshare Drivers United and the
 Transport Workers Union of America prepare to conduct a ‘caravan protest’ outside the California Labor Commissioner’s office amidst the coronavirus pandemic on April 16, 2020 in Los Angeles, California. The drivers called for California to enforce the AB 5 law so that they may qualify for unemployment insurance as the spread of COVID-19 continues. Drivers also called for receiving back wages they say they are owed. (Photo by Mario Tama/Getty Images)
Drivers in California sued Uber and Lyft, claiming the companies owe them $630 million in back wages.

  • Gig companies said labor law exemptions would create better opportunities for workers of color.
  • Instead, California’s Prop 22 “legalized racial subordination,” a new research paper argues.
  • The law worked like 1930s “wage codes” that paid workers in mostly minority industries less.
  • See more stories on Insider’s business page.

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.

To gin up support for Prop 22 in California, the Yes on 22 campaign touted endorsements from civil rights groups and sent mailers to voters implying that progressives like Sen. Bernie Sanders supported the ballot measure.

“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).

The head of the California NAACP chapter stepped down amid revelations that the Yes on 22 paid her consulting firm $95,000. Sen. Sanders and other progressives denounced the both mailers and Prop 22. And Yes on 22 reportedly harassed Dubal, a woman of color, on social media over her opposition to Prop 22 (Vetter told Slate that Yes on 22 condemned the harassment).

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.'”

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Most executives say they want more contract and temp workers. A majority of those workers say that’s not good enough.

Prop 22 protest
Jorge Vargas joins other rideshare drivers in a demonstration in November 2020 urging voters to vote reject Proposition 22, a ballot measure that exempted companies like Uber and DoorDash from California’s AB-5 law.

  • Contract workers “overwhelmingly” want to be permanent employees, according to a new McKinsey-Ipsos survey.
  • But executives say they plan to rely more heavily on contract labor, McKinsey previously found.
  • The findings reveal a huge divide between workers’ wants and those of their bosses.
  • See more stories on Insider’s business page.

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.

As Insider previously reported, the COVID-19 pandemic exposed how the tech industry’s push to build their empires on the backs of contractors has failed American workers, who abruptly found themselves without healthcare, sick pay, workers’ compensation, and other benefits guaranteed to employees.

Read more: Biden could be the most pro-labor president in decades. These 81 government power players will take a major role in shaping policy during his administration.

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.

Read the original article on Business Insider